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A mix of renewables for manufacturing

New energy sources for the decarbonisation of one of the most important industrial sectors of modern economy.

by Nicholas Newman
08 October 2020
8 min read
byNicholas Newman
08 October 2020
8 min read

An increasing number of large manufacturing companies worldwide, especially those involved in the production of iron, steel, aluminum and automobiles, are looking for energy sources cleaner than traditional fossil fuels. According to the Centre for Climate and Energy Solutions, manufacturing accounts for 12% of all greenhouse gas emissions worldwide. The trend of using renewables instead of fossil fuels is in part a response to a strengthening worldwide commitment to decarbonisation as set out in the Paris Agreement. Incentivised by national targets, the use of cleaner, renewable energy has led to lower costs while increasing the availability and reliability of sustainable energy supplies.

I addition, the cost of grid-scale renewable power generation has seen significant declines in costs, according to a recent International Renewable Energy Agency (IRENA) report. IRENA estimates that at the end of 2019, global renewable generation capacity had amounted to 2,537 GW; the share of renewables in global power generation was 28%. IRENA forecasts that, as soon as 2030, renewables could provide between 27% to 32% of total energy consumption by global manufacturing. Selecting an energy source for manufacturing can be challenging, requiring research and expert advice. Manufacturers have several alternative sustainable energy sources to choose from, including green hydrogen, wind and solar power, biomass, geothermal and hybrid power.

Low emissions hydrogen

A potentially promising low-carbon energy solution is green hydrogen. Made by splitting water and oxygen in large scale electrolyser plants, currently producing hydrogen from low-carbon energy is expensive. The International Energy Agency calculates that the cost of producing hydrogen from renewable electricity could fall 30% by 2030. With mass production of green hydrogen, delivery costs might fall by up to 70% and could find a ready market in intensive manufacturing. Tentative steps toward greater scale hydrogen production powered by renewables are underway. Already in Sweden, the steel group SSAB, the mining group LKAB and the energy group Vattenfall are producing zero carbon steel using green hydrogen instead of coal.

In Germany, the ThyssenKrupp Duisburg steel mill is converting to green hydrogen produced in a nearby 100 MW electrolyser and powered by utility RWE's local wind and solar farms. In 2022, this large-scale electrolyser could produce 1.7 tonnes of hydrogen per hour —enough to satisfy about 70% of the gas required by the blast furnace. In 2019, according to a report by Grand View Research, the global market for hydrogen was worth $117.49 billion, and they forecast a compound annual growth rate of 4.32% between 2020 and 2027.

New projects for the development of wind-energy

Wind power has been the fastest growing source of renewable electricity, finding a ready market in customers. Norway's oil company, Equinor, is planning to use floating wind turbines to power its Snorre and Gullfaks oil and gas platforms in the North Sea. On land, Germany has the € 7.4 million Westküste 100 project in Schleswig-Holstein near the Danish border, the only commercially operating integrated hydrogen factory powered by offshore wind. Boasting a capacity of 30 GW, it is expected to reach 700 GW on completion and may have a variety of manufacturing customers, including technology firms, chemical manufacturers and shipbuilders.

Elsewhere in Europe, Toyota's vehicle logistics centre in Zeebrugge uses wind power from two turbines installed at the site. And, beginning in 2021, the Mercedes-Benz facility in Lower Saxony, which produces the EQC electric car, will be supplied with wind electricity amounting to 74 GW a year from six citizen projects managed by Statkraft. In America, General Motors plans on purchasing 200 MW of wind electricity supplied via the grid to power their manufacturing facilities in Indiana and Ohio.

The sun behind the steering wheel

An increasing number of factories and warehouses have installed solar PV panels to reduce their energy bills and decrease their carbon footprint. Car manufacturing is a heavy user of power and has pioneered the use of solar PV. Nissan has switched to a new 4.75 MW solar farm at its Sunderland site. The solar farm is made up of 19,000 PV panels alongside 10 wind turbines. In the U.S., Ford is working with Detroit Edison to install a 500-kilowatt solar PV system at its Michigan Assembly plant. The system will be integrated with a 750kW energy storage facility that can store at least two million watt-hours of energy using batteries. In Oxford, the BMW Mini plant features one of the largest solar energy facilities in Britain. Over 11,000 solar panels cover an area the size of five football fields to supply over three megawatts of renewable energy.

The role of biomass

Biomass comprises organic materials, including agricultural and food waste alongside dedicated crops, being fed into anaerobic digesters to be converted into biogas. These bio-gasses can be burnt to generate heat or power. According to a Inkwood Research report, the worldwide industrial biomass boiler market may increase at a CAGR of 11.04% between 2019-2027. They forecast the market to reach $21,240 million by 2027. One example is the Markinch CHP biomass plant in Scotland powering the paper manufacturer Tullis Russell. This development is expected to reduce the paper maker's carbon emissions by over 70%.

Convenience and other benefits from the underground

According to recent Zion Market Research, the global geothermal energy market, valued at about $4 billion in 2018, is set to more than double to approximately $9 billion by 2025. Iceland is renowned for its usage of geothermal energy. Heat from below the earth's surface is extracted to generate electricity and provides heat that is distributed via pipelines and a power grid to a range of industrial processes, including processing diatomite and seaweed, according to the Iceland's National Energy Agency Orkustofnun. Iceland's cheap geothermal energy resources, combined with its cool climate, have made this North Atlantic island popular with the locating of data centres used in cryptocurrency mining. Cryptocurrency mining uses large amounts of computing power —22 terawatt-hours of energy per year— making cheap energy attractive to the industry.

A cocktail of renewables

Hybrid power, a combination of various technologies that include wind, solar and energy storage to produce power and heat for industry, is attracting the increased interest of many manufacturers. The Gold Fields' Agnew gold mine in the western Australian desert is powered by an 18 MW wind farm, which is now integrated into the micro grid. This farm includes a 4 MW PV array, a 13 MW/4 MW-hour battery and a 21 MW gas/diesel-fired power plant. In good weather conditions, this combination can now deliver up to 70% of Agnew's power requirements.

The die is cast

Reducing or eliminating fossil fuels from energy production for manufacturers could substantially lower emissions from the manufacturing industry as a whole. National and local incentives lowering renewable energy costs, along with the increased investment in new production facilities, are helping manufactures strengthen their commitment to decarbonisation.