Renewable energy in industry: three steps to reduce costs and emissions

Renewable energy sources like solar thermal should be part of any factory

Transition to renewable energy is an opportunity, a necessity and, in an increasing number of countries, an obligation for the industry.

Clean technologies are a vast universe and the range of available innovations includes solutions to supply water, gas, insulation, drainage and, of course, energy needs. There are many options for domestic use, for the service sector and even for industrial processes.

To meet the energy demand, one of the most important, but little exploited, renewable resources is solar thermal energy. As heat consumption represents a large part of the energy demand, integrating solar thermal into industrial processes offers a path towards sustainable and cost-effective operations, an important role in the energy transition.

Three steps to reduce costs and emissions in industry

1. Identify the area with the greatest potential for decarbonization.

To drastically reduce costs and carbon emissions in companies in the industrial sector, the key is to focus on heat demand. Globally, about half of energy use is heat (#HeatIsHalf!) and, of that heat, 53% of final consumption is used in industrial processes, according to data from the International Energy Agency (IEA).

Thermal energy (heat) is essential for a wide range of industrial processes: from boiling, pasteurization, sterilization, material transformation processes, moving turbines or chemical reactions that require high temperatures.

We do have the technology to generate it from renewable sources such as solar thermal, geothermal or biomass. However, gas continues to be the main fuel used and heat generation from renewable sources has grown only 2.6% in a decade, far from what is needed to reduce the consequences of climate change.

Although electricity consumption can also be covered by renewable energy sources such as solar (photovoltaic), heat is the area with the greatest potential for decarbonization.

2. Optimize and make processes more efficient

Before considering to invest in clean technologies, companies must first identify improvement areas in order to reduce energy consumption. Iván Acosta Pazmiño, specialist in energy generation projects, Senior Project Manager at MG Sustainable Engineering in Sweden and associate researcher of the Energy and Climate Change Group of the Tecnológico de Monterrey, explained this three-step process:

1. Energy sufficiency: an important step in the energy transition is, first, the reduction of energy consumption to the maximum based on each user.

2. Energy efficiency: evaluate devices in order to choose those that allow the most efficient energy consumption.

3. Energy generation with renewables: once the previous steps have been completed, it is then established how to supply consumption with renewables.

First we seek to reduce consumption in terms of the user - energy efficiency - and then the device part, what we can change - energy efficiency, and until that moment, you question how to do it with renewables.
Iván Acosta Pazmiño
Senior Project Manager at MG Sustainable Engineering

3. Integrate solar heating systems to industrial processes

Having identified the actual energy demand for heat-requiring processes, the next step is to integrate renewable energy sources to supply it, if possible, in its totality. The question lies in how to achieve this.

This shift must come from all fronts. Strong efforts are clearly required to reach an ideal share and overcome the trend of the last decade. To achieve this, industrial solar heating systems are a great alternative due to their efficiency, versatility, smaller space required for installation (compared to photovoltaic systems) and their great contribution to reduce emissions.

Solar thermal collectors use sunlight to directly generate heat. They are capable of supplying temperatures of up to 400°C to multiple processes, meeting many industrial needs, besides uses such as sanitary hot water and space heating. Currently, there are 68 suppliers of turnkey SHIP plants worldwide, 74% of them produce their own collector technology in-house or on-site.

A major challenge is the lack of knowledge about the benefits of solar thermal systems, which implies a slow adoption. Therefore, it is imperative to highlight the following points:

  • Customized configuration:each system is tailored to the company’s needs. Requirements are assessed and custom options are offered. For example, solar heating technologies range from flat-plate or vacuum tube collectors, which are ideal for low-temperature processes, to concentrating solar collectors which can generate steam.
  • Savings and investments to cover the demand: the financial cost is one of companies’ biggest concerns, it is important for them to know that it is possible to finance the entire system by deducting the cost of the investment, obtaining governmental grants, or buying the energy through a contracting scheme (Heat Purchase Agreement, HPA).
  • Durability: the useful life of the systems is up to 25 years and their maintenance requirements are relatively low.

Solar thermal’s role in decarbonizing industry

Solar thermal’s role in the decarbonization of the sector is becoming more relevant as more industries discover the potential of generating heat on-site and directly with solar energy. The most recent Solar Heat Worldwide report from the International Energy Agency Solar Heating and Cooling Program (IEA SHC) states that there are at least 1,209 solar heating systems installed in the industrial sector, mainly in the food, agricultural and chemical industries.

The installed capacity of such systems has tripled in the last two years with the largest solar thermal system installed in the industry in 2023 at Heineken in Seville with 30 MW of capacity.

Connecting the dots to industrial decarbonization

The good news is that industrial decarbonization is possible, and the even better news is that there is more than one way to achieve it.
 

We are now living three moments defining the pathways to industrial decarbonization: need, share and availability. Each of these moments deserves an analysis; however, how they converge gives us the key to tie up the dots and be able to observe the complete scenario in which industrial decarbonization is developing.

These moments respond to the motivations, the responsibility for greenhouse gas emissions and the feasibility of an energy transition in the sector. However, structuring the path to be taken is left to the context defined by public policies, regulations and access to benefits and technology. This gives us as a wide range of possibilities, where companies can make strategic, informed and practical decisions.

The following explains what these three moments are, their challenges and how to create that scenario of energy transition in the industrial sector where solar thermal energy plays a very important role in the path.

Necessity: new hopes and new rules for industry

 

Why decarbonize the industrial sector?  In 2022, the industrial sector was responsible for a quarter of global carbon dioxide emissions. It is not without reason that, albeit slowly, more and more pressure is coming from different sides to shift industry away from fossil fuels.

However, the motivation to join targets for decarbonization can come from immediate factors that make this process a necessity:

  1. Investors: these often have climate or decarbonization goals set out in their ESG (environmental, social and governance criteria). To accomplish these goals, they put pressure on the entities under their investment.
  2. Public entities: they establish local, regional or international regulations, in some cases forcing the disclosure of emissions. For example, the NDCs of each country or the European Union regulations that contemplate in their goals the decarbonization of the industry.
  3. The market: the decarbonization of the industry may also generate a boost in profits or may position companies in markets where they are not, with the benefit of staying where they already are.

These three factors feedback on each other and can strongly guide the industry’s decisions in its need to decarbonize its processes.

Share: #HeatIsHalf and the case of the energy transition

 
In the race towards zero emissions, it is urgent to address the problems at the source. The data come back again and again to confirm that a large part of the energy transition must be gestated from thermal energy.
 
The supply of electricity has a fair share of 30% from renewable sources. However, the overall need accounts for less than one third of the total final energy consumption. 
"The transition is more complex than just changing the fuel, it's changing the energy system, and with changing the system, it's changing the energy supply and demand as well."
Rana Adib
Directora Ejecutiva de REN21

“The transition is not happening fast enough, the demand for energy is growing faster than the adoption of renewables. There are continued investments and subsidies for fossil fuels that prevent renewable energy from coming” says Rana in a podcast of The smarter E.

In addition to this, Rana also mentioned that another challenge is concentration. First, of technology, which continues to focus on developing more photovoltaics; and, second, geographically, leaving aside regions such as Africa, Asia – not including China, the Middle East and Latin America.

Availability: options for decarbonizing industry

Proportionally, the industrial sector has a significant impact on final energy consumption. Of that total thermal energy use, 53% is used for industrial processes, 44% in buildings to heat water and spaces, and 3% for agriculture, according to 2023 data from the International Energy Agency (IEA). In other words, proportionally, a quarter of all energy end use is purely in the hands of the industrial sector.

Specifically, in the industrial sector, the IEA believes that improvements towards decarbonization have been “modest” and “very slow,” largely due to the low development and implementation of new technologies. In the Zero Emissions scenarios for 2050, they consider technologies that have been proven to be effective but are not yet commercially available.

Here is where visibility plays a crucial role. According to the report Solar Heat Worldwide 2024 from the IEA SHC, there are at least 1,209 plants that deliver Solar Heat for Industrial Processes (SHIP) at low, medium and high temperature levels around the world.  

A survey that is carried out annually, monitors the development of this market segment. The results from the 2023 survey, show that there are qualified suppliers with a remarkable track of systems installed in three continents: Asia, Europe and America.

There are multiple types of solar thermal technologies suitable for the specific needs of the factories. The survey also indicates that most of the suppliers produce the collectors in-house or assembly them on-site to deliver tailored-made clean heat solutions to clients from several industrial sectors around the world.

The thread that connects all: public policies and the market

We have already noted the proportional weight that thermal energy has in energy consumption, does this reflect in the world’s policies?

No, in REN21’s most recent report on the global status of renewables in 2024, of the 182 countries with renewable energy targets, only 43 have targets for heating and cooling. Meeting those targets will be the result of a series of guidelines and public policies that incentivize the inclusion of renewable technologies in the industry.

  • Public policies and the market are the context which shape the scenario for the industry to achieve its decarbonization. And in the need to move away from fossil fuels, transforming the origin of thermal energy, given its proportion, is a wise decision. The strategy lies in the ability to manage the availability of technology within the context that the market and policies provide.

Some examples of policies and regulations:

  • The case of CBAM in the European Union: the EU approved the Carbon Border Adjustment Mechanism, a tax in which the importer will have to declare the emissions linked to the production processes and, if they exceed the European standard, will have to purchase an “emissions certificate” with the EU CO2 price. If there is a carbon market in the exporting country, it will only pay the difference.
  • Nearshoring in Mexico: In recent years in Mexico, the advance of nearshoring has slowed down because the country does not provide enough energy from renewable sources. Some industries have not been able to locate in Mexico because they could not meet the percentage of clean energy established in their goals.
  • U.S. tax credits: The extension of clean energy tax credits that support the development of solar and wind energy now includes an additional 10% credit for the inclusion of U.S.-made materials.

Embracing solar thermal in the path of decarbonizing the industry

As we connect the dots of industrial decarbonization, it becomes clear that proactive steps are essential. Solar thermal technologies offer a viable and immediate solution to the need for decarbonization. Industries are urged to take advantage of the technological advancements and economic incentives available today. By integrating solar heating and cooling systems into their operations, businesses can significantly cut their carbon footprint and enhance their sustainability credentials. Let’s work together—industries, policymakers, and consumers—to accelerate the adoption of solar thermal energy and create a sustainable future for all.
Solar process heat system. Photo: Módulo Solar

Author: Laura Yaniz Estrada, Communications Consultant.