Talking New Energy: Thermal storage and decarbonising industrial heat

[00:00:01.780] - Jon Slowe

Welcome to Talking New Energy, a podcast from LCP Delta. I'm Jon Slowe.

 

[00:00:07.560] - Charmaine Coutinho

And I'm Charmaine Coutinho. Together, we're exploring how the energy transition is unfolding across Europe through conversations with guests at the leading edge.

 

[00:00:16.590] - Jon Slowe

Hello, and welcome to the episode. We're focused a lot in this podcast on decarbonising residential heat, but today we're turning our attention to industrial heat, also a major area where we need progress on decarbonisation. I'm joined today by co-host Charmaine Coutinho. Hi, Charmaine.

 

[00:00:34.350] - Charmaine Coutinho

Hi, Jon.

 

[00:00:35.650] - Jon Slowe

James Macnaghten, who is CEO of a company called Caldera, who have developed a thermal storage boiler, able to provide process heat to industry that temperatures up to 200 degrees or so. Hello, James.

[00:00:49.050] -  James Macnaghten

Hello, Jon.

[00:00:51.650] - Jon Slowe

James, a lot of our listeners, I guess, may not have heard of Caldera yet. Can you give us an elevator pitch for Caldera?

[00:00:59.440] -  James Macnaghten

Sure. Half of all the energy used in the world, roughly, is used for heat, and half of that is used by industry for industrial process heat. If we want to decarbonise our energy system, it's absolutely key that we tackle this. Caldera are focusing on companies that use heat up to 200 degrees Celsius, which is about 40% of the number I mentioned to put it in context, it's more carbon emissions than every car on the road in the world.

[00:01:36.290] - Jon Slowe

So a lot. A lot to go for. How long have you been going about this? How long have you been focused on this area?

[00:01:47.860] -  James Macnaghten

I've been working in, I would say, industrial-sized thermal storage for the better part of 15 years. We formed Caldera in 2017, and we started started by developing relatively small-scale thermal storage. We were looking at homes, you may remember. We started off in that when Russia invaded Ukraine, all of the low-cost overnight electricity tariff change, the whole market changed, and we pivoted the company to focussing on industry. We did it for two reasons. One of them was we had always planned to go to industry. We just brought these plans forward. But the second one is that industry is very different to home heating usage, which is it uses heat the whole way through the year. In the short-term, that's actually quite important for how we roll out our technology into the market.

[00:02:49.160] - Jon Slowe

Okay. Homes, obviously, only during the heating season, industry, higher temperature heat, and all year round demand for that heat. The technology that you use, how special is that? Tell us a bit about the thermal storage aspect of your technology and any challenges in getting to those process heat temperatures of up to 200 degrees.

[00:03:16.630] -  James Macnaghten

I have a simplified description of what we make at Caldera, which is for those that you remember them, we're a giant night storage heater in a vacuum flask is my simple description of what we do. My slightly more nuanced description is that we make a very... The heat storage has been around for It's been around for centuries. It's very important in things like the glassmaking industry and the steel industry. It's also very expensive. This is what people don't know. The cost is not about the material. It's always about the insulation and how you get the heat in and how you get the heat out. Where we've always come from Caldera, we always looked at it holistically because it's very easy to find a very cheap heat storage material in a very expensive heat storage solution when you factor in everything that you need to. The core of our system is a conductive solid block of material that we make from rocks and scrap aluminium. In a simplest, you can imagine a bucket of rocks. We heat the rocks up and we melt some very low-grade scrap aluminium, and we pour the aluminium over the rocks, and it sets into a solid block in the shape of the bucket.

[00:04:46.980] -  James Macnaghten

It's very conductive because aluminium is very conductive. We end up with a material that has the cheapness provided by having lots of rock in it, but a very high conductivity provided by the aluminium, and the aluminium holds it altogether. At the heart of it, we've developed this material that it's very easy to get heat into and heat out of and then the second aspect is that we've always thought it's very important to keep it there and be able to hold it for long periods of time. We developed our own vacuum insulation, which is the second bit I mentioned, but I said a nice storage heater in a vacuum flask. It means that we can build really quite large structures that are at 500 degrees Celsius that only lose a few kilowatts of heat, which is really important because then you're not having to go down the second rule, which you often see with thermal storage, which is they try and build very large systems so that the surface to area doesn't become an issue. But of course, if you try and build a very large system, you end up with a building project.

[00:05:56.300] - Jon Slowe

In terms of commercialisation, if Now, I'm an industrial customer, can I buy one of these? How many have you installed? Is it still being developed?

[00:06:07.890] -  James Macnaghten

We have had close to 100,000 hours of operating experience with our smaller units. We have our full-size showcase now operational at our factory in Fairam, and we will have a unit you will be able to go and see on an industrial site in place this year, so in 2025. At the moment, we are talking to a wide range of people, predominantly UK and Europe, and we are looking at further rollouts into what would be very well-known brands in 2026 and 2027. But in the first case, we'd say, Come to the factory, and in the second case, we'll take you to a showcase in the UK later this year on our side.

[00:06:53.180] - Charmaine Coutinho

I think they'll have some listeners who actually… I think we have quite a lot of technical listeners who probably will take you up on that roadshow James. Some of our listeners aren't familiar with industrial processes. Could you give us an example of what process this could be used for?

[00:07:11.070] -  James Macnaghten

Yes, I could probably give you a couple of examples. Everybody is familiar with brewing and distilling.

[00:07:18.900] - Charmaine Coutinho

Great example. Yeah

[00:07:20.450] -  James Macnaghten

Very close to heart. They use huge amounts of heat in both those processes. You would also find in most food and beverage manufacturing, you have sterilisation, you have heating processes, you have pasteurisation processes. A lot of this has been done with steam because steam is very easy to transport around a factory, and it's very easy to control. If I was to describe your typical factory, it might have 200 or 300 employees. It will have a plant room with four or five enormous steam boilers all powered by gas. When everything's running, they always have one on hot standby. They may well have a spare. They might have, say, four running in the winter and three running the rest of the year. They have a steam network that runs around the factory with steam at roughly 10 bar, which is a little bit under 200 degrees Celsius. Now, different machines in the factory will take heat steam from this steam network and maybe even use it at different pressures. But it's fundamentally quite a dumb system and easy to manage, and you have one big boiler house and the heat is then distributed centrally. That's most factories in the world today.

[00:08:39.960] -  James Macnaghten

We also have interesting new build factories where people are looking to fit heat pumps. The simplest way to think about it is if you imagine ingredients for, I don't know, making yoghurt, something like that. Fundamentally, the materials come in and they go out at the same temperature. Everything you do to them is basically a heating and a cooling process within there. There are also opportunities we see with heat pumps coming in, but there's a really interesting point about heat pumps, and this comes from heat pump manufacturers, which is they don't particularly like to load follow. And a lot of processes are batch-driven and are quite variable in the demand. In the factory of the future, we expect to see a lot of heat pumps and then systems like our storage boiler coming in to provide the flexibility because we can turn up and down very, very fast and we can provide a lot of power for really not that much cost. The way we describe it is we see in the world of heat pumps, you'll have the heat pumps doing the baseload and we'll be doing the high free... the variability, which you just would not want to...

[00:09:53.650] -  James Macnaghten

You wouldn't want to pay for double your heat pump capacity. It makes no sense. When you're talking about steam and in terms of just heat is very difficult to store. It's not like hot water at 90 degrees, which is very good way to store it. When you need something at 180, actually trying to store it in pressurised water is very dangerous.

[00:10:13.680] - Charmaine Coutinho

Yeah, sorry, I was going to say that's really obvious. It would have been really obvious to me that the typical ways that we use the store heat in a home does just not work for industrial purely because those temperatures from a safety perspective. Okay, That's the new thing. I think it's interesting to think about the heat pump as the baseload and you guys as the additional heat storage, because I think a lot of people can compare that to electricity and battery energy storage as well. That's interesting. You talked a little bit about your customers and how is their, if you can talk about it, how has their reactions been to this technology versus the alternatives that they've seen for this, or is there no really alternatives at the moment?

[00:10:57.970] -  James Macnaghten

We're a relatively small... we're a new company. We have 21 employees, and I have been repeatedly amazed at how many people contact us asking for help. The reason I would say is that you're a plant manager, your company is committed to decarbonise by 2035, maybe 2040, and you're being told you need to take steps to reduce your carbon emissions, and you're stuck because you've done all of the sensible things, and you've looked at various other solutions and you come to the conclusion they're really expensive or they just don't work. And so we get approached by them.

[00:11:39.420] - Jon Slowe

The basic question, James, is how do I get off gas? Because the gas boilers do a really good job of providing steam. So that's where there's not many alternatives, either a heat pump, as you say, or potentially direct electric.

[00:12:00.730] -  James Macnaghten

I'll talk about two ways you do this. The first way, and I personally think it's because the grid pricing rules don't make sense, and I'll talk about grid pricing rules on the second point, is that you build behind-the-metre renewables. If you use heat and electricity, you can build a very, very large solar array, and you can use everything you can as electricity directly. Then anything surplus, you either use directly as heat or with a system like ours, you can store it and spread it out into the evening or overnight. We see a five-year payback in most markets for doing a combination of a large solar behind-the-metre and supplying you with electricity and heat. But that's a hybrid solution. In the Most times of the year, we can potentially eliminate all of your gas usage. But depending on how far from the equator you are in the winter, we're going to do very little in the UK. If you're in Southern Spain, we're going to do a lot more. That, to me, is a very nice intermediate one because it doesn't require grid rules change, and it doesn't require us to wait for Governments to decide on how they're going to manage the transition.

[00:13:07.400] -  James Macnaghten

But coming back to your second one, hybridisation, we also think is hugely undervalued because if you look at the UK, we're expecting maybe 2,000 hours of surplus electricity within three years. That's the forecast I've seen, but this is going to happen everywhere that we add more and more renewables. Now, what that tells you is you want demand that will switch on in those periods. Obviously, heat, as I've already told you, is this huge demand that you can switch on. But if you keep the gas boilers, they can run when it's not windy and sunny. They don't add any cost. The problem with electrifying things that will use surplus a part of the time But then they have to run when it's also not windy and sunny, is they actually put more strain onto the electric grid. Whereas cannibalising gas sales by just switching from effectively being able to switch between a gas boiler and effectively electric storage boiler, gives the grid the best of everything because it supports the price, less curtailment. It helps the factory if you give them access to the electricity at less than the gas price. The reason you would do that is because then it makes sense for them to do switch, and you end up with a whole lot of positive benefits that potentially reduce the actual cost of electricity for all users.

[00:14:22.140] -  James Macnaghten

This is not about giving people a special case. It's about just providing a sensible incentive because the alternative is we pay people to turn off their wind farms or their solar farms. To me, the reason heat is very different to everything else is it doesn't add stress. If you hybridise, you don't add any cost to the network and the amount of peak capacity because you will never run when the price of electricity is high.

[00:14:46.330] - Jon Slowe

You can soak up the negative hours or the very low price hours and store them. How much storage, again, for a typical using a brewery customer that you described, how many hours or days of heat storage, you could build it however big you want, but in what you're looking to build, what you've got on site, is that an hour or two of process heat or is it a day or two of process heat?

[00:15:13.590] -  James Macnaghten

It is... Whenever we've modelled this, and again, it will depend on the number of hours and the actual pricing, I've always seen between about 4 and 12 hours of thermal storage. The value of thermal storage drops quite rapidly beyond that point, and it depends on whether you're in a wind-dominated market or a solar-dominated market. Solar is actually a sunny country near the equator, is much better for doing thermal storage from PV. Wind tends to have fewer cycles. In the UK or in Northern Europe, you get these low pressure systems, but you probably only get about 80 of them a year.

[00:15:50.339] - Jon Slowe

Yup, yup.

[00:15:51.320] -  James Macnaghten

If you're honest about it. I think to answer your question, we don't expect at the moment, I think the number will end up being 8 or 10 hours as the upper end. We currently see people specifying shorter periods, and partly that comes back to this point, which I said, you don't really have access... You don't really, at the to see these long periods of low pricing and have access to them, which is what customers would need to see before they will start to install.

[00:16:24.760] - Jon Slowe

And James, thinking about the challenges of growing a company like Caldera, how do you describe yourself? Because are you a technology company? How much busy technology, how many patents are in your system? Would you say you're technology-driven or are you more solutions and engineering-driven? Then looking forward from that, do you want to be a manufacturer of tens, hundreds of thousands of these systems or do you want a licence? So, interested in the growth strategy strategy for a company like Caldera?

[00:17:07.020] -  James Macnaghten

I would say we are a combination of a technology and a solutions provider. We do have patents, but we also know that when you go to the customer, they want a solution. We do everything from their 11,000 volt electrical connection or 20KV electrical to the pipe that goes to their steam network, we regard that as our solution. The reason is because if we don't do that, we also find if we don't do that, the cost becomes very high for the customer. We try and provide an integrated package. In terms of how we develop the company, our plan is the cover already, we've outsourced the manufacturer. The base will shortly be outsourced. We make our aluminium and rock blocks. They're actually in the shape of wedges. If you remember playing Trivial Pursuit, they look like a piece in the Trivial Pursuit.

[00:18:08.360] - Charmaine Coutinho

A bit of cheese.

[00:18:09.600] -  James Macnaghten

The cheese, they look like a piece of cheese. The wedges weigh between one and a half and two tonnes each, and you might have 50 of them in a store. That is currently we produce those in-house. That is the one piece that we are looking to, but it's not definite. We are looking to outsource that because it involves we run our own foundry, but actually when you start to want bigger foundry capacities, and ideally, you want to melt from scrap aluminium directly and then use it in one process rather than doing what we do at the moment, which is we buy the scrap aluminium after it's been melted and we remelt it. You want to do that in a single process, that involves relocating. Everything else about the system, the steam, the way we get the steam out and the way the electricity, that's this transformer, it's got unit. Those are all very standard pieces of equipment. We've worked very hard to have a system we believe we can scale very quickly. In the longer run, if we can outsource the wedge manufacturer as well, pretty much our whole strategy is outsource solutions provider where we do the installation, we do the support, we do the sale, but we don't have large factories employing hundreds of people.

[00:19:24.260] - Jon Slowe

That will reduce the capital that you need to raise.

[00:19:26.030] - Charmaine Coutinho

That infrastructure is set up. Yeah?

[00:19:28.020] -  James Macnaghten

Absolutely.

[00:19:34.420] - Charmaine Coutinho

Well, it makes sense because how does scaling happen otherwise, right?

[00:19:41.400] -  James Macnaghten

But it's also there are people that from the... Things like the cover is a twin-walled carbon steel vessel. Anybody that makes tanks, whether they're LPG tanks, contains like that, there are companies that are so much better at it and they're geared up for it and they have the right relationships with the people that supply the steel plate and the rolling machines. It's like we would never... It just makes no sense for us to try and do this. It doesn't add any value. Whereas being able to scale quickly by working with a company that could produce 500 covers in a year adds a huge amount of value.

[00:20:19.000] - Charmaine Coutinho

Yeah, it's really fascinating. I think we could talk about that, for ages, it's particularly about how you could 6 degrees of freedom from thermal storage to a tank, right? Probably got two there. Anyway, but we should move on, and I've got a crystal ball question, Jon, unless you've got any other questions you have up your sleeve. James, are you familiar with our crystal ball questions?

[00:20:42.610] -  James Macnaghten

No, but I'm good.

[00:20:45.100] - Charmaine Coutinho

Okay. What we do at the end of the podcast is we set the dial to some point in the future. For now, we're going to do it to 2035, so 10 years away. Tell us your vision for how widespread you see thermal storage and maybe Caldera's role in that?

[00:21:02.740] -  James Macnaghten

It's quite nice to be talked about hybridisation. I actually think every existing factory, or in my crystal ball, every existing factory will have thermal storage and it will be hybridised. For the reasons that we've talked about the benefit of it. I think every new build factory will have heat pumps for the same reason, which is if you're starting from scratch, it's very easy to integrate heat pumps into a process. It's actually quite difficult to retrofit them to an existing process. To me, it will be very, very widespread, and I hope that people see the value of hybridising systems. I often see people wanting to go fully zero carbon in one step, and to me, that feels like the wrong way to do it. This is a transition. We know we're going to be adding renewables, and we know we want to add electric demand, and they need to go hand in hand. We need to grow them together. For me, it's very odd. We also know that the winters and periods of low renewables They're going to happen. That's the time of the year. We don't want to have to build a whole lot of power stations just to cover a two-week period.

[00:22:06.790] -  James Macnaghten

Keeping the gas boiler and the gas for that period so you don't have to use the electricity, it's also really valuable. To me, I hope that hybridisation has become very established and everybody is moving slowly but steadily towards using less and less carbon. Factories with their huge heat demand are a key part of how we transition.

[00:22:29.630] - Charmaine Coutinho

Having yeah, I think that is a really good point about hybrid and we use the phrase vector coupling. We don't use it so much actually at the moment. I haven't seen it for a while, but that process of it being a journey and a transition. If you were to pick out, so imagine you're in 2035, one particular pivotal point that you saw on that journey, what would it be, do you think?

[00:22:54.870] -  James Macnaghten

It would be the Government allowing… The There's market rules for electricity being changed. When there is surplus generation, companies that can use additional electricity can access it for less than the price of gas

[00:23:12.930] - Charmaine Coutinho

Okay. I think this is I see a lot of people who would share the same hope. Well, thank you very much, James, for your time. That was a really interesting conversation. I'm sure there's plenty more that we could be saying on industrial storage, heat storage in particular. But we'll finish up there.

[00:23:29.790] - Charmaine Coutinho

Jon, what do you think stood out to you from that discussion today?

[00:23:33.970] - Jon Slowe

I think for me, the parallels with a lot of the discussions we've had on residential heat, actually, and the hybridisation point. I particularly like the way James talked about a stepping stone to full decarbonisation, because it's very tempting sometimes to jump from where we are today to full decarbonisation. But if I put myself in the shoes of a factory, I I think it's a relatively low-risk way and relatively easy step way to instal a unit like Caldera's unit and maybe take off one gas spoiler, one of the five gas boilers, and save some money, save some carbon, but still feel quite safe in your operations, because for the facilities manager, they don't want to take much risk. They don't want to lose money and not be producing beer because they're a new heating system didn't work.

[00:24:35.290] - Charmaine Coutinho

Yeah, completely. I think the investment, well, the decision you make around sustainability as a large industrial customer, you have to be really thought through because you make one decision badly. That's not just you haven't met your carbon, your scope two emissions. It's a fundamental the number of beer bottles out the door is must be impacted. So yeah, I would agree with that. I also actually really like It's nice to hear people in their early stages of growth talking realistically about what they're good at and what they want to be doing versus what other people are good at and what they should be doing as part of the whole process. The idea about outsourcing, I think, stood out for me as well. We'll finish up there. As always, thanks everyone for listening. We really hope you enjoyed it, and we hope to do much more on industrial decarbonation over the next few months. We'll be back next week with another episode, but in the meantime, thanks very much for listening.

[00:25:29.250] -  James Macnaghten

Thank you, Jon. Thank you, Charmaine. Bye.

[00:25:31.690] - Charmaine Coutinho

Thanks for tuning in.

[00:25:33.030] - Jon Slowe

If you're enjoying the podcast, please subscribe, and we'd love it if you rate and review it with us. And, of course, share the podcast with colleagues.

[00:25:41.710] - Charmaine Coutinho

If you got suggestions for guests or topics for the podcast, please do let us know.