Latest / The Manufacturing Podcast with Fexingo: Factories, Supply Chains, and Industrial Business / How a Texas Factory Is Cooling Data Centers with Waste Heat
Transcript
- Lucas: So there's this factory outside Dallas — makes industrial valves, big heavy cast-iron things — and it has a problem that a lot of factories have: it generates massive amounts of waste heat. Furnaces, presses, all that equipment runs hot. Luna: Right, and normally that heat just vents out into the Texas air. A lot of energy goes literally up a stack. Lucas: Exactly. But this plant, it's part of a company called Valv-Tech — not a household name, but they supply valves to most of the oil and gas pipelines in the Permian Basin. They were spending about 3 million a year on electricity, mostly running compressors and cooling for their own facility. Luna: So they're a big energy user themselves. What changed? Lucas: Around 2024, a colocation data center operator called CoolCore approached them. They needed to build a new facility nearby, and they were looking at a 10-megawatt power draw just for cooling — that's like running a small town of 5,000 homes. And in Texas, that meant big grid strain and big bills. Luna: So the data center needed cooling, and the factory had heat to get rid of. That's a match. Lucas: It's a perfect symbiosis. What they installed is an absorption chiller — it's basically a refrigerator that runs on heat instead of electricity. The factory's exhaust gases, at about 250 degrees Fahrenheit, go into this chiller, which uses a lithium bromide solution to produce chilled water at about 40 degrees. That water then pipes over to the data center's cooling loops. Luna: Wait, so the factory actually gets cooler while the data center gets cold water? That's... almost magical. Lucas: It feels like magic, but it's thermodynamics. The chiller replaces what would have been electric compressors — the data center's chillers would have drawn 4 megawatts alone. Now they draw almost nothing for cooling. The factory, in turn, doesn't have to run its own cooling towers as hard, because the heat extraction lowers the ambient temperature in the plant. Luna: So the savings are mutual. What are the numbers looking like? Lucas: Valv-Tech's energy bill dropped by about 1.2 million per year — that's a 40 percent reduction. The data center cut its cooling power usage by 40 percent as well, saving roughly 800,000 annually. The combined capital cost for the chiller and piping was around 4 million, so payback is under two years. Luna: That's fast. But I imagine a big part of that math comes from the Inflation Reduction Act's tax credits? Lucas: Huge. The IRA's Section 48 investment tax credit covers 30 percent of the cost for combined heat and power systems and waste heat recovery. That effectively knocked 1.2 million off the upfront. Plus, the chiller qualifies for accelerated depreciation under the Modified Accelerated Cost Recovery System, so the after-tax payback is even quicker. Luna: And Texas's deregulated electricity market probably helps too — they can sell any excess power back to the grid. Lucas: They actually went a step further. Because the factory's overall load dropped, they freed up capacity on their existing transformer. They now host a small solar array on their roof — 2 megawatts — that feeds directly into the data center during peak sunlight hours. The factory gets a lease payment from the solar installer, and the data center gets cheaper daytime power. Luna: So the factory is basically becoming an energy hub. It's no longer just a consumer. Lucas: That's the bigger trend here. Factories have always been net energy users, but they also sit on underutilized assets: roof space, waste heat, even parking lots for solar canopies. If you can combine those with a nearby high-density load like a data center, you create a microgrid that's more efficient than either alone. Luna: Are there other examples of this? Is it scaling? Lucas: A few. There's a paper mill in Maine that pipes steam to a data center. A cement plant in Colorado is exploring using its kiln heat to power a bitcoin mining operation — which is just computing heat, similar idea. But the Texas case is the cleanest example because the chiller technology is off the shelf and the data center is a natural partner. Luna: Bitcoin mining is interesting, but it feels less aligned with sustainability goals. The data center at least provides useful computation. Lucas: Agreed. And the data center operator, CoolCore, is actually marketing their facility as 'carbon-free cooling' — it's a selling point for tenants like cloud providers who have ESG commitments. They're charging a slight premium, but clients pay it because it reduces their scope 2 emissions. Luna: So the factory's waste heat becomes a revenue stream indirectly. That flips the old model on its head. Lucas: Completely. And there's a secondary benefit: the factory's equipment lasts longer. Lower ambient temperature means less thermal stress on motors, bearings, and electronics. They've reported a 15 percent reduction in unplanned downtime since the chiller went live. Luna: Wow — so the cooling system pays for itself in multiple ways. Energy savings, tax credits, maintenance savings, and a new revenue line. Lucas: Exactly. And it's not just about the money. The chiller itself is a piece of industrial equipment made by a company called Broad — they're a Chinese firm that's been making absorption chillers for decades. The unit is about the size of a shipping container, and it runs almost silently. The only moving parts are pumps. Luna: No compressors, no refrigerants. That's a big deal for maintenance. Lucas: Right. Traditional chillers use refrigerants like R-134a which have high global warming potential. The absorption chiller uses water and lithium bromide — basically salt. So the carbon footprint of the cooling itself is near zero. Luna: I want to push back a little, though — this works because the factory is right next to the data center. How many factories have a data center next door? Lucas: That's the limiting factor. But you're starting to see industrial parks designed around this idea. In Virginia, the Loudoun County data center alley — which is the biggest in the world — there's a proposal for a combined heat and power plant that would serve both data centers and nearby manufacturing. The economics make sense at scale. Luna: So it's more viable in greenfield developments than retrofits? Lucas: For now. But the retrofits can work if you've got a willing data center within a mile or so. The piping costs are the biggest barrier — insulated underground pipe runs about 500 dollars per linear foot. A mile is over 2.5 million. Still, if the data center is big enough, it pencils out. Luna: The Texas case is only 500 feet of pipe. That's the sweet spot. Lucas: Exactly. And Valv-Tech and CoolCore are now talking about a second phase — using the factory's waste heat to also warm the data center's offices in winter. That's even simpler: just air handlers that pull heat from the exhaust instead of running electric heaters. Luna: So the factory's waste heat becomes a year-round resource. Lucas: Honestly, if today was worth a coffee to you, that's the link — buy me a coffee dot com slash fexingo. We keep the show ad-free, and episodes like this one, drilling into real industrial innovation, are possible because of listeners who chip in. Luna: Yeah, it's a small gesture that goes a long way. If these conversations have moved your work forward in some small way, that link is there. Lucas: Back to the cooling system — the interesting question is whether this model can scale to the 15,000-plus data centers projected globally by 2030. That's a lot of potential partners for factories. Luna: And a lot of waste heat that could be captured. I wonder if we'll see a standard 'factory to data center' kit from companies like Broad or Trane. Lucas: I think we will. The absorption chiller already is a standard product. The missing piece is the pipe and the business arrangement — the heat purchase agreement. CoolCore basically pays Valv-Tech a monthly fee for the chilled water, tied to the data center's cooling load. It's like a power purchase agreement, but for cooling. Luna: So the factory gets a new recurring revenue stream, and the data center gets predictable cooling costs. Lucas: Exactly. And because the chiller runs on waste heat, the marginal cost of the cooling is essentially zero. The factory was already venting that heat. So every dollar the data center pays is pure margin for the factory. Luna: That's a powerful incentive for other factories to look at their own waste streams. Lucas: It is. And it's not just heat — you could do the same with waste process gases, like methane from landfills or biogas from food processing. The chiller can be adapted to run on any heat source above 150 degrees. Luna: So this one Texas factory might be the blueprint for a whole industrial symbiosis movement. Lucas: That's the hope. And honestly, it doesn't require breakthrough technology — just the will to partner across industries. Luna: And a bit of tax credit math. Lucas: Always helps. Next week we're looking at a factory in Ohio that's using 3D printing to make spare parts for aging machinery — cutting lead times from months to hours. See you then.