Application of a novel heat pump model for estimating economic viability and barriers of heat pumps in dairy applications in the United States

Abstract

Heat pumps represent an important opportunity for energy savings and decarbonization. This work investigates the techno-economic performance of high-temperature heat pumps (HTHPs) for use in the U.S. dairy industry. The studied heat pump performs a 50 °C temperature lift on a waste heat stream of cleaning water and applies the upgraded heat stream to a fluid milk pasteurization process. This work involved the creation of a HTHP model that estimated the coefficient of performance (COP), internal rate of return (IRR), net present value (NPV), and payback period (PBP), and emissions saved for a heat pump replacing a natural gas boiler. Capital costs, operations, and maintenance (O&M) cost, heat pump lifetime, electricity prices, natural gas prices, and a cost of carbon were varied to perform a parametric study on the factors affecting the break-even price of HTHPs. The results show that HTHP economics are highly sensitive to COP and energy price environment, and less sensitive to capital and O&M cost variance, leading to a large scatter of positive and negative NPVs based on U.S. location. PBPs demonstrate a defined threshold, based on energy price environment, below which favorable two-to-three-year PBPs predominate. This work is focused on the U.S. dairy industry, but international application in relation to fossil vs. electricity price regimes. Heat pumps have seen wider adoption in regions with a high ratio of fossil energy to electricity prices ($/MMBTU vs. $/kWh). The U.S. has plentiful natural gas resulting in lower fossil energy prices which has reduced heat pump adoption. This paper identifies potential first mover industries for HTHP adoption and their associated price regimes even in regions with lower ratios of fossil energy to electricity prices that exist many places globally.