Heat pumps are acknowledged as essential for electrifying and decarbonising energy globally. However, new research from an independent think tank reveals that their potential impact on industrial environments is largely ignored in Australia.
In its latest report, ‘Industrial heat pumps key to addressing excess gas demand’, the Institute for Energy Economics and Financial Analysis (IEEFA) shows that industrial heat pumps (IHPs) could replace about 17 per cent of Australia’s total gas use, particularly in states facing excess gas demand in coming years. Key near-term opportunities to reduce gas demand include an estimated 94PJ in alumina refining and 29PJ in the food and beverage sector – six per cent and two per cent of Australia’s annual gas use.
IEEFA guest contributor and the report’s co-author, Cameron Butler, said, “The food and beverage sector presents the most readily deployable opportunity as commercially available IHP models can meet the temperatures needed in the sector. ,
“Given the high energy losses typically experienced in the food and beverage sector, IHPs could deliver energy savings of 80–90 per cent, and therefore be highly financially attractive.”
While less mature, the opportunity is even more significant in the alumina sector. Mechanical vapour recompression (MVR), which works as a series of open-cycle heat pumps, could replace about two-thirds of the energy used in alumina refining.
“MVRs could slash energy use in alumina by recovering and reusing heat from the process, potentially requiring just 1GJ of electricity to replace about 5GJ of gas,” Mr Butler said.
However, the technology has yet to be demonstrated in the sector. An MVR pilot in alumina refining was started in 2021, but it closed late last year due to cost overruns.
“The industry still believes the technology could play an important role in the sector but has stressed the need for further government support to demonstrate the technology and derisk future investments,” Mr Butler said.
The potential gas demand reductions delivered by IHPs could greatly alleviate the impending tightening of gas markets on Australia’s east and west coasts.
IEEFA Australia CEO and co-author of the report, Amandine Denis-Ryan, said, “The majority of the opportunity lies in Victoria and Western Australia, which are both facing material excess gas demand in the coming years.
“Implementing commercially available IHPs in the Victorian food and beverage sector could save 14PJ of gas in the next ten years and reduce the state’s industrial gas use by 36 per cent.
“In Western Australia, shifting from gas to IHPs in alumina refining could save over 74PJ of gas, equivalent to ten per cent of the state’s total gas use today, going a long way to avoiding excess gas demand in the early 2030s.”
Upfront costs for IHPs are typically three to four times higher than those for new gas or electric boilers. However, the technology is developing rapidly, and the global market is expected to grow from US$2 billion in 2023 to US$11–US$21 billion by 2030, driving down costs. Nonetheless, IEEFA found that some commercially available IHPs could show a return on investment within just two years.
“A small number of government-supported feasibility studies and a real-life case study have found material energy and cost reductions in the food and beverage sector, with a range of productivity benefits, such as reduced maintenance costs and equipment downtime, as well as improved working conditions,” Mr Butler said.
IEEFA recommends that the government support a large-scale IHP pilot program in the food and beverage sector and a smaller-scale program in the alumina sector to build better data, expertise, and supply chains for IHPs in Australia.
“Despite their large potential, IHPs seem absent from government plans, and the Australian market lags behind its global peers. It is time the Australian government steps up,” Ms Denis-Ryan said.
View the full report here.
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