Latest / The Manufacturing Podcast with Fexingo: Factories, Supply Chains, and Industrial Business / How a Finnish Factory Uses Geothermal Heat to Cut Energy Costs
Transcript
- Lucas: So there is this factory in Finland, about an hour north of Helsinki, that used to burn natural gas to heat its production halls and offices. Natural gas in Finland, by the way, is not cheap — it has to be imported via pipeline from Russia, and after 2022 the pricing got extremely volatile. Luna: Right, and Finland also has cold winters. I mean, we're talking average January temperatures around minus ten Celsius. Lucas: Fifteen below at night sometimes. So keeping the factory at a stable twenty degrees requires a lot of energy. The plant manager there — his name is Juhani — decided to drill forty boreholes, each about three hundred meters deep, and install a giant ground-source heat pump system. It now covers eighty percent of the factory's heating load. Luna: Eighty percent is significant. What happened to the natural gas? Lucas: They cut gas consumption by eighty percent. The remaining twenty percent is for peak demand on the coldest days — they kept the old gas boilers as backup. But the heat pumps handle the base load year-round. And in the summer, they actually reverse the process to provide cooling. So the same boreholes work both ways. Luna: That's clever. So you're using the ground as a thermal battery essentially. Lucas: Exactly. The ground at three hundred meters stays at about eight to ten degrees Celsius year-round, regardless of what's happening on the surface. In winter, the heat pump extracts that heat and concentrates it to around sixty-five degrees for the heating system. In summer, it takes heat from the factory and dumps it into the ground. Luna: What was the upfront cost for that system? Lucas: Juhani told me the total project cost was about two point two million euros. That includes the drilling, the heat pumps, new piping, and the control system. The factory's annual gas bill before the retrofit was roughly six hundred thousand euros. So the payback period works out to about four years, assuming stable gas prices. Luna: Four years is pretty attractive. Especially if gas prices spike again. Lucas: Right. And that's without any subsidies. Finland does have some government support for industrial heat pumps, but Juhani's plant actually didn't qualify for the main program because they are not a small or medium enterprise. So they did it entirely on their own economics. Luna: That makes the case even stronger. If a large factory can justify a two-point-two-million investment purely on energy savings, that's a real signal. Lucas: Now, one thing I found interesting is that they chose geothermal over other options. Solar thermal was ruled out because the winters are dark and cloudy. Biomass was considered but the logistics of sourcing wood pellets were complex. And wind — well, putting a turbine on site would have required permitting that could take years. Geothermal was the most straightforward. Luna: 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 episodes like this one. Lucas: Yeah, it truly does. If these conversations have moved your work forward in some small way, that's where you can keep them coming. No pressure at all. Luna: Alright, back to the boreholes. So forty holes, three hundred meters deep. That's a total of twelve kilometers of drilling. How long did that take? Lucas: About three months. They had to coordinate with the factory's production schedule because the drilling rig needed access to part of the parking lot. They did it in phases — drill five holes, move the rig, drill five more. The whole thing was completed without any downtime for the factory itself. Luna: That's impressive project management. And the heat pumps themselves — what kind did they use? Lucas: They installed two large industrial heat pumps from a Finnish manufacturer called Calefa. Each unit has a heating capacity of about five hundred kilowatts. Combined, they can deliver up to one megawatt of thermal output, which covers about ninety percent of the peak winter load on all but the coldest days. Luna: One megawatt — that's enough to heat maybe a hundred typical homes. But for a factory, it's not huge. What kind of factory is this? Lucas: It's a metal components factory — they make parts for industrial machinery. The building is about fifteen thousand square meters. So not a massive plant, but medium-sized. The interesting thing is that they didn't insulate the building any further. The heat pumps just replaced the gas boilers, and the existing radiators and air handling units stayed the same. Luna: So it was a straightforward swap. That makes the retrofit more replicable. Lucas: Exactly. You don't need to upgrade the entire building envelope. The return temperature of the heating system is about forty degrees Celsius, which is well within the range of a modern heat pump. Older radiators might need to be upsized, but in this case it was fine. Luna: What about electricity consumption? Heat pumps use electricity to move heat, and if that electricity comes from fossil fuels, the carbon benefit is smaller. Lucas: Great point. Finland's grid is about eighty percent low-carbon — a mix of nuclear, hydro, wind, and biomass. So the electricity that runs the heat pumps is already quite clean. But even if the grid were dirtier, the heat pump's efficiency — a coefficient of performance around three point five — means it uses about seventy percent less primary energy than burning natural gas directly. Luna: So it's still a net win. And the factory's overall carbon footprint dropped by roughly what? Lucas: Juhani estimated a reduction of about sixty percent in scope one and two emissions. That's from the gas combustion plus the grid electricity for the compressors. The remaining forty percent is mostly from the backup gas and some process heat that still uses gas for a high-temperature furnace. Luna: That furnace — that's the part that's hard to electrify. You need temperatures above a thousand degrees for metal treatment. Lucas: Right. The heat pumps max out at about ninety degrees Celsius for the heating system. So for high-temperature processes, you still need gas or perhaps hydrogen in the future. But for space heating and low-temperature process heat — which is the majority of energy use in many factories — heat pumps can cover a huge share. Luna: And this factory is proof that it works in a cold climate. I think a lot of factory managers in Minnesota or Wisconsin assume that heat pumps are a warm-climate technology. Lucas: That's a common misconception. In fact, ground-source heat pumps actually perform better in cold climates because the ground temperature is more stable. Air-source heat pumps do struggle when it's extremely cold, but ground-source systems don't have that issue. The boreholes are deep enough that frost doesn't reach them. Luna: So what's the key takeaway for a factory manager listening? Lucas: I'd say: start with your heating bill. If you're spending more than about fifty thousand euros a year on natural gas or oil, a ground-source heat pump system is worth a serious look. The drilling cost is the biggest barrier, but the payback period is getting shorter as gas prices rise and heat pump costs fall. And you can often phase the drilling over a few years. Luna: Juhani mentioned that they are already planning to drill ten more boreholes next year to cover the remaining gas load. Lucas: That's the beauty of a modular system. You don't have to do it all at once. Start with the base load, see how it performs, then expand. I think we'll see a lot more factories doing exactly that over the next decade. Luna: One last question — what happens to the boreholes in fifty years? Do they eventually lose their thermal capacity? Lucas: Good question. The ground around the boreholes will slowly cool if you extract more heat than is replenished, but with proper design — spacing the holes far enough apart and balancing heating and cooling loads — the system can operate indefinitely. Juhani's system is designed with a fifty-year lifespan for the borehole field. After that, you might need to drill new ones, but the heat pumps themselves last about twenty-five years. Luna: So it's a long-term asset. And the factory gets energy price stability for decades. Lucas: Exactly. No exposure to gas price spikes. No carbon taxes — Finland has a carbon tax of about seventy euros per tonne of CO2, so the savings will only grow. It's a genuinely smart industrial investment.