Editor’s note: At the time of this writing, federal programs including the Inflation Reduction Act (IRA) and 48C Tax Credits are on hold, and the status of other programs (DOE, EPA, etc.) is unknown until details are worked out by the current Trump Administration.

Forecasts suggest that 2025 liquid natural gas (LNG) prices may remain stable or decline slightly due to increasing production and weaker demand growth. However, by 2026, prices could see some upward pressure if LNG exports rise significantly or supply tightens. While natural gas is seen as one of the more sustainable energy sources, nevertheless there is a relatively limited supply of it and its potential volatility has processors looking at other options.

Explore More Sustainability

Industrial heat pumps (IHPs), though they use electricity as an input, have the ability to put out more thermal energy per watt input than electrical resistance heating and provide an option for obtaining heat without the need for boilers. Whether an IHP will work in a certain application needs research and careful attention before taking on such a project.

However, according to a recent announcement from the American Council for an Energy Efficient Economy (ACEEE), new food/beverage IHP projects are underway or completed and up and running. A new interactive map recently released online from the ACEEE reveals that more than 50 manufacturing facilities across 22 states have announced plans to adopt clean heat from IHPs and thermal batteries (also known as thermal energy storage (TES) tanks). Many of these projects are being deployed at food and beverage manufacturing facilities across the U.S., says Andrew Hoffmeister, ACEEE senior research analyst. [1]

 According to Hoffmeister, innovative financing from states can help boost early adoption of clean heat. Thanks in part to support from the California Energy Commission, a major CPG company has announced plans to install a steam-generating heat pump from Skyven Technologies at its facility in Southern California. Similar programs helped California Dairies, Inc. adopt Skyven’s clean heat technology at two facilities in 2023, preventing 7,000 metric tons of CO₂ emissions per year — or the pollution equivalent of driving more than 1,600 vehicles for a year. [2]

Clean heat technologies can transform manufacturing facilities into a flexible resource for the grid, making it possible to bring down peak electric demand, lowering owners’ costs. To help make these benefits widespread, the Renewable Thermal Collaborative published a new playbook to help utilities support industrial electrification. [3]

Lower electric rates in regions such as the Southeast and Mid-Atlantic are making industrial heat pumps more cost competitive against natural gas-fired boilers, a phenomenon backed up by recent research.[4] Already, industrial heat pumps are in place at lumber facilities near Harrisburg, Pennsylvania, as well as a brewery just north of Atlanta. Best ROIs, says Hoffmeister, come from operations with simultaneous heating and cooling needs plus running times in excess of 4,000 hours per year.

IHPs present a compelling opportunity for food processors to hedge against the volatility of natural gas prices, says Grant Kovac, Vilter director of product management. “Unlike fossil fuel-based heating, IHPs run on electricity, providing a stable and often more cost-effective alternative, particularly as industries move toward electrification to meet sustainability goals. Additionally, IHPs are significantly more energy-efficient than traditional boilers, leveraging the refrigeration cycle to deliver three to four times the heat output per unit of electricity consumed.”

Costing IHPs

In Europe where taxes paid on CO₂ emissions are high, IHPs have already been in service for more than 10 years, says German Robledo, industrial heat pump sales manager for North America, GEA HRT (Heating & Refrigeration Technologies) NAM. In addition, natural gas prices in Europe are higher while electricity is lower than the U.S. In some areas, European utilities reduce their rates significantly for manufacturers who are using IHP technology.

IHP is a way to make the heating process more efficient, Robledo says. An IHP will always show high efficiency compared to a combustion boiler, where the boiler may be either 80% or 90% efficient; electrical boilers, 95%; electrode boilers, 98% — where IHPs show an efficiency depending on temperature lift and capacity requirements of 200% or more, Robledo says. Many IHPs with temperatures of about 180°F will fall into a 4 or 5 COP (coefficient of performance or efficiency, where a COP of 1 is 100% efficient and 2 is 200% efficient, and so on).

“From an ROI perspective, the payback period for IHP installations varies,” Kovac says. When food and beverage manufacturers optimize their systems to utilize both the heating and cooling capabilities of an IHP, the efficiency gains can reduce the payback period. The best ROI scenarios emerge when food processors integrate IHPs into applications requiring simultaneous heating and cooling, such as food and beverage facilities with existing refrigeration systems.

A processor needs to implement the break-even COP methodology, which is the minimum efficiency required for a heat pump to be considered a feasible investment, independent from the specifics of the process such as the required temperatures and availability of excess heat, Robledo adds.

This is related to the electricity price to gas price ratio (spark gap) of the location where the project will be executed. Break-even COP considers operation and investment costs to explore various investment scenarios: socio-economic and private economic risk aversion, characterized by differences in expected payback periods (investment lifetime and usual industry payback periods, respectively).

“If COP is lower than the spark gap ratio, to justify investment becomes a challenge,” Robledo says. “COP needs to be equal to and preferably higher.”

“IHPs like Skyven Arcturus (which use electricity to generate steam at efficiencies three times higher than standard natural gas boilers) can be used to offset increasing energy prices for natural gas,” says Chris Barnhill, Skyven Technologies director of marketing.

Arcturus is installed in a redundant, hybrid configuration with existing steam generation systems at manufacturing facilities, Barnhill adds. This enables fuel-switching between Arcturus and the existing steam systems to produce steam using whichever energy source is less expensive at any given time, reducing operating costs for the manufacturer.

Suitable Applications

“IHPs are particularly effective in processes that require simultaneous heating and cooling, such as pasteurization, sterilization, drying and space heating,” says Brian Hafendorfer, Gray AES, director, mechanical engineering. “Recently installed IHP systems have shown ROIs ranging from two to five years, depending on the energy savings and available incentives. Consideration for the future beyond just looking at LNG pricing is also import as some restrictions may be imposed on the use of gas for heating. Electrification of heating sources goes beyond just considering price.”

“IHPs can significantly reduce fuel consumption by recovering and upgrading waste heat, cutting reliance on natural gas,” says Tania Herrera, Güntner key account and product engineer. “IHPs are most effective in processes requiring simultaneous heating and cooling, like dairy processing, breweries and beverage production — and meat and poultry processing. Depending on the installation, IHP can achieve between 20-60% reduction in gas consumption when replacing traditional boilers, leading to long-term cost savings and sustainability benefits.”

Sustainability Benefits Realized

As might be expected, while there are new IHP projects underway, getting particular case-history information about them is a challenge for several reasons. The installations so far sold or installed in North America and using GEA, have been executed by outside companies that have not shared many details of the projects, and many have gone through NDA — which prevents sharing information, says GEA’s Robledo. Only one case has been a greenfield or new plant, and the others have been brownfield or retrofitting existing facilities. None had any federal or state or organization funding, grants, incentives other than internal funding and internal corporate incentives, mainly decarbonization targets. “Funding in the USA is short and poor,” Robledo says.

“We have delivered [IHPs] from 1 MW, 2MW and 4MW heating capacity and temperature ranges from 180°F up to 203°F,” Robledo says. “Per some publications, the CO₂ abatement is around 0.185 kg per heating kW capacity where this would indicate that 1 MW would reduce 185 kg CO₂ per hour, and if we account for 5,400 hours per year (18 hours per day, 6 days per week, 50 weeks per year) would be 999 tons CO₂e (carbon dioxide equivalent) per year. But the overall picture needs to consider the CO₂e total abatement including the one coming from the electricity supplier and whether it is gas turbine, water turbine, solar PV, or wind turbine.”

Besides reducing carbon emissions, an unexpected benefit for some facilities is reduced water consumption, says Vilter’s Kovac. “IHPs optimize water usage by reducing reliance on evaporative cooling towers — an advantage particularly relevant in water-stressed regions.”

Installing IHPs and decreasing boiler usage has other sustainability benefits besides reducing carbon footprints, says Skyven’s Barnhill. “Skyven Arcturus uses electricity to generate steam, reducing loading on the plant’s existing fossil fuel-fired boilers. Reduced combustion of fossil fuels leads to cleaner air via fewer CO₂ emissions plus reduced emissions of criteria air pollutants like NOx, SOx, particulate matter, VOCs, etc. They also reduce Carbon Intensity (CI) score at manufacturing facilities and reduce the carbon footprint of products produced at each site.”

Available Funding — Depends…

Available funding in the U.S. can come from several sources, but how much and if it’s available depends on whom you ask. Barnhill suggests that both state and federal funding has been available to cover capital costs of IHP projects in the form of grants:

• Federal: OCED Industrial Demonstrations Program, 48C tax credit
• State: States with sustainability programs include CA, NY and others

However, GEA’s Robledo notes that from the federal standpoint, the IRA act is now frozen, and 48C Tax Credits are also now on hold by the new Trump Administration, and no one yet knows the future. Robledo notes again that Europe’s programs are already well defined compared to U.S. programs.

According to Gray’s Hafendorfer, some states, including California, New York and Massachusetts, offer incentives or grants for energy-efficient industrial solutions like IHPs, and other jurisdictions have targeted phasing out the use of gas as a priority. Federal programs, such as the Department of Energy’s (DOE) Industrial Efficiency programs, may also provide funding. This has shown to be a very dynamic situation with local, state, federal and even international regulations from other countries have been in flux on what is looking to be more scrutinized with regulations, currently phased out and possibly being deregulated. The political atmosphere is constantly reshaping the status quo on incentives and phaseouts.

Günter’s Herrera lists some specific options for potential grants and tax incentives, including:

• Inflation Reduction Act (IRA) which offers tax credits and grants for energy efficiency projects (including IHP, of course).
• U.S. Department of Energy (DOE) Industrial Efficiency Programs. The Better Plants Initiative supports IHP adoption through technical assistance and funding.
• EPA Climate Pollution Reduction Grants (CPRG): provide grants to states, local governments and territories to develop and implement plans for reducing greenhouse gas emissions
• New York: NYSERDA (New York State Energy Research and Development Authority) provides grants for heat recovery and electrification projects in food processing.
• Minnesota: The Minnesota Energy Efficiency Program offers grants and rebates for industrial heat recovery systems.
• Oregon: The Energy Trust of Oregon funds industrial energy efficiency upgrades through cash incentives for IHP projects.
• California: California Energy Commission (CEC) offers grants and low-interest loans for industrial energy efficiency.

For more information on projects and funding aids, see the sidebar provided by ACEEE entitled “IHP Solutions and Government Programs.”

Powering IHPs and the Future

Later this year, we’ll look at Grid support for IHP technology and integrating IHPs into existing chilling and freezing systems.

On another note, it’s clear that moving away from fossil-fuel power for electric generation is necessary, but an overlooked source to include in the clean-energy arsenal is nuclear. Unlike the giant megalith nuclear power plants of the past, smaller, more manageable and safer nuclear systems are on the horizon. One-third the size of conventional nuclear plants, these systems have three-times better fuel utilization and can provide up to 345 MWe.[5] As we move toward an electric economy with increased demands on electricity coming from manufacturing, digital data centers and AI systems, nuclear systems will operate around the clock with continuous power output—unlike solar and wind power.

References/Resources

[1] “Industrial Electrification Across the United States,” Electric Heat Technology Installations, ACEEE, 11 FEB 2025.

[2] “Decarbonizing Process Heat at California Dairies, Inc. with Skyven Technologies,” Renewable Thermal Collaborative, April 2024.

[3] “Utility Engagement Playbook for Industrial Customers,” Renewable Thermal Collaborative, December 2024

[4] “Decarbonizing Industrial Heat: Measuring Economic Potential and Policy Mechanisms,” Center for Applied Environmental Law and Policy, October 2024

[5] “The Next Generation of Power is Here: The natrium® reactor and energy storage system,” TerraPower, LLC, 2025

“Upgrading Chilling Equipment to Industrial Heat Pumps,” Wayne Labs, FE, October 2024