Waste heat recovery: heat exchanger economics?

Industrial heat comprises around 20% of global CO2 emissions, but around half of all the heat generated may ultimately be wasted. Hence, this model simplifies the economics of waste heat recovery using a heat exchanger from an industrial facility, based on the engineering equations of heat exchange and recent technical papers.

Installing a heat exchanger to capture waste heat will typically earn a 6% IRR under our base case assumptions in the US, where gas prices are a low $3/mcf.

IRRs are uplifted to above 20%, either if we assume European gas prices (around $6/mcf) or a $50/ton CO2 price. IRRs can reach 40% if we assume both.

High IRRs may be necessary to unlock waste heat recovery. First, each project is complex, with large amounts of engineering, and implementation disrupts operations at a plant.

Second, although IRRs are high, NPVs are low, as many projects will be small-scale. For example, the NPV10 may be less than $1M on a single, small heat exchanger project, even if it achieves a 40% IRR.

Other research into waste heat recovery covers Rankine Engines, Absorption Chillers and Insulation Materials.

The model contains a variation looking at waste heat recovery in gas-fired facilities, and another variation looking at waste-heat recovery in coal-fired facilities.

Our top 4 conclusions of waste heat capture are highlighted in the article sent out to our distribution list here.

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