Financial Feasibility and Carbon Mitigation Analysis of Hypothetical Waste-Heat-to-Power System at a Cement Plant, with Broader Implications for Rollout of Waste-Heat-to-Power Systems at Industrial Plants in the U.S.

The United States Department of Energy (“DOE”) highlighted in 2008 the existence of nearly 1.5 quadrillion British Thermal Units (“QBtu”, or “quads”) of harvestable waste heat from eight key domestic industries. The key industries contain tens of thousands of industrial locations where waste-heat-to-power (“WHtP”) systems could be installed, but less than 50 such systems have been installed at MW-scale to-date. To better understand the factors limiting adoption, this project conducted a detailed feasibility analysis of a hypothetical WHtP system at a cement plant. The feasibility analysis utilized a financial and engineering model that calculated the internal rate of return (“IRR”) for the project and the metric tonnes of carbon dioxide (CO2) mitigated by the system. Key inputs to the model included (i) cost of grid electricity, (ii) carbon-intensity of grid electricity, (iii) cost of the WHtP system, and (iv) power generating capacity of the system. The analysis considered how results would vary geographically as (i) cost and (ii) carbon-intensity of grid electricity varied across 6 randomly-selected U.S. locations. IRRs varied from 4.3% in Washington State to 18.6% in California. Carbon mitigation potential varied from 7,638 metric tonnes of CO2 per year in California to 16,773 metric tonnes of CO2 per year in South Carolina. Even though positive, the relative magnitude of these results is small – power costs savings represent less than 5% of annual plant costs and emissions reductions address only 2% of annual plant CO2 emissions. The project concludes by discussing in detail barriers to adoption for WHtP systems, including (i) small relative magnitude of financial and carbon savings from such projects and resulting lack of demand from customers, (ii) irrationally-inflated perception of operational and financial risks among potential customers, and (iii) small number of legitimate WHtP system opportunities due to the diffuse nature of most waste heat point sources. Finally, the paper suggests approaches to overcome these barriers, including (i) creative business models using third party management and financing, (ii) construction of demonstration systems to prove that irrationally-inflated perception of operational risks is unfounded, and (iii) additional research and development regarding power conversion technologies, to lower the costs, and therefore increase the IRRs, of WHtP systems