Greenify #73: The Heating Dilemma
July 28, 2023
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📌 Fact of the week
The Australian state of Victoria will ban natural gas connections to new homes from next year as part of a plan to cut emissions and lower energy bills.
Hottest news of the week…
Regulation 🗃 – France taking a step back
What happened: It appears like the French government has stepped back from its initial plan to abolish gas boiler systems in new buildings by 2026. According to an article by Les Echos, the initial ban should now be removed. One of the cited reasons was international competition: the government thinks that most added value in heat pump components (e.g. compressor) comes from Asia, and does not like this. A similar analogy can be drawn with Italian tyre maker Pirelli’s case in China. 👀
Zoom out: European countries have launched very generous subsidy schemes linked to home energy renovation in recent years, and have set ambitious targets on several metrics, including heating. Overall, the agenda is set towards banning gas boiler systems and favouring heat pumps. However, problems such as the one mentioned above, the availability of heat pump installers and technical difficulties linked to how products would fit in the existing building stock, made some countries rethinking their plans. Germany has also revisited its initial targets a couple of weeks ago…👎
Business 💰 – Octopus energy going big on offshore wind!
What happened: Octopus Energy Generation, subsidiary of UK utility company Octopus Energy Group, has outlined a sensational plan to invest $20 billion in offshore wind by 2030! According to the plan, the investments should generate ~12GW of electricity per year, enough to power ~10 million homes, roughly equal to 40% of total houses in England. The investments, which will be carried out worldwide, represent a huge commitment for the firm, which currently has offshore wind assets of just over £1 billion.💸
Zoom out: This piece of news is vital for the European offshore wind industry, which is struggling from high material prices, increasing maintenance costs, and low public incentives. The sector is not looking good for investors right now, with investors like Swedish utility Vattenfall pulling out from already approved projects due to low margins. European institutions must do something to make offshore wind more attractive, as it is a fundamental source of electricity which we cannot afford to overlook.🌎
Innovation 💡 - Dessicants to the rescue!💪
What happened: In a race to decarbonize cooling, many start-ups are rethinking existing air conditioning systems. Currently, nearly all existing systems run on vapor compression, an approach by which a refrigerant is pumped around in a cycle and through heat exchangers, soaking up heat from the inside air and releasing it outside. This method requires a lot of energy, particularly 1) when it is very warm and 2) considering this approach deals with reducing humidity as well, thereby increasing energy needs. Here are where dessicants come into play: these are materials which suck up moisture, acting as dehumidificators. Several start-ups are launching new air-con hybrid systems which use dessicants to dehumidify, and cool at the same time, requiring less energy overall.💡
Zoom out: As heat waves are invading different parts of Europe, we come to terms with the relevance of air conditioning systems, and, most importantly, with the importance of having efficient systems. According to the MIT Download, electricity demand for air conditioning is expected to triple in the next few decades. Hence, to support the grid efficiency is key: one of the hypothetical hybrid systems described above can allow a potential 35% energy saving vs. conventional models.🔥
Deep dives of the week…
Chart of the week - Why gas boilers matter
In our news section, we discussed governments’ plans to abolish gas boilers to cut down emissions. This chart shows why gas boilers matter so much: in Europe, most of gas is consumed in the residential sector, 41%, followed by industry at 33%.
Source: S&P
Deals of the week
Field - solving the intermittency problem
Field, an energy storage start-up, has just raised £200 million in equity from DIF capital partners, an infrastructure fund. The start-up develops battery systems to store energy in periods of oversupply to then resell it to the grid in shortage periods. This service is very much needed, as it tries to mitigate the intermittency of renewables and the variation in the demand for electricity. This becomes even more important as renewables start making up a larger share of the total sources of electricity. Field was born in the UK and has already an active storage plant in Manchester, with 4 more under construction in other parts of the country. The large amount of money raised will foster expansion in Europe, starting from Italy!
Dioxycle – reusing CO2 to make plastic
Dioxycle is a French-American start-up that uses CO2 to produce ethylene. Ethylene is a fundamental component of various petrochemical derived materials, and it is the 3rd most polluting material after steel and concrete in many countries. Their technology is pretty complex…put in a simple way they created an electrolyzer that through the use of electricity combines water and CO2 into ethylene. The process itself is not new but it has always been considered very energy intensive. Dioxycle is trying to make the process as energy efficient as possible.
This technology could be disruptive as it would abate emissions from different sources: 1) It would create an additional market for CO2, hence increasing the incentives to capture CO2 before it is released in the atmosphere, 2) It would avoid all the emissions involved with ethylene production.
The success of the start-up depends on how cheap their technology can become. In the meantime, they raised $17 million from investors including Breakthrough Energy Ventures and Lowercarbon Capital.
👋 See you next Friday, for the best sum up of this coming week!
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