For many companies, it’s quite the challenge: striking the right balance between energy demand and the ambition to become more sustainable. Whether it’s large chemical and energy firms, storage terminals, pharmaceutical companies or the food sector – everyone wants to decarbonise, but preferably in the most cost-efficient way. How can you ensure that your investment in, for instance, an e-boiler or industrial heat pump actually pays off?
Heat demand varies greatly depending on the industry and the process. Industries with continuous processes – such as in chemicals or refining – have a constant heat demand. Other industries, such as food or pharma companies, rely on batch or campaign processes, where energy needs fluctuate significantly. Heat demand is just one of many organisation-specific factors that come into play. This means there’s no such thing as a one-size-fits-all solution for every energy challenge, yet every organisation wants to manage its energy use as (cost-)efficiently as possible. The key question remains: how do you match supply and demand in the smartest possible way?
a volatile energy market
The energy market has undergone a drastic transformation in recent years. Where long-term contracts with stable energy prices were once the norm, flexible contracts have now taken their place. This shift brings new challenges: electricity prices can spike during periods of high demand, while surplus solar or wind power can even lead to negative pricing.
At the same time, the supply side is becoming increasingly inflexible. There’s a widespread push towards electrification and phasing out natural gas, yet renewable energy sources aren’t continuously available. This means companies must think more strategically about how and when they purchase and deploy energy. The volatile energy market adds an extra layer of complexity.
the search for the optimal mix
Electrification seems like a logical step for companies looking to move (partially) away from natural gas. However, the payback time of such a solution – for instance, an electric boiler (e-boiler) – is heavily influenced by the interplay between energy supply and demand. Depending on electricity prices, gas-fired heat can sometimes actually be the more economical option. The key question then becomes: when should your company opt for gas, when for electric heat, and when for a combination of both? A solid business case is not built overnight.
Still, for every challenge, there is a fitting solution. Jos Sentjens, consultant and principal process engineer at KH Engineering, explains: ‘Any organisation facing a specific heat challenge can rely on KH Engineering for insights and advice. We use our SHINE (Sustainable Heat Integrating Networks for Energy) tool to support this. It enables companies to take control of their energy costs in an ever-changing market, and to make strategic decisions that are attractive both from a financial and sustainability perspective.’
what does the process look like?
We always begin with a thorough exploration of the client’s question. What does your organisation want – and why? There’s always a balance between cost efficiency, sustainability, and/or compliance with regulations. So where does the emphasis lie? ‘By first understanding these economic drivers in depth, we can tailor our advice to the organisation’s specific needs’, Jos explains.
Next, KH Engineering maps out the company’s processes and energy demand. This insight is essential to determine which energy solution is the most efficient and cost-effective. Then comes the core of the process: identifying the optimal solution. The SHINE tool takes into account not only organisational data, but also variables such as current energy prices, fluctuating CO₂ trading rates, and energy taxes. This gives you a highly realistic and comprehensive picture of your actual operational costs under a given scenario.
‘You don’t just gain insight into the optimal energy use,’ Jos continues, ‘but also into the financial implications, such as payback time and return on investment (ROI). It provides a clear plan for any organisation to manage energy strategically and cost-effectively. The analysis can be a one-off, or you can opt for a real-time monitoring solution, enabling you to actively respond to volatility in the energy market.’
What's the bottom-line result?
A good question – but one without a straightforward answer. It really depends on the specific situation and organisation. ‘That said, we’re seeing the success of our SHINE tool play out in practice’, says Jos. ‘For example, we advised an energy company not only to use their existing e-boiler for district heating, but also as a so-called peak shaver – by outsourcing its use to a transmission system operator for grid balancing. Thanks to this smart move, the payback time was less than a year.’
A chemical company also turned to KH Engineering for advice on using an e-boiler as a sustainable heat solution. Jos explains: ‘Our SHINE tool showed that a standalone e-boiler, based on base load electricity prices, would actually lead to a negative return. But when we modelled the scenario using dynamic hourly electricity prices, the payback time dropped to under two years. There was, however, another option: running the e-boiler in parallel with the existing gas-fired boiler while applying dynamic hourly pricing. That brought the payback time to under a year. A very compelling outcome indeed.’
facing an energy challenge?
A well-thought-out energy strategy doesn’t just aim for the cheapest solution at any given moment – it combines different technologies in a way that delivers maximum flexibility and minimal cost for your organisation.
Does your company have a specific energy-related challenge? Get in touch with Serdar Erdag. We’ll be happy to tell you more.