Latest / The Manufacturing Podcast with Fexingo: Factories, Supply Chains, and Industrial Business / How a Danish Factory Uses Thermal Batteries to Cut Steam Costs
Transcript
- Lucas: There's a factory just outside Aarhus, Denmark — a big industrial bakery that's part of the Danish Crown cooperative — and last year it stopped burning natural gas to make steam. Luna: Wait — they just stopped? What did they replace it with? Lucas: A thermal battery. Specifically, a 4-megawatt resistance heater that heats up a container of crushed volcanic rock to about 600 degrees Celsius. That heat is then used to generate steam on demand. The company behind the tech is called Hyme Energy — spun out of a Danish university project. Luna: So essentially they're using rocks as a battery for heat. How does that compare to, say, a lithium-ion battery? Lucas: Completely different economics. Lithium-ion batteries are great for electricity to electricity storage, but they're expensive per kilowatt-hour and they degrade. A thermal battery is just crushed stone in an insulated tank — the marginal cost of storing an extra kilowatt-hour of heat is basically the cost of the rock and the insulation. Hyme claims their system costs about one-tenth per kilowatt-hour of storage compared to a lithium battery. Luna: But the round-trip efficiency has to be lower — you're turning electricity into heat and then heat back into steam, there's loss at each step. Lucas: Right, you're losing maybe 20 to 30 percent compared to direct electric heating. But here's the thing: the factory doesn't care if it's 70 percent efficient if the input electricity is cheap enough. They charge the battery during off-peak hours when grid power is cheap — often negative prices in Denmark when the wind is blowing hard — and then discharge the heat during the day when natural gas would otherwise be expensive. Luna: So it's an arbitrage play on energy prices, not just a green move. Lucas: Exactly. The bakery told Hyme they expect payback in under four years based purely on the spread between off-peak electricity and natural gas. The CO2 reduction is a bonus. But for a factory that needs high-temperature heat — and steam especially — this is a pretty elegant solution. Luna: Steam is everywhere in food processing, chemicals, textiles. How big is this market? Lucas: Huge. IEA data says industrial heat accounts for about 20 percent of global energy demand, and steam alone is roughly 30 percent of that. That's a lot of natural gas boilers that could be replaced. But the challenge is that most factories run batch processes — they need steam at unpredictable times. A thermal battery gives you that on-demand flexibility. Luna: I'm curious about the rock itself. Does it degrade over thousands of cycles? Lucas: Hyme uses a specific type of crushed basalt — it's abundant in Denmark from old volcanic deposits. The material doesn't undergo any phase change, it just stores sensible heat. They've tested it for over 10,000 cycles in the lab with minimal degradation. Compare that to a lithium battery that might lose 20 percent capacity after 5,000 cycles. Luna: And the installation at the bakery — how big is the tank? Lucas: It's about the size of a shipping container — 40-foot equivalent. The 4-megawatt heater sits on top, and the whole thing is heavily insulated. It provides about 12 megawatt-hours of thermal storage, which covers the bakery's peak steam demand for several hours. Luna: So the bakery can basically run its ovens and cleaning lines without a gas connection during peak hours. Lucas: Exactly. And they still have the old gas boiler as a backup, but they're running it less and less. The plan is to eventually disconnect from the gas grid entirely. Luna: What about other industries? Is this scalable beyond food? Lucas: Hyme is already working with a chemical plant in Germany that needs superheated steam for distillation. And there's a paper mill in Sweden looking at a 20-megawatt version. The modular design means you can stack multiple containers. The limiting factor is really the electricity grid — you need a big enough connection to charge the battery quickly. Luna: That's interesting — you're basically turning the factory into a grid asset. The battery can also help stabilize the local grid by soaking up excess renewable power. Lucas: That's the next phase. Hyme is working with the Danish grid operator to provide frequency regulation services during charging. So the factory gets paid twice: once for the energy arbitrage, once for grid services. That could shrink the payback period even further. Luna: It feels like one of those rare cases where the green solution is actually cheaper than the fossil fuel one, at least in a market with high carbon taxes and volatile gas prices. Lucas: Denmark is a special case — carbon tax is about 150 euros per ton of CO2, and gas prices have been volatile since 2022. But the economics are getting better elsewhere. In the US, the Inflation Reduction Act has a tax credit for industrial electrification that can cover 30 percent of the capital cost. Hyme is looking at projects in California and New York. Luna: A quick honest thing — a handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making this many of these episodes. Lucas: Yeah, it's true. We don't run ads, we don't have sponsors, and we want to keep it that way. If these conversations have moved your work forward in some small way, that's where you can help keep it going. Luna: And it's really a small group — less than two percent of listeners — but it makes all the difference. Lucas: Anyway — back to the rock battery. One question I get a lot is: what happens if the basalt dust gets into the steam system? Luna: I was wondering about that. Isn't there a risk of particulate contamination? Lucas: Hyme uses a closed-loop heat exchanger — the air that circulates through the rock never touches the water. The hot air goes through a heat exchanger that boils the water into clean steam. So the steam is as pure as from a gas boiler. Luna: That makes sense. What about the footprint? The tank at the bakery is about the size of a shipping container — but if you scale up to 20 megawatts, you're looking at multiple containers. Lucas: Right. For a big paper mill, you might need 10 or 12 containers. But the containers can be stacked two high, and you can put them on a concrete pad outside — doesn't have to be inside the building. The paper mill in Sweden is planning to put them on a vacant lot next to the mill. Luna: So it's not a huge land grab. And the permitting should be simpler than a lithium battery because there's no fire risk. Lucas: That's a big selling point. Hyme's system is classified as non-combustible — it's just hot rocks. So you don't need the same fire suppression systems or setback distances. That saves on insurance and compliance costs. Luna: I want to go back to the economics for a second. You said payback in under four years at the Danish bakery. But that assumes a certain spread between gas and electricity prices. What happens if gas prices drop? Lucas: That's the risk. If European gas prices fall back to pre-2021 levels, the arbitrage narrows. But Hyme's CEO told me they model a break-even gas price of about $6 per million BTU — roughly equivalent to $35 per barrel oil. Current European gas is around $10 per million BTU, so there's a buffer. And again, the grid services revenue adds another layer. Luna: And the carbon tax isn't going away in Europe. If anything, it's likely to rise. Lucas: Exactly. The EU's carbon border adjustment mechanism is going to make it harder to import goods made with cheap fossil fuels. So factories that electrify early may have a competitive advantage in export markets. Luna: That's a good point — this isn't just an energy story, it's a trade story. Lucas: It really is. And one more thing: Hyme is not alone. There are at least a dozen startups working on thermal batteries for industry — companies like Rondo Energy in the US, which uses bricks instead of rocks, and Kraftblock in Germany, which uses a ceramic material. The Danish bakery is just one early case, but it's a proof point that the technology works at commercial scale. Luna: It's refreshing to hear about a climate solution that's not about subsidies or mandates — just better economics. Lucas: Yeah. It's rare, but it's happening. And for any factory manager listening who's tired of volatile gas prices, it's worth at least looking at the numbers. For this episode, I've put a link to Hyme's case study on the show page — we'll have that at fexingo dot com slash manufacturing. Luna: And if you want to support the show directly, you know where to find us. Lucas: Alright, next week we're looking at a completely different angle — how one factory in Ohio is using AI to predict machine failures before they happen. The results are pretty wild.