EiD has received a valuable contribution from Marco Baresi, vice-president of Italcogen, the Confindustria association of manufacturers of CHP and waste heat recovery equipment in Italy. In reviewing a new report from the World Bank’s International Finance Corporation, he shows the importance of waste heat recovery in Europe and that the EU’s Energy Efficiency Directive could be an important driver in exploiting the potential.
Review: “Waste Heat Recovery for the Cement Sector: Market and Supplier Analysis”
Recently the International Finance Corporation (IFC), and part of the World Bank Group), together with the Institute for Industrial Productivity (IIP), published Waste Heat Recovery for the Cement Sector: Market and Supplier Analysis. It gives some valuable information and insights for the development of industrial energy efficiency policies in Europe.
The report provides some key points that allow us to have some brainstorming of the way forward:
- There are over 850 Waste Heat Recovery power installations in the world. China leads in the number of WHR installations – 739, followed by India (26 WHR installations) and Japan (24 installations);
- Waste Heat Recovery (WHR) can reduce the operating costs and improve earnings before interest, tax, depreciation and amortisation (EBITDA) margins of cement factories by about 10 to 15 percent. On average, electric power expenses account for up to 25 percent of total operating costs of a cement factory. WHR technology utilizes residual heat in the exhaust gases generated in the cement manufacturing process and can provide low-temperature heating or generate up to 30 percent of overall plant electricity needs;
- Regulatory measures and lower capital costs have been key factors behind China’s success in mainstreaming WHR technology. Initially, WHR development in China was driven by incentives such as tax breaks and Clean Development Mechanism (CDM) revenues for emissions reductions from clean energy projects. In 2011, a national energy efficiency regulation mandated WHR on all new clinker lines constructed after January 2011. These drivers were reinforced when multiple Chinese WHR suppliers entered the market, lowering WHR capital and installation costs by adopting;
- Domestic components and design capability are fundamental and they were key for developing the technology for the Chinese market;
- Business opportunity revealed by the study: investment of ~US$5 billions to introduce ~2GWe of WHR power capacity in eleven developing and emerging countries;
- Structured financing is the key to realise the untapped WHR potential. A number of commercially-viable WHR opportunities are not implemented due to financing issues.
The IFC report effectively shows how policy, regulation and finance in the waste heat recovery in energy intensive industries field can be very useful to join energy efficiency, industrial competitiveness of manufacturers issues and driver to develop technologies for domestic and foreign markets.
The Chinese have become leaders in “big size” heat to power recovery plants with more than 700 units developed in the past years for domestic field and now they are ready to export their technology in foreign markets.
“Small size“ heat-to-power recovery plants, a peculiarity of the European industrial ones, addressed to revamping the old existing manufacturers plants, are at an early stage with less than 10 existing WHR plants mapped in the report. The potential is significant. A good reference is the Heat Recovery in Energy Intensive Industries (H-REII) project.
Importantly, the EU’s Energy Efficiency Directive could be a “driver” to further exploit the potential in Europe.
In summary, Waste Heat Recovery is a best practice of:
• energy efficiency for a sustainable industry
• increasing industries competitiveness
• promoting a new European supply chain to export
• helping in saving/creating new jobs.
The IFC-IIP report is available here.