Electrifying the Factory of the Future

First some facts:

1.??????? The Industrial sector accounts for 30% of total direct and indirect GHG emissions

2.??????? Global manufacturing contributed 9.2 Gt of energy related CO2 emissions 2022

3.??????? 75% of industrial GHG is CO2 from fossil fuels, most from heating processes

?Now some figures:

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As we know, energy is used for four basic activities of living: lighting, heating, transport, and manufacture.? The first two comprise mainly consumer homes and business offices with decades of efforts to improve building energy efficiency. The third, transport, ties both consumer and industry in moving people and goods and the provision of services.? The low carbon future for this is a combination of electrification and new lower carbon fuels for private and commercial vehicles.? The fourth, manufacturing, is the most complex and most demanding of traditional use of fossil fuels and therefore a complicated fix to replace while maintaining growing productivity demands.?

Circularity of manufacturing, zero waste, and circularity of materials, recycling, will be the focus of future FSX articles.? Here we focus on some key aspects of energy usage in manufacturing. How do we provide carbon free energy entering the factory?? How do we electrify traditional fossil fuel driven heating processes in steel, cement, shoe making, chemicals, food processing, and others? Importantly how do we capture and circularize waste heat, (and water vapor) as well as capture/reduce/avoid emissions??

First, the four walls of the factory.? ?As we know, heat is used to make forge steel, cure cement, create chemistries, dry food ingredients, cook food, make computer chips, and combine and otherwise join materials.? Heat is therefore in many ways the core energy consumption source of any factory.

A range of energy related FOF technologies are available and being developed that cover the range of energy and heat use from low temperature heating for drying of ingredients in the food industry (<200C) to high temperature processes for cement and steel (>500C).

To dimension the opportunity at hand, 75% all industrial heat today is obtained through fossil fuels.? 149-200 million Terajoules (Tj) of energy is used in manufacturing (2017-2020 growth). ?The first atomic bombs released circa 63 Tj in energy.? Global manufacturing today uses millions of times that energy.? To put in yet another perspective, 1 Terajoule is equivalent to 0.278 Gigawatt hours (GWh), or roughly a billion Google queries (see below).? And 1 Joule is the energy it takes to lift 100g (say, an apple) one meter against gravity, or in our case the amount of energy needed to raise 1 g of cool dry air 1C in temperature. Yet of all this energy, only 20-25% today is delivered electrically.

Why? Historical inertia, the cost of new technology adoption, as well as the availability and control of heat range are all barriers to change.? The challenge for factory electrification is matching the versatility and temperature range of flame heat and convenience of fossil fuels with equivalent electrical equipment that need to be invented, innovated, and engineered into existing processes.

One engineered solution example that we see having widespread adoption potential is replacement of gas fired boilers with electric heaters coupled with heat pumps and thermal recyclers to capture heat. Though more elusive, much as we propose to capture molecular species such as carbon and other emissions, the value proposition here is to capture kinetic energy to concentrate, reuse, and repurpose heat, and if in sufficient quantity, to drive turbines for internal electricity generation.? If heat can be captured in even greater quantities, then shared heating ecosystem schemes become possible.? Heat as a Service is not new, most notably seen in Europe through district heating, but is now worth reconsidering as an ecosystem business model, especially with the AI-interest driven proliferation of high heat extruding data centers.

Data centers are an interesting case in point for the reuse of heat and how we might begin rethinking circularity of heat.? To put this in perspective, a Google query costs 1.08 kJ of energy whereas the same query through ChatGPT costs 10X more. ?Today the average data center captures and reuses 0% of its waste heat.? A hyperscale 100 MW data center essentially gives off 100 MW of waste heat.? Today there are over 10,900 data centers worldwide and growing, consuming in 2022, close to 300 TWh of electricity.? To put in perspective, the average US home uses 10.8 MWh/year of electricity, so close to 27M US home equivalents of power is given up to the atmosphere in the form of heat each year just from data centers.?

And there are millions of manufacturing sites globally, all using heat to manufacture products.? If just 0.1% of the $16.2 Trillion in manufacturing output in 2022 was invested in electrification and thermal management, a $16B market would exist.? And since only 20-25% of factory heat today is electrified, there is massive room for improvement and opportunity.?

Now a key fly in the ointment is the fluctuating price of electricity coming into the factory and the degree of carbonization of that electricity. ?Enlightened manufacturers derisk price fluctuation through extended power purchase agreements (PPAs) and “decarbonize” their electricity through the purchase of offsets through mechanisms such as energy attribute certificates (EACs; see also GOs, I-RECs, and GECs).?

Today, obtaining cheap, carbon free electricity (CFE) is managed through financial tools mediated through digital assets.? Tomorrow, this could evolve into a very interesting hardware story as needs for grid resiliency and energy security coupled with site specific climate risk reduction leads to more and more manufacturers deciding that critical facilities need their own renewable captive grids that self-generate their own 24/7 CFE.

Similar to carbon capture, the solutions for electrification and thermal management lie in modularization and capturing the long tail of manufacturing, i.e., the millions of small and medium sized manufacturing sites around the world in addition to large.? There exists a Moore’s Law type of innovation opportunity here to provide ever smaller, more distributed, engineered solutions at the speed we need to effect the change needed. What might catalyze this change?? Grid undercapacity could drive manufacturers to increasingly build their own captive (nano) grid solutions which would inherently be renewable, leading to new long tail markets for solar and wind for smaller facilities and nuclear SMR and geothermal for large ones.? In either case manufacturers would want to resiliently electrify as much of their manufacturing as possible.? Or will be the other way around? Under pressure to decarbonize operations, manufacturers embrace electrification and thermal management and then turn their attention to decarbonizing the flow of energy into their facilities on their own terms.? The two go hand in hand.