IEEFA report: Heat pumps could cut Australia’s gas use by 17% in key industrial sectors
A new report has found industrial heat pumps could play a major role in addressing Australia’s gas demand challenges, particularly in the food, beverage, and alumina sectors.
Industrial heat pumps (IHPs) have the potential to reduce Australia’s gas consumption by 17%, according to a new report from the Institute for Energy Economics and Financial Analysis (IEEFA). The study suggests that IHPs, which are critical in global electrification efforts, could be an underutilised solution for cutting gas use in Australian industry—particularly as the country faces future excess gas demand.
The IEEFA report, Industrial heat pumps key to addressing excess gas demand, identifies immediate applications in food, beverage, and alumina refining industries. In the food and beverage sector, commercially available IHPs could meet necessary heat requirements and offer energy savings of up to 90%.
“The food and beverage sector presents the most readily deployable opportunity as commercially available IHP models can meet the temperatures needed in the sector,” says Cameron Butler, IEEFA guest contributor and report co-author. Additionally, IHPs could reduce maintenance and equipment downtime while improving working conditions.
Alumina refining also shows promise for gas reduction with the use of mechanical vapour recompression (MVR), an open-cycle heat pump system that could replace up to two-thirds of gas used in the refining process. According to Butler, “MVRs could slash energy use in alumina by recovering and reusing heat from the process, potentially requiring just 1GJ of electricity to replace about 5GJ of gas.”
However, the technology has yet to be fully demonstrated at scale in Australia, as an MVR pilot program launched in 2021 was halted due to cost overruns. Industry experts maintain that government support is essential to advance the technology and reduce investment risks.
While initial costs for IHPs are currently three to four times higher than new gas or electric boilers, the IEEFA report forecasts a significant price reduction as the global market for IHPs is expected to expand rapidly, from US$2 billion in 2023 to between US$11 billion and US$21 billion by 2030. In Australia, some IHP models could already achieve a return on investment within two years.
IEEFA is calling for government-supported pilot programs to accelerate IHP adoption. It recommends a large-scale IHP pilot in the food and beverage sector and a smaller one in alumina refining to gather performance data, build expertise, and develop local supply chains.
