ERM Energetics Exchange
Follow developments in energy and climate risk with leading Australian consultancy ERM Energetics. Our podcast series features conversations between experts who advise Australia’s largest businesses and all levels of government Energetics develops market leading approaches to climate and energy risk management for ASX200 and all levels of government. For more information visit our website www.energetics.com.au
ERM Energetics Exchange
Episode 18: The pursuit of net zero emissions – developments in energy technologies
Our guest for this podcast is Jarrod Leak, CEO of the Australian Alliance for Energy Productivity (A2EP). Jarrod joins Energetics’ Roger Horwood, arguably one of Australia’s most experienced energy strategists who has consulted across all sectors of the economy. At a time when energy markets are changing and business commitments to decarbonise are growing, Jarrod and Roger discuss developments in energy technologies that support electrification, demand management, bio energy sources and, increasingly, hydrogen and decentralised manufacturing.
Featuring: Jarrod Leak, CEO, A2EP and Roger Horwood, Associate, Energetics
Note: The information and commentary in this podcast is of a general nature only and does not take into account the objectives, financial situation or needs of any particular individual or business. Listeners should not rely upon the content in this podcast without first seeking advice from a professional.
Welcome to the energetics exchange podcast conversations with energy and climate experts. Please note that the information and commentary in this podcast is of a general nature only, and does not take into account the objectives, financial situation, or needs of any particular individual or business business should not rely on the content in this podcast without first seeking advice from a professional,
Speaker 2:Hello, everyone, and welcome to the energetics podcast series on math brain. I'd like to begin the podcast by acknowledging and paying my respects to all first nations people or for traditional owners of the land on which we meet today. Aaron Sydney, I particularly pay my respects to elders past and present today. I will believe in a discussion on developments in the world of energy technologies and what they offer Australian business, especially for those with planning underway to make zero emissions commitments. Joining me today is Jared Lake. Jared is the chief executive officer of the Australian Alliance, which is an independent not-for-profit coalition of leaders, business, government research disciplines who are working to double Australia's energy productivity before rain to EAP. He had a long career with Swedish engineering company, but has a great depth of experience and expertise in implementing innovative technology-based sustainable energy productivity solutions. Hello, Jared, thank you for joining us today. Thanks Matt. Great to start off by acknowledging the traditional owners, which I'm podcasting from the Darren Marichal people, I would also like to welcome the 30th energy advisor with more than 30 years experience advising Australia. If we could start with you, can you set the scene and share your insights into the macro level trends in energy management for businesses operating in the industrial and commercial sectors in Australia? We see this is a quite a time of change within energy markets. The, the emergence of, uh, more de-carbonization commitments from, uh, end-users mainly FMCG, uh, the emergence of cheap renewables solar wind batteries, especially at that price level versus gas and the emergence of, uh, industry 4.0 where we've seen the, the cost of connectivity coming down dramatically is having a, quite a profound impact on the way energy is, is used and consumed and organized. The main ones where that we're seeing that impact is electrification and demand management, bioenergy, hydrogen, and decentralized manufacturing with circular economy and value chains in there as well. So it's, it's certainly quite a time of change and yeah, technologies have been that have been around for many years and are coming to the front
Speaker 3:Because of these changes.
Speaker 2:Great. Roger given a lot of energy efficiency and energy productivity programs and conducted feasibility studies to help businesses understand the opportunity presented by these emerging technologies. What have you seen? What has succeeded and what are some of the barriers?
Speaker 4:Thanks, Matt. I think really the main thing that's drives businesses is costs and all of the projects that we have only our clients are looking for, how much will it improve our costs or improve our productivity, which in the long run is the amount of money they're gonna make in their business. Uh, regulations and standards have been to some extent, been barriers to some technologies getting into the market, but real and the other is, um, they're getting easier. It's getting easier to replace technology with something that's already been approved. Um, so you need to look at that sort of thing. Overall, the, the change is coming. It's unstoppable businesses, which don't move, there'll be overtaken by competitors. Uh, the ne get into advanced manufacturing and advanced controls. All of those areas, it's paramount. If we're going to remain competitive with the rest of the world and we need to de-risk our projects. So projects are seen as, because there isn't enough information or is that, that is standing. Now, people will look at those projects. Uh, so that's another, education's going to be important there, and there's gotta be, uh, and there is quite a number of government funding programs that are available, the advanced manufacturing fund and modernization fund sitting under the lease that, um, is in terms of, uh, energy saving certificates in new South Wales. There's Vincent scheme in Victoria. And there's ways that you can actually save up to 50% of the project costs. Um, some people look at the, the actual, the, um, the carbon credits approach. Uh, but generally that's not quite as, as big a benefit to your project, but there's, what's worth having a look at
Speaker 2:An interesting term at the start of this conversation that, um, energy productivity and energy efficiency. How do you see the difference between those two terms and where does, where do they use interchangeably within business?
Speaker 3:Normally, you'd say that energy efficiency is say a subset of energy productivity because energy productivity looks at a much wider scope. You know, things like, uh, increasing yield, uh, energy productivity is very much about the value you get out of, out of energy and maximizing that value. I think it should be clear that we shouldn't be afraid to use energy. It creates a lot of wealth, but we need to use it very well and very carefully, very efficiently. So historically energy efficiency has been related to lights and what have you, but it does need to move well beyond that to much more technological sort of developments, um, and energy productivity working, even with energy efficiency for such move ways to move forward, that they do go hand in hand. We certainly that when you start talking about productivity or production, um, it makes the, uh, the energy efficiency case much, much easier to, to get through a business and get approval. Um, the value of extra production is so much more than just saving energy. So when you can link the two and give it a bigger business case, that's when we know that energy productivity projects go ahead. That's when we see a higher value products coming out of the energy used that's when we say de-carbonization as well,
Speaker 4:Energy technologies that are coming along and in fact already are in the marketplace, is this drive towards improving automation, uh, getting more advanced controls, using the cloud to, um, to look at the data and understand how to best manage your business. Uh, areas I think are evolving very quickly and they overlap very strongly into, Hey, you're going to use energy and, um, how, how efficiently you will use it. And in fact, how you can use it to produce more or to make sure that you're running your business as efficient as possible condition is another area that's actually growing rapidly. Uh, the use of, uh, technologies such as heat pumps, uh, such as, um, indirect use of, um, electric boilers that have customer come to me the other day and actually asked for the price of the high voltage electric boiler. Uh, this has been considered, um, the drivers being things like carbon gas emissions, and also that the they're looking towards the future when the cost of electricity may be quite a lot lower than, uh, the fuel sources that they're presently using. The other one along quite strongly is bioenergy, or really the one I've been looking most at is probably in biomass and bio gas projects. Uh, biomass, uh, certainly is a cost-effective way to go to replace, uh, boilers that are running on high cost fuels, things like LBG or diesel or other types of cross fuels. Um, and the bio gas side of things is in the food industry. That's been, um, taken up quite a lot in the last few years, and that's building anaerobic digesters to process the waste that's coming from your plant and creating a guest stream, which is marginally methane, which can be burned in boilers. So, and in fact, in a recent project that I was looking at, it was burned in a gas engines, produce energy, and also the waste energy was then used for, or you say it throughout the plant, you had an overall efficiency of something like 70 to 80%. It's a very high, a very good way of using a renewable source and also using it very efficiently.
Speaker 3:I was going to add to that to heat pumps. Uh, we're certainly seeing some, uh, many, many more favorable cases come out for heat pumps, not just when you're you're versus LPG at 20 or$30 a gig, a but a much lower energy rates as well. Uh, we've done a series of studies with a conjunction with arena, uh, and then we say some, some very favorable results there, especially when there's, there's onsite PV, where they want to use that PV during the day. And so use that to be able to create hot, create hot water, but they may use in the evening or during the night, that's create a very good case for, uh, electrification, uh, using, using heat pumps and start using
Speaker 4:It's actually using a battery, isn't it?
Speaker 3:It is a thermal battery, a battery to 10% of the cost of a lithium ion. It's a, it's a good idea.
Speaker 4:Yeah. Um, so, um, the heat pump projects, I know that we are involved in one of them where it didn't come out quite as cost-effective as we wanted it, but mainly because it was hard to put it, uh, to put the equipment onto the site and the storage that we were just talking about. Jared. So what's, um, one of the, another application of the heat pump that was actually quite successful just as in general terms,
Speaker 3:A couple of the best ones we see is where your heat demand is below that sort of 80, 85 degrees. And you have space for thermal storage. The heat pump technology will typically cost a factor of seven to maybe even 10 times that of a traditional gas burner or a boiler. Uh, so if you're spending that much more on your, on your capital equipment, you need to get much better utilization now is that, you know, instead of, uh, sizing such equipment for peak loads, you need to be able to size it for an average load over say a 24 hour period. And that gives you a much better return on capital there. So that's where we see the best potential, uh, things like standalone advertise. They have a, a quite a high demand for a 65 degree, hot water, and then some 82 degree hot water for sterilization. We also see a very good demand for breweries, uh, their tunnel pasteurizers often operating around 70. So between 1780 degrees water temperature, uh, that's a very good space once again, when we say potential for, uh, pumps, the other one, uh, spending some time on is on aquatic centers. Uh, we think for, uh, natural refrigerants, such as ammonia would be ideal for aquatic centers where most of their heat demand is below 65 degrees. And when sized correctly and allowing for defroster colder conditions, uh, it can go all the way down to a very cold climate, uh, down South that's for sure. So they're probably the main ones we have following and watching and booking yet. There is other things that can make it more difficult because of things like electrical demand, being able to get that enough electricity onto the site and what have you. Um, but there's also a lot of other things that make it much more attractive as well. I mentioned the onsite PV, uh, I mentioned, you know, LPG, if you're switching from that high fuel cost, um, there's a lot of, a lot of factors that come into play here. Um, and, uh, so it does, doesn't it quite a, quite a study to be done to make sure it's the right decision.
Speaker 4:So I'm, I'm sort of thinking that this is, um, leading us down the path that says there's specific instances where pumps and transportation are going to be, um, probable or at least possible ways of going forward to reduce your costs, and also to reduce your carbon emissions since with the fact that you want your electricity coming in, as green as possible. So it might be onsite PV, or it might be from remotely from one of the big wind farms or solar farms. I don't, I'm wondering just how, how far people would go with that type of thinking at the moment. Have you seen any of that, Jared,
Speaker 3:Indeed. It's a case of you, you continue to say, uh, information and signals that that gas price is going to go up. I mean, if we're talk seriously about bringing LNG into, uh, Sydney and into Melbourne, we're obviously talking about getting much higher gas prices as at differential between gas price and electricity price increases. Uh, you'll, you'll just see so much more heading towards electrification. Uh, right now we see very good cases for sort of up to 90, 95 degree heating that's here. And now, uh, we, we suggest within a few years that'll be up to 130, maybe even 160 degrees to say that done economically. Uh, there's, there's certainly a pilot scale testing being done in, uh, Austria and in Japan at the moment up to 160 degrees. Um, so certainly once you get up to that really opened up another magnitude of opportunities. I mentioned before, like aquatic centers and avatars. Once you go to that above a hundred degrees, you start getting into the range of where products are being hooked or dried. And then that really does open up a lot of opportunities there. So, um, probably temperature ones, maybe a few years away, but, uh, you know, we're not talking 10 years away, we're just talking three to five where we'll start seeing them more and more in pilots happening there in Australia. And that'll give you the confidence that people need to move ahead with those
Speaker 4:With a lot of Georgie mentioned a lot of innovation going on overseas. Have you seen anything in Australia that simulating some of the innovative technologies and try to increase the federal level?
Speaker 3:Yes. The biggest program at the moment is with Irena, who's supporting these technologies. And whether that be, uh, a covered anaerobic lagoon, uh, producing biogas, or potentially as well as thermal plant or a, or, or a heat pump. So arena certainly into getting into that now. Um, there's other, uh, why is it, this is also being promoted. You've got the largest ever cooperative research center called the race for 2013. Right now they're doing an opportunity assessment, which we'll dive into this potential for this 100 to 150 degree hating range. And we expect that to flow on to a more studies and funding of small pilots and what have you, it tastes in that high temperature, um, uh, that, that CRC is up and running and moving very quickly. So I think within 12 months you can see some pretty serious things happening there. You've also got a more progressive governments. I'll tell you that, uh, state governments that are helping to look at funding studies and with this as well. So I think we'll see much more happening in new South Wales and Victoria, and just trying to encourage a change away from gas and more electrification as well. So yeah, absolutely plenty happening in that space. And Roger we've, we've covered a lot, I think industrial technologies in the final 10 minutes, what do you see happening in the commercial building space that can drive either energy efficient, fuel de-carbonization over the next?
Speaker 4:Hmm, it's a good question. I think the main thing would be that heat pumps, once again, becomes a way of going forward. Um, heat pumps, uh, been around for quite a while actually. Uh, the reality is that it's not a bad environment for most buildings with the require, both heating and also, uh, cooling that you barely really got an opportunity with a heat pump arrangement to recover energy from the chiller system and use that to create any of the heat sources you might need. So, uh, I think that probably, I think more advancements in that area more bit better control over their improved use of compressors in that area. Um, the evolution of, um, I suppose, lighting in LEDs, for instance, as a really gone to the point where you really getting to the minimum levels of energy use in that area. So it's actually a good example of a technology that took off. I don't know, it was only really recently over the last 10 years, maybe, and it's really only last five years that it's just dominated the marketplace and, and continues to do so. Now I expect that some of the technology systems that prove themselves and be saving water energy and to be saving a lot of costs and becoming very flexible in the way you can use them. I think they start to, um, take over the market.
Speaker 3:I think the Ellery DK certainly does give you confidence where a government backed programs and incentives is able to get technologies to tipping points, uh, where, where you have your, you move things from a technological readiness to a commercial where there's really well developed supply chains, um, in a really competitive supply and innovation to coming as well. Along with that, if we talk about heat it's, you would say it's not fully commercially, uh, mature just yet. There is a range of companies, uh, out there and they are developing and growing and adding resources. Um, there, there is the service, uh, network there, um, that can look after the heat pumps mainly through industrial refrigeration companies. Um, but there's still some gaps in the market and, uh, gaps in the, in the product range and, and things are not fully modularized to make things as economical as possible, but GE has, it really has, uh, come a long way in the last 10 years for products that are out there. And, uh, I think, you know, another five, 10 years of product maturity, we'll continue to see the cost of them come down. Uh, the, the experience and capability of people to install them economically is going to increase. And importantly, I didn't mention this before is the ability to integrate with other functions and other other waste heat sources on spot. Roger, you just mentioned integrate with chillers before and the waste heat from a chiller, integrating that with a heat pump. You know, that that is really probably a fourth key thing, uh, to make sure that heat pump is, uh, is effective and efficient is getting a really good, a really good heat source. And, and certainly things like the avatars that I mentioned before now, the heat pumps going on to avatars will be integrated with existing onsite industrial refrigeration plant. Um, and, and that gives it a nice steady flow of waste heat somewhere between somewhere around 30 to 35 degrees. And at that temperature, that, that does give you a very good, what sign is coefficient of performance for the heat pump. And those really greatly help the economical case for it.
Speaker 2:Chillers are an interesting example in both industrial and the commercial space. So I know you both mentioned integrating them with heat pumps, but in their selves over the last maybe two or three decades, efficiency of the chillers have improved, um, astronomically really we're going from old reciprocating chillers to now some of the magnetic centrifugal bearings, the efficiency has gone from a CRP of sort of two up to out of the range of 11, 12 out some of the top end tormentors. Um, and again, that becoming sort of business as usual is integrating some of these higher efficiency chillers people are going away from the low CapEx in school costs, considering a whole of life costs, which can be up to sort of 30, 40% of your building's energy load. Um, so there's movement that I think the other piece around some of the
Speaker 4:Data innovation, all the compressors are getting smaller and smaller people are considering the overall building design, not just using the same old Hatrack system that they've used for 13 years that are considering alternative approaches. And whilst that's slow to move in, in the construction industry, I think there are people out there now thinking differently about how they set up that building Singapore has gone around building designs to reduce the overall consumption. Um, and I see that flowing through as well over time.
Speaker 3:When you talk about those improving CRPS, that you really need to mention things like a CO2 heat pumps as well. Yeah. We've got local companies out of Adelaide called Lyceum. You'd put my car was range of CO2 heat pumps. Um, and not only were they produced your hoarder at SCOP potentially sort of five or six, they will also give you chilled water. And as soon as you add that chilled water and the healing say I paid together and you might be operating in a CRP of eight or nine. So that's for every one unit of energy coming and giving your nine units of heating or cooling. It's an incredible, incredible case. And especially if you're using on site. So the losses that you would have from that solar PV going through to hate you just can't match that anywhere else in that sort of effectively then 700% or so efficiency. It's, it's quite a beautiful song because to be honest,
Speaker 4:That's a good example there, Jared, for the, um, the thing that we probably missing the beginning of some of these projects is that you really should be looking at the energy efficiency of the overall operation. First understanding that is as low as possible. Do you think in terms of lower energy use and then then applying the new technology and then it will be correctly. So rather than being sized, be too large to be cost-effective for instance, um, I think there's a need to combine the, the thinking of increase your energy efficiency and then apply the technologies when, when they can be at their capital most effective level.
Speaker 3:Absolutely. And I think when you look at that, taking that primary energy that you create, and then thinking of the end use service, the efficiency of that is what you need to look at, and that's, that's energy productivity. And that's why when you look at hydrogen, you know, with, with the, the cell efficiency and by the time you store it and use it, you know, you'll be well below 50% from that power that you've come in from solar or wind created hydrogen, and then used it you'd be well below 50% compared to taking that wind or solar straight into a heat pump, running it at probably a 700, hundred percent. So it's the case that anytime you can use a technology like a heat pump, you know, that you have to go for that way. We are a little bit concerned I, to AP of, uh, that, that hydrogen might delay in good investments right now, or people are waiting for hydrogen to come down. And if they keep on waiting and waiting, they're putting off some great investments which can be made today.
Speaker 4:Yeah, no, I can understand that that's, um, something I've sort of struggled with sometimes to understand exactly where hydrogen fits, but it does fit fairly well. I think within the transport sector and in areas where you have very large, renewable power generation, which isn't being utilized effectively at the present moment, uh, that if you can use it, you can use any of that power for generating great green hydrogen, um, and then use it in a transport system. It might make sense, uh, would that is, if you weren't gonna use that power in the first place, you might as well use it for generating some hydrogen. Maybe that'll sort itself out over time, but the application of hydrogen, I think fits quite well in transport. It doesn't, I don't think it fits so well in the industrial sector.
Speaker 3:Oh, look, I also think there's place for hydrogen in those very high temperatures call it plus 800 degrees, uh, Illumina, Cal signers, uh, potentially gloss, uh, brakes, uh, cemented. There's a lot there's emerging alternatives and what have you. So I wouldn't, wouldn't say necessary for cement. There might be some other ways to do that. Uh, but certainly those high temperature applications where you might not be able to get enough biomass or bio energy to do the job, then hydrogen is probably the likely or likely requirement there for, from[inaudible] perspective. We certainly want to explore and being involved in how to use that hydrogen as effectively as possible, because it's hardly likely to see it's always going to be much more expensive than natural gas is say today. Uh, so you make that happen to the hydrogen gas happened. Uh, it's all about using as effectively, efficiently as possible, making every gig, uh, count, basically
Speaker 4:Distributed data. What role do you think?
Speaker 3:Yeah. So anyone who looks at the open them on a regular basis can say that lovely cycling up and down and the duck curve is a negative, uh, wholesale electricity prices we have now. Uh, so we're getting on top of that and a lot of energy users acting together in unison. And what have you, there's, there's a lot to do there. Uh, I mentioned before this rice for 2030 CRC, one of their big focus areas is to look at, uh, demand response and load flexing and see how industry do more there. You've got your big players, like medium, and they're getting ready to, to upgrade their up line so they can do more load flexing. That's it's not as simple as what one would think. Um, but there's a whole lot of industries which can, which can, uh, upskill and upgrade their technology so they can do it as well. Uh, cold stores, refrigerator, industrial refrigeration plants, a lot of happening in the commercial space. Uh, it is going to be crucial and, and make sure that we can handle those, uh, periods of, of peak load and, and also, uh, peak supply. What are we going to do there? And that's, that was coming back to heat. Once again, just say during the middle of the day, being able to soak up some of that extra supply of solar and heat pumps are a fantastic way to do that. And you could say how you could, that's all the way from residential all the way through to manufacturing, just soak up that additional solar resource.
Speaker 4:Absolutely. So in conclusion, we know that change is coming. The shower of renewables in the energy mix is growing and we're shifting into distributed energy and electrification is well underway globally. There is innovation to wrap up. I'd like to ask you both a question. So what are your top three pieces of advice to business? I tend to think that the things that I could, I, I surprises me every so often when I look back over the years in terms of technology and just how much it's evolved. So I think one of the things we need to keep your eye on the technology, see what's going on in the marketplace, keep your eye open so that you understand when opportunities are coming along. And when you can actually get into a technology that might make you highly competitive. Um, other area is government funding. It goes up and down like a yo-yo it's. Um, one state government will have the money to go at one stage and then it'll be open for a week or two. And then federal government who gives us are going to be program. And then it gets released in little bits and pieces. So you have to keep your eye on it all the time. And you have to actually understand when you've got an opportunity. So it's good to apply evaluate when you see these programs, how eligible you are for it, and whether you got particular projects available. And that sorta brings out 0.3, put a plan in place, make sure you understand what are the things that you want to improve and how are you going to improve them in the future. And then when the window of opportunity comes along, you've actually got something shovel-ready ready to go into the planning program. So they went to all three of you.
Speaker 3:We certainly see the best way to get energy productivity moving is having a de carbonization commitment and say, well, okay, how did that happen? Why would that happen? And that often starts with marketing. And so that's a department judging where consumer's thoughts and behaviors are at and, and working out if they can, uh, uh, have a benefit by making such a de-carbonization commitment. We had a nice presentation from the company called the ladder strategy last year, talking about how marketing out there and kick this off. So I did carbonization and leads into Roger saying it's in having a plan as well. Um, I'd say something as simple, also as a metering and monitoring, you know, everyone knows what it is is measured, is managed. So you've got to have that in place, and it needs to have a much higher priority with spending. And I'm talking to, uh, the ones or the accountants and the controllers here that need to be asking you then making sure that that budget is there to be, uh, majoring and monitored, to ensure that when projects go ahead, they put the right data. And then after the project, they can see how that program went as well. And if I could throw one in there, I guess it's ensuring somebody in your organization is taking ownership. So who is that sustainability manager, that energy manager now giving them that ownership, that'll have the empowerment through you to cover de-carbonization commitment and they'll have the data through the majoring in monitoring. And then you'll really see the action. And we send some fantastic companies that have pretty much following that sort of those sorts of, sorry. Thanks, Jared. We greatly appreciate the time you've taken. If you have any questions or comments relating to our discussion today, thank you.
Speaker 5:Energetics exchange, podcast conversations with energy and climate experts.