The industrial sector, which consumes more than one-third of global energy, faces an urgent challenge: reducing its reliance on fossil-fuel generated heat. Nearly three-quarters of the energy used in industry is to generate heat, and 90% of it still derived from fossil fuels. While the level of consumption creates enormous potential for emissions reduction, finding low-carbon solutions widely applicable across sectors and their multitude of applications has proven difficult, making heat decarbonization highly challenging.
When powered by renewable electricity, heat pumps offer a highly efficient, low-carbon solution to a wide range of thermal demands. While they are already the gold standard for sustainable domestic heating, knowledge gaps persist in industrial settings. Many stakeholders are less familiar with heat pumps than conventional technologies like boilers and have concerns about their reliability and operational complexity. Despite these perceptions, heat pumps can potentially transform industrial heating and cooling as next-generation technologies advance.
Their key advantage lies in tremendous efficiency and the ability to leverage waste heat from factory processes as well as the ground, air, and/or water. By converting low-temperature heat into higher-temperature heat, rather than generating heat from fuel combustion, they achieve 3-5 times the efficiency of traditional gas boilers, delivering significantly more heat per unit of input energy without the associated carbon emissions. Their versatility and adaptability across a wide range of processes make them a key technology for achieving Net Zero ambitions when integrated into a comprehensive decarbonization strategy.
Efficiency and Decarbonization at Lower Temperatures
For low-temperature applications – those requiring heat up to 90°C – heat pump technology is mature and widely applicable. It is ideal for processes such as pasteurization, drying, and cleaning in the food and beverage sector or bleaching, de-inking, and initial drying phases in the pulp and paper industry, which are conducted within this temperature range. Heat pumps excel here by "upgrading" heat, whether from the ground, ambient air, water, or industrial processes (waste heat), to meet operational needs without relying heavily on external energy sources. When powered by green electricity, they offer a direct pathway to decarbonized heat.
Coupling heat pumps with renewable energy sources, such as onsite solar generation, enhances their sustainability and cost-effectiveness. Onsite renewable electricity not only reduces operational carbon footprints but also mitigates risks associated with fluctuating energy costs and grid constraints. These factors make the combination of heat pumps and onsite renewables an excellent choice for companies aiming to achieve Net Zero goals.
Beyond 90°C: Challenges and Emerging Solutions
While heat pumps are a proven, efficient option for low-temperature applications, their role in higher-temperature processes – those exceeding 90°C – remains less developed, which can make implementation difficult and technically challenging. These higher temperatures are critical for processes like sterilization, evaporation, drying, boiling, or even steam generation, where traditional boilers still dominate.
The limitations of heat pumps in these scenarios are primarily technical. Producing higher-temperature heat using heat pumps is possible but requires greater energy input for compression, which reduces the coefficient of performance (COP) and, consequently, the system's overall efficiency. Additionally, compressors face reliability challenges under high-stress conditions, especially when dealing with steam.
Source 1
Despite these hurdles, innovations are emerging. High-temperature heat pumps, some of which can produce steam at temperatures up to 130°C, are gaining traction. Technologies like mechanical vapor compression – where steam is compressed and recycled rather than generated from scratch – represent a promising frontier. Although not yet widespread, these advancements hint at a future where heat pumps can serve even the most heat-intensive industrial needs.
Heat Pumps Integral to a Strategy of Decarbonization Through Electrification
One of the most important considerations when integrating heat pumps into industrial operations is recognizing that they are not a one-size-fits-all solution. Their effectiveness depends on careful design and planning, including waste heat recovery and system optimization. For instance, designing heat recovery systems for industrial refrigeration plants that account for seasonal variations in the available waste heat and apply intelligent controls to balance supply and demand is crucial for maximizing efficiency and ensuring that the system operates effectively throughout the year.
Heat pumps are most attractive as an option when considered as part of a holistic decarbonization strategy, extending beyond equipment replacement to encompass broader system integration, energy efficiency improvements, and the use of renewable energy sources. Successfully integrating heat pumps into industrial operations requires more than just replacing traditional fossil-fuel-driven equipment; it demands a comprehensive approach that includes analyzing actual heat demands, ensuring grid capacity is sufficient, and exploring how renewables can support operations. Only by taking these steps will heat pumps fully deliver on their promise as a no-regrets lever for industrial decarbonization.
We recommend taking the following steps to pave the way for successful electrification of industrial sites:
Energy demand reduction: Conducting an energy efficiency audit and implementing a tailored program to reduce energy demand is crucial. By addressing inefficiencies, companies can lower both capital (CAPEX) and operational expenditures (OPEX), regardless of their ultimate decarbonization strategy.
De-steaming the site: Many facilities rely on steam systems, which are inherently inefficient due to losses during generation, transportation, and condensate return. Reducing unnecessary steam use where possible across a facility by lowering the supply temperature and replacing steam with hot water improves the efficiency of the thermal generation system, making it easier to integrate heat pumps and enable better performance.
Onsite renewable energy opportunities: Installing onsite renewable energy sources, such as solar photovoltaics (PV), can insulate operations from volatile electricity prices. By generating clean electricity onsite, companies enhance the sustainability of their heat pump systems while ensuring long-term cost stability.
Again, it is important to be aware of any grid constraints concerning energy import capacity before getting started on a detailed heat pump integration roadmap.
Cost Considerations for Heat Pumps
The cost of heat pump systems is often misunderstood. Approximately two-thirds of the expense is tied to design, installation, and integration within the existing site infrastructure. The heat pump unit itself accounts for only about one-third of the total cost. This breakdown highlights the importance of detailed planning and engineering to maximize the efficiency and longevity of the system, and points to the urgency of finding ways to reduce the cost of heat-pump installation.
While upfront costs may be higher than fossil-fuel alternatives, heat pumps offer significant savings over their lifecycle due to their high efficiency and lower operating costs, particularly when paired with renewable energy. The European Heat Pump Association estimates that gas demand in buildings will decline by 40% compared to 2022 if the EU hits its installation targets of 60 million more heat pumps by 2030. This would translate into €60 billion saved on energy imports, reducing dependence on volatile fossil fuel supplies. However, their cost-effectiveness depends heavily on the specific applications, site conditions, local energy markets, and government incentives.
Geographical Variations in Heat Pump Economics
The economic viability of heat pumps varies significantly by region, depending on a complex interplay of economic and regulatory factors. These variables create stark disparities in their financial attractiveness across regions, making it crucial to examine the drivers that enable or hinder their widespread adoption. Chief among these factors are the Spark Ratio and the regulatory environment, both of which shape the affordability of heat pump systems.
The “Spark Ratio”
The Spark Ratio, or Spark Gap, expresses the price difference between electricity and natural gas. In countries like Finland and Sweden, where the Spark Gap is narrow, electricity is a competitive heat source, making heat pumps a cost-effective solution. However, in countries like the UK and Germany, where electricity is significantly more expensive than natural gas, heat pumps must achieve exceptionally high coefficients of performance (COPs) to remain economical.
Regulatory Environment
Local policies also influence the feasibility of heat pumps. Countries with robust incentives for renewable energy and decarbonization, or those that use carbon pricing mechanisms, enhance the business case for heat pump adoption. Conversely, in regions with limited support for electrification, transitioning to heat pumps may be financially challenging without broader reforms.
Understanding the economic viability of heat pumps requires a holistic view of market dynamics as well as policy frameworks. A narrow Spark Gap can unlock the potential of heat pumps as a decarbonization solution, but in regions where conditions are unfavorable, even the most efficient systems may struggle to gain traction. Companies with multiple sites in different countries need to be aware of these parameters, as well as the potential for onsite solar energy production when considering portfolio-wide implementation of electric heating solutions.
Environmental Concerns About Refrigerants
The environmental impact of refrigerants used in heat pumps has become a significant topic of discussion, particularly in the EU. Most conventional refrigerants are categorized as PFAS (Per- and Polyfluoroalkyl Substances), which are under scrutiny due to growing evidence of adverse health and environmental effects caused by exposure, and because they are known as “forever pollutants” that remain in the environment for decades if not centuries. The use of certain refrigerants is restricted or banned in the EU. Regulatory developments to be aware of include:
REACH Regulation: Managed by the European Chemicals Agency (ECHA), REACH (Registration, Evaluation, Authorization and Restriction on Chemicals) regulates chemicals that may pose health and environmental dangers. In 2023, several EU Member States proposed a formal restriction on PFAS, aiming to eliminate all non-essential uses. Since many heat pump refrigerants fall under the PFAS category, their availability could be restricted in the future, depending on the outcome of ongoing negotiations.
F-Gas Regulation: The EU’s F-Gas Regulation, implemented to reduce the use of high-global warming potential (GWP) refrigerants, is also tightening restrictions. A proposed amendment could ban the use of all fluorinated greenhouse gases (F-gases), particularly hydrofluorocarbons, in heat pumps by the end of the decade, pushing the industry toward alternatives such as natural refrigerants (e.g., R717-NH₃, R744-CO₂), hydrocarbons, and hydro-olefins. However, these alternatives come with trade-offs, including toxicity, flammability, and operational challenges.
Heat pump developers and industries must navigate these regulatory and environmental shifts carefully, ensuring compliance while adopting refrigerants that balance performance, safety, and sustainability.
Embracing Heat Pumps for a Sustainable Future
Heat pumps represent a transformative decarbonization opportunity for industries whose processes require low-temperature heat, and increasingly the lower end of medium-temperature heat. Their ability to efficiently convert low-temperature heat into valuable thermal energy makes them an indispensable tool for industries striving to meet Net Zero goals. When paired with renewable electricity and implemented as part of a comprehensive strategy, heat pumps deliver not only significant carbon reductions but also long-term cost savings and operational resilience.
Successful adoption requires a forward-looking approach. Addressing site inefficiencies, de-steaming where possible, and investing in onsite renewable energy are key preparatory steps. Additionally, businesses must navigate regional variations in energy costs, the evolving regulatory landscape, and the environmental implications of refrigerant use. By proactively managing these challenges, companies can position themselves as leaders in sustainable innovation, unlocking the full potential of heat pumps as a "no-regrets" solution for decarbonization.
The future of industrial heating is electric, efficient, and sustainable. Heat pumps, while not a one-size-fits-all solution, offer a pathway to rethinking energy use – driving progress toward a greener, more resilient industrial sector. Companies should not hesitate to partner with an energy consultancy to assess the feasibility of transitioning to heat pumps for their processing needs, and to make heat pumps a cornerstone of their holistic decarbonization strategy.
1: International Energy Agency (IEA), The Future of Heat Pumps, 2022 (https://iea.blob.core.windows.net/assets/4713780d-c0ae-4686-8c9b-29e782452695/TheFutureofHeatPumps.pdf). Representation using IEA extended TRLs, (IEA, Energy Technology Perspectives 2020), based on Maruf, N. et al. (2022), Classification, potential role, and modeling of power‐to‐heat and thermal energy storage in energy systems: A review, Sustainable Energy Technologies and Assessments, Vol. 53(B)
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