Energy incentives are a win-win for new plants

Energy Expert Peter Garforth says break the heat recovery paradox and replace tax breaks with energy incentives.

By Peter Garforth

Wasted heat is the most undervalued resource in the industrial energy value chain. In the typical factory, a wide range of processes release unwanted heat and use valuable fuels, costing money and causing substantial greenhouse gas emissions. The historic low cost of energy combined with the ease of venting waste heat through stacks or cooling towers encourages treating this as a normal part of the process. However, it doesn’t take long before a good energy efficiency program identifies waste heat as an opportunity.

This typically triggers obvious, useful,and low-cost actions, such as replacing hot water boilers with recovered heat, pre-heating gas and combustion air, and providing space heating for buildings. Other applications, often cheaply and successfully implemented, include material batch preheating and various drying applications.

So what’s the problem if there are so many valuable uses for heat? As the obvious measures are implemented, a realization often grows, especially in energy-intensive industries like glass, metals, cement and ceramics. The heat that can be recovered and used in these relatively easy and cost-effective ways is a tiny fraction of total heat waste. This triggers further studies to eliminate or use this excess heat.

Eliminating large amounts of waste heat in existing process is usually technically difficult and rarely cost-effective, especially at current energy costs. The only really successful approach to cut waste process heat is to redesign the process itself. This involves both time and research investment. Clearly, every industry should evaluate possible process breakthroughs, and occasionally there will be step changes. In reality, these are few and far between, and low energy prices rarely generate the urgency to explore these.

Wasted heat is the most undervalued resource in the industrial energy value chain.

– Peter Garforth

The obvious alternative is to find uses for the balance of the waste heat. Invariably, using it to make electricity through a variety of technical approaches is considered. Depending on the heat characteristics, this will include steam turbines, ironically sometimes with supplementary fuel use to condition the waste heat, or emerging approaches like Sterling engines. These and other approaches can be technically pretty effective in converting waste heat into usable electricity. However, economics normally kills these projects. Low natural gas and fuel oil prices, the high costs of heat recovery, heat conditioning and the generating technology, along with additional operating costs, render the supplementary electricity too costly, when compared with the prices from just about every utility in the U.S.

So, this is the paradox. Vast amounts of valuable fuel are wasted in the form of heat. Cost-effective uses in a typical plant represent a small percentage of the waste. Capturing and using the balance on-site isn’t cost-effective at today’s energy prices. Are we condemned to view this excess waste a cost of doing business for the foreseeable future, or could there be another way to look at this unused resource, especially when major capacity expansions are made or new plants are built?

When a new plant or a major expansion is in the works, the company will approach the local community for incentives of one form or another. These often are generous to attract investment and jobs. They invariably reduce the state and municipal taxes, frequently causing high levels of political tension in the community. They reduce the community’s ability to provide services for residents, ironically including the new employees. Is there another set of incentives that would produce a clear added value for both players?

In a typical U.S. city, about half of the non-industrial energy use is for heating and cooling homes and buildings. This is low-grade thermal energy in industrial terms. The expanded or new plant is a potential ready-made source of cheap low-grade heat for decades to come. The challenge is getting the heat from the smelter, furnace stack or cement kiln to the living room or office. To do this efficiently and cost-effectively requires a district energy infrastructure in the city, something that rarely exists in North America. Cities such as St Paul, Minnesota, and Toronto are rediscovering the value of urban heating and cooling systems. Others are considering them, but being deterred by initial investments, local resistance and disturbance.

Is it beyond imagination to rethink the incentive logic? Instead of giving the plant the tax breaks, take the equivalent value and develop district energy infrastructure. This has a long-term value for the community. If the incentive for the plant is now a multi-decade waste heat take-off agreement at prices indexed to the natural gas market, the plant benefits from reduced carbon emissions, guaranteed cash flows and some protection against future price increases.

Instead of accepting the heat waste as inevitable, with some creativity the technical, and social relationship between the plant and the community can be redefined.

Peter Garforth is principal of Garforth International LLC, Toledo, Ohio. He can be reached at peter@garforthint.com.

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