Stakeholder Views on Barriers to

Utilisation of Low Grade Heat for Process

Efficiency Improvements

Stakeholder Views on Barriers to

Utilisation of Low Grade Heat for Process

Efficiency Improvements

Report on a workshop at the PRO-TEM Network

Industrial Forum

26 March, Wilton Centre

Prepared by Dr Conor Walsh & Dr Patricia Thornley, Tyndall Centre for

Climate Change Research, University of Manchester

May 2010

Report number R108105/2010/rep001r01 Deleted: ¶

¶

Page Break

Executive Summary

This report outlines the key outcomes of the PROTEM workshop held on 26th

March

at the Wilton Centre, Middleborough. The aims of the workshop were:

• To identify key barriers to improving low grade heat use from industrial

processes

• To prioritize the most important barriers for the process industry and the most

relevant for the PROTEM network to address

• To gain insight into how the barriers are viewed by different stakeholders

• To discuss and share experience of how these barriers might be addressed

The barriers identified by the participants covered a wide range of issues, which were

collated into 21 different categories. The most dominant of these were “location”,

“cost”, “lack of investment return” and “performance/quality”. However, risk was

also a frequently mentioned issue in different contexts (financial, performance, impact

on existing process, market/policy etc.).

The barriers which participants rated as most important echoed this pattern to some

degree, with the following rated as the 3 most important barriers to address:

• Lack of pipe infrastructure

• Capital cost

• Location

However, the issues which participants felt it was most appropriate for the PROTEM

network to address were quite different, highlighting the following 3 most important

issues:

• Communication and awareness

• Suitable end users

• Technology and performance risk

Based on these findings, small groups then discussed the following key issues:

• Technology and performance risk – this highlighted the balance of risks and

rewards, the concerns of industrialists over disruption to established processes

and the consequent need for pre-implementation confidence and assurances

• Communication or user-based barriers – this focused on the difficulties of

matching users and suppliers of low grade heat, expectations and mutual

understanding of what is being ventured and potentially gained, the need for

return on investment and market failure to date to incentivise efficiency gains

or foster demand for low grade heat

• Finance and fiscal incentives - discussions on the efficacy of voluntary and

involuntary financial instruments, incentives and penalties. There was concern

that rate of return calculations were and inadequate assessment vehicle

Overall the workshop confirmed that economic viability is a key factor in facilitating

heat recovery; but other interconnected barriers are also important. There is a need

for candour and a long term perspective amongst stakeholders and hopes that

PROTEM might be able to address communications between heat users and potential

suppliers. Other themes for future PROTEM work which emerged from the analysis

included “Policy Incentives” and “Risk”.

1 Introduction

The PROTEM Network was established in 2009 to further stakeholder involvement

and interaction in advancing energy management and efficiency within the thermal

processing industries. One opportunity for improving thermal management in the

process industries is to make better use of low grade heat. While the recovery of

process heat forms an integral part of any thermal management system, streams at

higher temperatures are more amenable to heat recovery. Consequently while low

grade heat is quantitatively abundant and an under-exploited resource, there are a

number of practical, economic and other challenges in making better use of this

resource.

While these barriers to exploitation are documented to a limited extent in the

scientific literature (and a full review of this is given in a separate report), a workshop

was held as part of a PROTEM meeting to investigate this area with key stakeholders.

The PROTEM meeting and workshop were held on 26th

March at the Wilton Centre,

Middleborough. The workshop objectives were:

1. To obtain an up-to-date perspective from all the industrialists and other

stakeholders present on the barriers associated with the use of low grade heat

in the process industries

2. To prioritize the barriers, both in terms of how material they are to

development of thermal management initiatives and the extent to which they

should be a future focus of the thermal network

3. To discuss in detail some of the key barriers

The first 2 objectives were addressed in a plenary session with all attendees invited to

contribute to identifying their own (unprompted) priorities and then to prioritize the

areas that the group had collectively identified. The third objective was dealt with in

smaller interest-led groups, each of which contained academic and industrial

representatives, in which discussion and recording was facilitated by University of

Manchester staff.

2 Definition and classification of barriers

Barriers to implementation of low grade heat recovery and utilisation are issues that

impede or block progress. Barriers are more than just problems or difficulties (such

as fouling or economic costs, which may be addressed by technological solutions or

appropriate design). Instead barriers are intrinsic constraints or limits that impact on

the capacity of the industrial sector to engage with low grade heat recovery. This may

relate to institutional competency, regulatory enforcement, financial incentivises as

well as the perception of the stakeholders themselves. Barriers cannot be removed

simply by investment or improving technology within an isolated area. Conversely

addressing existing barriers may not directly remedy any individual site or plant

specific issues. However removing barriers will provide a more productive starting

point from which individual constraints (technical or otherwise) can be examined.

For the purpose of barrier classification within the workshop, four broad categories

have been identified, based on previously published work1.

2.1 Structural barriers

Structural barriers are evident when a new entity is attempting to develop within a

space that was fashioned to suit a previous incumbent. As the characteristics and

needs of the new entity are different, its progress will be impeded by boundary

conditions that were previously not material. An example relevant to the use of low

grade heat may be the lack of an established heat distribution infrastructure. This is

nto necessary when a process serves only its own needs, but becomes essential if

trying to match waste process heat to an external user. However, structural barriers

can also be less tangible, for example related to regulatory and permitting procedures

that may act as obstacles to project initiatives to improve process efficiency.

2.2 Market barriers

Market barriers arise when the services provided by a new technology are not

adequately valued within the existing market. This makes it difficult for the benefits

of any new technology to be monetized or be shown to offset the cost of their

implementation. With regards to low grade heat an example would be that in many

cases the costs required to recover energy may exceed the costs associated with

wasting lower-grade energy and consuming additional energy and the carbon savings

associated with the improved efficiency are not valued by the market in the same way

that, for example, carbon savings related to renewable energy may be valued.

2.3 Interaction barriers Interaction barriers may occur when the development of the new element necessitates

coordination (in terms of skill sets, products or services) between sectors and industries

which may not have experience in cooperating and cannot benefit from established

linkages. This can result in disagreements regarding project priorities and the optimal

means to overcome specific constraints. This is particularly relevant for projects

which seek to use low grade heat as it will be necessary to match low grade heat

supply with demand. This will require communication between many stake holders,

including producers and consumers of such heat.

1 Thornley, P., Prins, W., “Barriers to European Bioenergy Expansion”, European Biomass

Conference, Hamburg, 29 June – 3 July 2009

2.4 Performance barriers

Performance barriers perhaps represent the most relevant constraints for the use of

low grade heat. Because of its low thermal quality, the recovery of such heat will

invariably pose technical problems. Producers and consumers of low grade heat may

have specific expectations which may exceed the capacity of existing technology to

deliver. It may be the case that low grade heat recovery based on some technologies

will be unfeasible, uneconomical or have a marginal benefit. Identification of

performance barriers may inform future research by highlighting the areas where

efficiency gains may be more readily achieved. This may include a review of working

fluids, heat exchanger materials or indeed designing processes which minimize the

amount of heat wasted in first place.

3 Barriers analysis and characterization

3.1 Identification of barriers

At the start of the workshop participants were asked in the meeting to identify what

they considered to be the key barrier(s) to utilisation of low grade heat in the thermal

process industries. Table 1 shows the raw responses received in the first column,

which are then aggregated into collated headings in the second column.

Table 1: Barriers to utilisation of low grade heat identified by workshop

participants

Raw responses Collated responses

Lack of long term view re project payback periods.

(Industrialists do not have long term confidence

they will still be in business to make long term

energy investments

Company strategy (interaction)

Lack of time for considering creative activities

Corporate capacity and strategy

High cost of moving/extracting/upgrading low

grade heat vs. its value

Development costs of new technology & risks (big

bet)

Cost of implementation

Temperature and therefore the cost of heat exchange

equipment

Cost

Cost

Low pay back/cost

Cost

Cost

Cost effective technology

Cost

Cost

Cost to process and supply

Putting a value on energy efficiency best practice Policy incentives

Price for carbon Price of energy/carbon

Economics/IRR/payback of projects using low-

grade heat

Payback on investment

Project cost (capital/payback)

Return on investment

cost/payback period

No rate return investment for low value commodity

e.g. DH

ROI

Low value

New technology doesn't fit industry payback times

Low pay back – cost

Payback constraints

Lack of investment return

Use = market

Lacking interest

Low demand

Difficulty finding partners to use LG heat

Lack of market interest

Capex/availability/lack of funding

Difficulty in gaining capital

Access to capital

Inconsistent government policy!

Long term regulatory framework is uncertain - no

interagency joined up thinking

Regulatory uncertainty - lack of confidence in the

legal framework that governs key “?” E.g. revenue

stream (green credits)

Policy inconsistency

Appropriate infrastructure

Transport

Infrastructure

Structural

Lack of pipes/infrastructure

Who pays for infrastructure - what legislates to

drive investment?

Infrastructure of networks not available/affordable

to distribute low grade heat to suitable users

Infrastructure financial support

Can't use the heat recovered anywhere

Distance to end user of low grade heat and cost of

supply infrastructure

Lack of customers with correct requirements in

close proximity

Physical location – distance

Expensive to export off-site

No consumer in close proximity

End user (remote site)

The location of end users in relation to industrial

installations

Distribution infrastructure

Infrastructure to transfer & capture low grade heat

to allow pathway to end user

No one wants it/needs it nearby the source

Remoteness from users

Local use of low grade heat (lack of)

Transport of energy from low grade heat technology

Distribution

Companies & people who can use low grade heat do

not locate close to chemical plants

Logistical

Geography of the existing plants

Location

Risk

Risk

Risk

Risk

Low capital return combined with business

interruption

Capital cost of investment in new technology

Cost of capital

Cost of being able to supply

Capital effectiveness

Equipment capital cost - end use does not exist

(academic)

Capital cost

Production constraints

Process restrictions

Effect on process

Lack of technical solutions to heat recovery/the cost

of the technologies

Too expensive to recover, size, corrosion

Quality of low grade heat: too low temp/too

corrosive

Use of new technology for production of electricity

Proving new low grade heat recovery devices off-

Performance/quality

line so that they can be installed with confidence

during a shutdown

Extraction?

Quality

Performance

Performance: whether one available

process/manufacturing will be selected depends on

its performance or customer whether accepts it

Adequate frequency of supply

Ageing current equipment not frit for technology Ageing equipment

Reuse: integration with other processes

Degradation of process if used internally?

Need to compromise our operating practices to

enable economic downstream use of low grade heat

Alternative internal use

Unproven technologies i.e. capital risks

Risk of new technology

Flexibility of application

Technology and performance risk

Reliability of supply

Long term viability of low grade heat customers -

risk of changing markets

Having guaranteed long-term users next door to

long-term low grade heat suppliers

Reliability of long term supply

Awareness

What technology would use it?

Lack of users for the type of heat available

Finding suitable consumer for LGH

Matching source to consumer

Use of low grade heat (structural)

Suitable end users

Communication

Difficulty in all working together for common good

Co-operation between parties

Interaction

Awareness

Communication/interaction between different

disciplines

Communication difficult across range of

independent commercial organizations

Communication and awareness

3.2 Classification of barriers

Figure 1 shows a mapping of these barriers across the different sectors discussed in

sections 2.1-2.4. Some constrains are recognised as representing more than one

category and were therefore assigned to areas of overlap. Initially participants

assigned their own barriers to these categories, but Tyndall representatives then

allocated individual barriers to the relevant collated groupings, removed any

duplication or disparity and in this process some barriers were reassigned to other

classification sectors.

Structural

Interaction

Market Performance

Lack of pipe infrastructure

Lack of market interest

Production constraints

Ageing equipment

Reliability of supply (long

term)

Capital costLocation

Paying for infrastructure

Policy incentives

Policy inconsistency

Cost to process &

supply

Performance/quality

Risk

Alternative internal use

Suiting end users

Communication awareness

Technology risk

Corporate strategy

Access to capital

Lack of return

Figure 1: Map of barriers to low grade heat use.

As can be seen from Figure 1 a number of barriers are placed at the intersection of

two or more categories. “Risk” was seen to be a barrier common to all four categories

and therefore centrally placed, although it should be noted that this covers a wide

variety of different types of risks and an alternative approach would be to subdivide

the barrier into different types of risk. Tyndall Centre have subsequently highlighted

the linkages between individual barriers by adding arrows to join barriers which may

have a direct impact on each other. This serves to illustrate the interconnected nature

of many of these barriers and draws attention to how sometime addressing connected

barriers may be an effective way of realizing progress with adjacent barriers. This

can be particularly effective if the connected barrier is upstream of the one being

addressed or, in some cases the most efficient results may be achieved by addressing

the most highly linked barriers, which will realize multiple impacts.

3.3 Ranking of barriers

Figure 2 shows how 25 of the participants at the workshop (note: some who had

contributed to the earlier barrier identification had left by this stage) ranked the

importance of the collated barriers identified above and how important they

considered it to be that the PROTEM network address these barriers.

Summary of Ranking of Non-technical Barriers identified by

Attendents of Pro-Tem meeting.

0

1

2

3

4

5

6

7

8

9

10

Lack

of p

ipes

/infra

stru

ctur

e

Infra

stru

ctur

e fin

ancial s

uppo

rt

Lack

of i

nves

tmen

t ret

urn

Lack

of m

arke

t int

eres

t

Policy in

cent

ives

Cos

ts to

pro

cess

& s

uppl

y

Price

of e

nerg

y/ca

rbon

Acc

ess to

cap

ital

Policy in

cons

iste

ncy

Cor

pora

te cap

acity

& s

trate

gy

Com

mun

icatio

ns &

awar

enes

s

Suita

ble

end

user

s

Techn

olog

y an

d pe

rform

ance

risk

Reliabi

lity

of lo

ng te

rm s

uppl

y

Perfo

rman

ce/q

uality

Agein

g eq

uipm

ent

Alte

rnat

ive

inte

rnal u

se

Risk

Cap

itla

cost

Loca

tion

No

. o

f in

div

idu

al v

ote

s

Important barrier

Important barrier forPROTEM to address

Figure 2: Ranking of barriers to low grade heat use.

In general terms, (lack of) financial support, capital costs and the problems associated

with location were considered the main impediments to low grade heat use. The lack

of communication and awareness, the difficulty in finding suitable end users, and the

risks associated new technology are seen as being of greatest relevance to the

PROTEM network.

4 Detailed discussions of key barriers

Based on the results described in the previous section, the meeting then moved into

discussion groups to address three of the key issues: 1) technology and performance

risk, 2) communication or user-based barriers and 3) finance and fiscal incentives.

4.1 Discussion group on technology and performance risk

The industrialists within this group reaffirmed the importance of proving the efficacy

of any new technology before adoption. This included a clear indication on timescales

(e.g. during shutdowns) involved and assurances that any technology would behave

predictably and perform within requirements. Equally (if not more) significant were

concerns regarding how existing processes would be affected by any new technology

or process modification. The group was reminded of the margins involved in many

installations and clarified that within industry there is little tolerance of modifications

that could impact any existing process operation.

In relation to low grade heat processing it was mentioned that many modern industrial

processes are configured such that the continuous rejection of heat is vital in order for

the process to maintain in operation. This represented a very serious concern which

was not highlighted previously, indeed the prospect of not being able to reject heat

and thereby interfering with process operation would be seen as a significant risk by

plant managers. Leading on from this, the balance of risks and rewards was discussed.

It was the general view that the recovery of low grade represented significant risks

(such as discussed in the previous point) and that the perceived rewards for modifying

any process to improve efficiency are relatively small.

Following the above point it became clear that before any modification can be put into

operation, there is a manifest need to establish if the process can be reversed (i.e.

“Can we switch it off if it doesn’t work?”). The security of knowing that a previous

(and proven) configuration can be returned to with relative ease, was considered by

the group to be a important prerequisite to process modification. Specific examples

were then discussed. It was pointed out that the Organic Rankine Cycle had the

benefits of allowing for a modular design which could be removed without

significantly impacting on process integrity. The group was asked whether any risk-

sharing mechanisms would be appropriate for addressing this concern. While some

participants would consider a consortium based approach with financial risk sharing,

it was generally regarded as unfeasible as the financial benefits were insufficient to

justify accepting such a risk, even collectively.

The discussion branched into the advantages and disadvantages of process

optimisation. Participants generally felt the need to include a caveat when discussing

the integration of systems in a bid to increase or optimise process efficiency. An

adaptable process which allows different elements to be slotted in and out was clearly

the preferred option. This was reaffirmed by another participant who stated (via

email) that any equipment required must not reduce the operating capabilities of the

industrial processes it becomes a part of. However the participant accepted that most

opportunities will be in modifying existing operations. The heat recovery equipment

must therefore be flexible enough in application to work with a wide range of existing

process configurations.

Timescales were discussed briefly. New ideas needed to be introduced gradually,

which contrasts with the quick decisions that appear necessary in order for

commercial success. However, the respondents felt that larger companies require

assurances (particularly for investors) that their company is in “safe hands.” This

meant incremental change and minimizing business risk. In reference to some of the

earlier points, ‘build, own, operate’ was considered a suitable mechanism for risk

sharing for the sort of plant described which allows process elements to installed and

removed if necessary. Finally it was pointed out that it was important to first build

confidence at small scales.

4.2 Discussion group on communication and user-based barriers

This discussion began by stating the need for a clearer indication on who will (or can)

lead on establishing infrastructure for low grade heat use. This may include the

division of responsibility between the generator and users of low grade heat such as

areas supplied with low grade heat. The potential role of the user was reinforced as

industry will be unlikely to act without external impetus. (It was agreed that some

form of public funding would likely be necessary). Some participants felt that return

on investment remains the elephant in the room. Companies are very unlikely to

engage in a process that is not profitable. This needs to be made clear to the

proponents of low grade heat recovery. Concurrently companies need to be made

aware of any additional benefits; quite separate from monetary remuneration such as

improved public relations etc…This may be helped by highlighting, for example, how

district heating based on low grade heat use has been applied in other countries more

economically than the UK. (Although one participant stated that this is only possible

through significant state intervention and relates to areas in which gas is not as readily

available).

In terms of end users it was agreed that that no-one wants to move an estate near a

factory. In that regard, making effective use of low grade heat cannot be done

retroactively. It was agreed that it should be discussed at the earliest planning stages,

involving all stakeholders or not at all. It was felt that as it stands, low grade heat has

no suitable end users in close proximity and there is no incentive to change that. It

was strongly agreed that integrated thinking was essential, as an ad-hoc approach will

be counter productive. For example it was felt that there was a need to look beyond

the obvious user. For example certain sites in Europe pump CO2 into nearby

glasshouse installations. One participant felt that perhaps the barriers had been

overstated and that there was a need for clearer resolution that these problems remain

engineering problems and can be solved if sufficient support or demand is available.

With regards to the inequality between supply and demand, there was again

reasonable consensus that one of the main issues remains geographical disparity

between sources and users. Low grade heat represents an ample supply for which

there is no demand. Therefore finding users and matching them to a suitable supply is

paramount. Potential users need to be made aware of the existence of low grade heat

and its benefits. This was seen as a problem that is best tacked on a regional basis. It

was agreed that there is a need to identify which processes have the optimal capacity

to supply low grade heat and market towards these areas. In that regard energy

mapping is crucial. Some of the participants stated how low grade heat may be

perceived by industry as “unglamorous”, not particularly modern or easily

marketable. Another participant, communicating via email, felt that some industries

were not given sufficient recognition. Petrochemical and oil refinery complexes, for

example, already seek to utilise as much low-grade heat internally as is economically

feasible. This participant suggested that best practice for designing such processes is

essentially to design the whole system (including the hot initial step and colder later

steps) so that it is in balance, allowing as much heat to be recovered as practically

possible. In particular, academic or regulatory bodies need to appreciate that energy

suppliers are generally conservative. There was an accepted need for constructing

demonstration plants along with guarantees for both suppliers and users. This was

suggested that the costs associated with such a project may be supplemented by the

issuing of green certificates, which may alleviate industrial concerns regarding

process disruptions.

One of the participants felt that the development of suitable infrastructure should be

the responsibility of government, much like the maintenance of roads. The participant

continued that the presence of an under-exploited yet available resource constitutes a

market failure. The responsibility for addressing a market failure ultimately rests with

the government. Therefore the government needs to be made aware of issues at hand

and how it could intervene. However it was felt that government intervention could

only be practical on a large scale and can assist in fostering significant centralized

demand such as hospitals, universities etc This necessitates proper planning and

zoning as well as considering low grade heat at the earliest design stage. It was

accepted that there will always be incentives for big business to locate in a particular

area, and if the use of low grade heat can be placed in the context of other potential

benefits, it may increase its acceptability within the industry. The potential for low

grade heat use will, of course, vary amongst different industries. It was suggested that

while district heating may be seen by generation companies as being “high cost”, but

also “low risk” if properly managed, supply confidence must be maintained with in-

built redundancies.

4.3 Discussion group on finance and incentives

The discussion revolved around the pros and cons of regulatory versus voluntary

measures to encourage process energy efficiency and much of what is reported below

was said by two participants within the group (one academic and one from industry).

The participant from an industrial background argued in favour of voluntary measures

such as capital write downs in the first year as opposed to the existing 20% applied

annually and only to specified technologies. A more general incentive for thermal

processing efficiency was suggested, incorporating carbon emissions. For example it

may be useful to derive incentives for co-location, including making it an intrinsic

part of planning.

The participant from an academic background argued for penalties and regulation as

well as incentives. This included taxes which, it was felt, are currently inadequate.

The attempt to reduce the pay-back period (and aid cost-effectiveness) was

highlighted. A payback period for return of investment of five years is considered by

industry to be too long, in many cases two years is expected. There is an element of

tension with the need to remain internationally competitive. Another contributor

(communicating via email) agreed that investment return was an important issue. It

was suggested that even when oil and gas prices rise dramatically the return on

investment estimate will not actually change accordingly. One of the reasons

suggested was that when energy prices increase, so do steel and concrete prices, since

energy is a major constituent of their prices. Other participants felt that there is ample

existing regulation e.g. EU Emission Trading Scheme, climate change levy, etc.

Therefore a further tax is not needed but further persuasion or if necessary “arm-

twisting” should be considered. Another participant agreed that manipulating

incentives can work, but it is important to get them right. One of the potential efforts

of the PROTEM network could be in ensuring that regulatory bodies properly

understand the issues surrounding low grade heat. Proper awareness of such issues

may assist voluntary regulation in playing a part in addressing barriers. Returning to

investment, the participant replying through email stated that a five year payback

represents a 20% rate of return. (Although this has been questioned as it doesn't

subtract the cost of capital, which most companies would do). Energy projects with

similar rates of return are not being invested in, while for comparable rates,

acquisitions are being invested in that may not perform as well as expected, between

10-15% for example. This was seen an indictment of the quality and numeracy of

some firms. For that reason it was suggested that firms should be required to declare

their investment returns. This will allow for different standards for different types of

project. However differences between firms must also be acknowledged. Scale, for

example, is an issue as for some companies; a five year return may be too long. This

may not be the case for other firms.

It was felt that ‘short-termism’ pervades across society, including government

authorities e.g. ISO accreditation can mean nothing in terms of actual quality; but is

merely seen as perfunctory box-ticking, which promotes “carbon badge hunting”.

Generally, an associated carbon footprint is not taken into account within the payback

calculations of energy projects. Another participant bemoaned the apparent obsession

with “flashy fashionable gizmos” over more grounded approaches such as proper

insulation, stating that a well-located photovoltaic in the UK requires over a decade to

pay back its carbon debt. For that reason it was felt there was a strong need to

monetize carbon savings – emission trading schemes makes these savings saleable,

despite increasing energy costs by 10-20%. Yet typically this is not accounted for.

The potential issue of firms leaving the country if taxes are tightened was also raised.

Towards the end of the discussion it was suggested that energy projects are generally

not seen as desirable for individual’s careers. This was agreed but wider support could

formalise a mandatory requirement for a declaration of rates of return. A mandatory

declaration might lead to greater awareness amongst shareholders and provide weight

to the arguments of non-governmental organisations pressuring for change. Although

another participant issued a caveat on putting too much faith on such estimates,

stating that companies set rate of return benchmarks essentially to prioritise projects

as opposed to a belief that the calculations are accurate. A figure somewhere in the

teens is likely to allow projects proceed to consume the capital they can practically

afford. This suggests that projects to save energy rarely compete economically with

projects which produce material commodities. This was agreed by another participant

stating that due to increasing global competition the consequences of not satisfying

the objectives of any investment project would be significant. The development of

any new heat recovery process must therefore include steps which identify existing

capabilities and reduce potential risks. While the potential energy recovery

opportunities of low grade heat are large, the value of accessing this is unlikely to be

significant. Given the likely payback criteria which will be applied (as suggested

earlier in this discussion) keeping capital costs low must be a major development

objective.

5 Discussion

As can be seen from Table 1, the perceived barriers to the utilisation of low grade heat

are varied and involve numerous factors. Many of the points raised are duplicates and

hence are aggregated into consolidated categories. Quantitatively, the issues of cost,

location and return on investment were seen to generate the most responses. Needless

to say an individual participant’s background will determine what barriers are chosen

or deemed to be significant. However failing to take cognisance of the individual raw

responses may ignore some potentially important and relevant points. For example,

the collated category “Performance/quality” incorporates such individual elements as

the stream temperature, installation size as well as potential corrosion. While these

may be anticipated, other barriers such as the need for new technologies to be proved

offline (allowing effective installation during shutdown periods) may not be readily

apparent to some observers. Correspondingly, a small number of responses within a

category should not be seen as equating to an inherent lack of significance. For

example, “Access to capital” is seen to represent two ‘raw’ responses within Table 1.

However the importance of gaining investment for the implementing of any process

adaptation is unlikely to be disputed by industrialists.

The mapping of barriers should be provided with a caveat as the exercise is inherently

subjective. However proposing reasonable linkages between individual barriers may

assist in illustrating that any individual barrier must not be viewed in isolation and has

an associated root-cause and effect. In other words, no individual barrier was seen as

being unrelated to all others, and indeed the linkages suggested should not be seen as

being exhaustive. As can be seen from Figure 1, some barriers are linked directly to

other barriers within the same category, whereas others, such as location, will impact

upon barriers within different categories. It is worth noting that some of the linkages

appear to be circular. For example, the difficulty in raising capital will reduce the

likelihood of funding for new infrastructure, which in turn may be seen as a constraint

on production and hence reduce the performance of the installation. This may been

seen as an additional risk and reduce the possible of securing capital in the future.

This of course is just one example but it does demonstrate how attempting to address

one barrier may, in-turn, have an effect on others. Alternatively addressing a number

of key barriers in tandem (such as communication and corporate strategy) may be

more effective than addressing a number of disparate barriers individually.

Neither the distribution of individual barriers within collated groupings, nor the extent

of linkage between individual barriers should be seen as an incontestable metric for

the significance of any given constraint (although cross sectional linkages could

arguably be seen as reflecting importance.)

Figure 3 summarizes the results of the workshop prioritization activities.. The

grouping “barrier” in yellow shows the distribution of the initial responses of

participants across the different barrier categories. This represents a sum of

individual perspectives on which are the significant barriers to address. Location is

seen as most significant, followed by “costs to process & supply” and then

“investment return”.

Distribution of Responses to Barrier Identification and Ranking.

0%

5%

10%

15%

20%

25%

30%

35%

40%

Lack

of p

ipes/in

frast

ructure

Infra

structu

re fi

nancia

l supp

ort

Lack o

f inv

estm

ent re

turn

Lack o

f mark

et inte

rest

Policy

ince

ntives

Costs to

pro

cess &

suppl

y

Price o

f energ

y/carb

on

Access

to ca

p ital

Policy

inco

nsist

ency

Corpora

te c

apacit

y & st

rate

gy

Com

municat

ions & a

ware

ness

Suita

ble e

nd u

sers

Techno

logy a

nd p

erfo

rmanc

e risk

Reliabilit

y of l

ong te

rm s

upply

Perform

ance/

qua lity

Age ing e

quipment

Altern

ative

inte

rnal

use Risk

Cap

itla c

ost

Locatio

n

Co

ntr

ibu

tio

n o

f in

div

idu

al

ba

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ov

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ll r

es

po

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es

Important barrier

Barrier for PROTEM to address

Barrier

Figure 3: Summary of initial identification of barriers, prioritisation for the

industry and prioritization for PROTEM

When participants were able to view all the collated priorities and asked to prioritize

across these (but with no indication given to the participants of how many people had

identified each barrier) “Infrastructure and financial support” was rated by far the

most significant followed by capital cost and location. There are many obvious links

between these barriers, since capital costs related to location issues could often by

expended on infrastructure.

When participants were asked to prioritize what PROTEM should address the top 3

responses were:

• Communications & awareness

• Suitable end users

• Technology and performance risk

The first seems to be an obvious role of a network, but the emphasis appeared to be on

communication between different stakeholder groups and to address this effectively it

is likely that PROTEM would have to significantly expand its stakeholder base

(which is presently focused on industrialists and academics) to include local

authorities, building services providers, energy service companies, social housing

providers, regional development agencies etc. This role is echoed in the second

priority of “suitable end users”. This could be seen as possibly linked to a perceived

role for PROTEM in matching heat supply and demand, vendors and customers or

just an anticipation that the contacts and information database embedded within such

a network would be useful in addressing geographical matching issues. While the

EPSRC thermal management project linked to PROTEM will carry out some mapping

of heat loads that may be useful to industrial participants, identifying end users did

not seem to be a key original objective of the PROTEM network. The third item on

technology and performance risk is something that could be addressed by PROTEM

in future meetings and events. Other areas that were considered significant for

PROTEM and might be areas to explore at future meetings were “Policy Incentives”

and “Risk”.

At the workshop, three barrier groupings were identified as being the most pertinent

overall and would therefore benefit from closer examination by stakeholders in

breakaway discussion groups. These were:

• Technology and performance risk

• Communication or user-based barriers

• Finance or fiscal incentives

One of the main points that pervaded the discussion amongst the breakout groups was

the perceived need for greater candour and clarity, by all stakeholders, in discussing

low grade heat.

5.1 Technology and performance risk

Within the discussion on technology it became clear that industry requires assurances

that low grade heat can be recovered without becoming detrimental to the process

itself. When dealing with industrialists, proponents of low grade heat may not be

sufficiently aware of the need for process predictability and that may in fact

necessitate the emission of low grade heat. The point that significant process changes

will by necessity take time is an important one and its inclusion within the corporate

strategy barrier in Table 1, may be understating its importance. This discussion in

essence relates to the risks perceived by the supplier of low grade heat, which perhaps

are not clarified, and (as seen in Figure 1) intersects with all barrier categories. Indeed

it seems that the perception of multiple different types of risks by stakeholders is in

fact related to this perceived need for greater candour and clarity. This would

obviously be linked to the issue of communication particularly between the process

industries and heat customers (including any intermediaries.)

5.2 Communication and awareness

The discussion regarding communication followed on from this by expressing a need

for clarification of the division of responsibility within low grade heat use. There was

a need for explicit guidance on who could lead implementation of such a change. In

this case industry was seen to be reactive and requiring greater clarity from potential

users of low grade heat as well as regulatory bodies. The statement that the lack of

low grade heat utilisation represents a market failure is a serious indictment, implying

a fundamental flaw within the industrial sector. Because of the difficulty in matching

low grade heat supply to demand, the need to consider it in the earliest planning

stages was made clear. As with the issue of time, the lack of a long term corporate

view was considered an element of the corporate strategy barrier, especially as it

appears that a purely fiscal incentive in isolation may not be effective.

5.3 Financial and fiscal incentives

The point above about fiscal incentives was also raised within the third discussion

group where the necessity of further involuntary penalties was debated or whether

greater persuasion, even if in the form of “arm-twisting”, would suffice. The need for

greater openness particularly in terms of declaring the expected and actual return on

investment was seen as a potential means of making incentives more effective. Many

non-energy projects fall below the targeted return on investment, which may suggest

that comparing an energy recovery project against an “ideal” target may represent an

unfair comparison. As with the other discussion groups the issue of time or lack of

planning, referred to as “short-termism” was seen as a significant barrier to both the

use of incentives (which may simply result in “box-ticking”) and the recovery of low

grade in general. It is interesting that the issue of time and a lack of planning were

highlighted within each discussion group but the collated indicator grouping, namely

corporate strategy, was not seen as being significant either in general or specifically in

relation to PROTEM. This should not be seen as a reflection of the individual choices

but rather a consequence of the aggregation or classification, which is in itself

necessary to succinctly convey the underlying trends.

6 Conclusions

Based on the information received within the workshop it is clear economic viability

is essential for industrialists and is influenced by numerous factors. These barriers are

sometimes cyclical which may prove a significant impediment if left unanswered but

have the potential for substantial progress if the “vicious circle” can be effectively

broken. The workshop did not extend to considering the implications or effectiveness

of particular measures to address some barriers e.g. carbon tax or fiscal incentives.

This is something that could be considered further in the project, particularly once

carbon balance calculations have been completed for different technologies/industries.

What is apparent is the need for honest and clear engagement amongst all

stakeholders at the earliest juncture of the planning stage with acknowledgement of

the industrial concerns related to return on investment and process stability alongside

adequate recognition of the greenhouse gas and energy balance benefits. Risk was

identified as playing a key role in many different ways in these discussions and to

some extent all of the barriers discussed represent a facet of the risk involved in

undertaking any change. Until the relationship between risk and reward (i.e. cost and

benefit) is changed, low grade heat will remain an abundant but under used

commodity.