Where Are Your Energy Costs? Transformative Opportunities in Food and Beverage Processing

By Terry Bickham, Vice President, Engineering and Business Solutions, Green CHP 

For many organizations, electricity is an indispensable resource, much like the air we breathe. Its significance often goes unnoticed until an issue arises—whether it's too hot, too cold, compromised in some way, or absent altogether. Like oxygen, electricity is a silent yet vital force that sustains our operations. In the food and beverage industry, hot water assumes a comparable role. Its use, including water heated to produce steam, is pivotal in guaranteeing food safety, maintaining hygiene standards, and ensuring the efficient transformation of raw materials into the final products that ultimately reach consumers. The seamless integration of hot water into our processes is fundamental to the quality and safety of the products we deliver. 

Another reality is that organizations face evolving and increasingly urgent challenges of energy costs, risk mitigation, sustainability or decarbonization initiatives, and electrification. Meeting the challenges of today requires evolving solutions. The best approaches are often holistic solutions that are scalable, leverage proven technologies and integrate business requirements with progress across multiple imperatives. This can include concepts, technologies, and best practices that leverage “the power of AND”, combining the best attributes of traditional Combined Heat and Power (CHP) with renewable energy, Solar PV with Solar Thermal. The power of the combined approach has multiple advantages: decarbonization AND scope 1 & 2 emissions reduction AND reliability AND sustainability AND scalability AND fuel free hot water production AND renewable electricity. 

The High Cost of Heat 

The percentage of energy costs attributed to hot water can vary significantly depending on factors such as the type of energy used, the efficiency of the water heating system, local energy prices, and company usage patterns. However, on average, hot water production typically accounts for a substantial portion of commercial energy consumption.  

What we do know is that energy costs typically account for 15% to 20% of a food processor’s total operating costs. An increase in energy rates for electricity and natural gas can have a significant impact on profitability. And inflation has not helped.  

In 2022, natural gas prices surged to a 14-year high. While wholesale prices for natural gas did come down in 2023, the volatility is likely to remain. Natural gas is a primary fuel for the electric grid as well as industrial processes with the unpredictability of demand and government mandates that increase utility prices makes it difficult for food processors to predict future energy costs. 

According to the recent econometric study, “Electric Bill Inflation in California,” conducted by energytoolbase (www.energytoolbase.com) electric utility bills in California cumulatively inflated nearly 70% on average over our 10-year period from 2014 to 2023. This cumulative rise is roughly 2.5 times higher than the 28% cumulative inflation rate, measured by the Consumer Price Index (CPI). One key observation was the considerable spike in electric bill costs from 2020 to 2023, which accounted for over 75% of the total cumulative increase due, in part, to significantly higher wholesale natural gas prices. 

Sustainability And Economic Performance Are Not Mutually Exclusive 

The cost of energy and its environmental impact significantly affects production expenses, with imposed limits, charges, and taxes contributing to the overall cost. One potential solution is optimizing energy use, improving processing efficiency, and reducing emissions. 

However, food processing faces challenges in optimizing energy efficiency and reducing costs compared to industries which benefit from concentrated mass production in a few locations, allowing for significant energy savings. Food processing is often spread over large geographies, operates seasonally, or relies on numerous small producers and processors in the supply chain. Many processes have prescriptive, unavoidable energy needs whether in the form of electricity or heat that are not mutable. These unique features have led to less emphasis on energy optimization in the food industry in the past.  

Despite these challenges, rising energy costs and environmental concerns, as well as sustainability mandates, have prompted a shift. Even less energy-intensive food processing plants, such as those producing sugar, ethanol, glucose, dry milk, tomato paste, vegetable oil, and fruit juice, are now considering alternative strategies to reduce both energy costs and environmental impact. 

Efforts to optimize energy use, adopt more sustainable practices, and reduce environmental impact are becoming increasingly important in the food processing industry for those companies wanting to remain competitive.  

For example, food processors are increasingly adopting heat recapture and reuse strategies to enhance energy efficiency and reduce overall production costs. By adopting these heat recapture and reuse methods, food processors can not only reduce energy consumption and costs but also contribute to environmental sustainability by minimizing the demand for additional energy resources. Another approach well suited to food processing, combined heat and power or cogeneration systems can be employed to produce electricity while simultaneously capturing and utilizing the heat generated in the process for heating or other production needs. While these systems are typically fueled by natural gas, attempts by food processors to reduce their total energy spend and meet renewable energy goals have food processors looking to alternative systems that combine heat AND power.  

The global shift towards sustainable practices is reshaping industries across the board, with the food processing and food and beverage sector taking bold strides towards adopting renewable energy solutions. One of the noteworthy trends gaining momentum is the integration of solar power in a combined heat and power solution. 

The Green Solution to Energy and Heat Recapture  

A traditional CHP system and a CHP system that incorporates solar energy as the “fuel” to harvest both power (PV) and thermal (T) energy, or Photovoltaic-Thermal (PVT) technology, share the common goal of simultaneous generation of electricity and useful heat. However, the incorporation of solar thermal PVT technology introduces key differences that enhances the overall efficiency and sustainability of the system. 

Combined Heat and Power (CHP) System 

A traditional CHP system generates electricity and captures the waste heat produced during the electricity generation process for use in heating or cooling applications. In a typical CHP system, a prime mover (such as a gas turbine, steam turbine, or reciprocating engine) is used to generate electricity. The waste heat produced during this electricity generation is then captured and repurposed for space heating, hot water production, or industrial processes. 

While CHP systems are known for their high efficiency compared to separate production of electricity and heat, they often rely on conventional fossil fuels with scope1 emissions considerations. 

CHP System with Solar Thermal PVT Technology 

A CHP system that integrates solar power and thermal PVT technology combines the benefits of conventional CHP with the added advantage of solar energy capture. The sun is not only bright, but also hot and free. PVT technology combines photovoltaic (PV) cells for electricity generation with solar thermal collectors for heat capture. This allows for the simultaneous production of electricity and thermal energy from a single system. Solar thermal PVT panels have a dual-purpose: they generate electricity from sunlight using PV cells, and they absorb heat from the sunlight using thermal collectors. This absorbed heat can then be utilized for various heating applications, such as providing hot water, pre-heating water for steam applications, or supporting space heating. 

By integrating solar thermal PVT technology into a CHP system, the overall efficiency is increased, as solar energy contributes to the heat input, reducing the reliance on conventional fuels. 

Benefits of a Green CHP Solution to Food and Beverage Processors 

A combined heat and power system powered by renewable solar energy offers several specific benefits to food processors, aligning with sustainability goals and providing economic advantages. Here are some key benefits: 

  1. Energy Cost Savings: 

By harnessing solar energy to power the CHP system, food processors can significantly reduce their reliance on grid electricity as well as lower energy costs. Solar power is a renewable resource with no fuel costs, providing a stable and predictable energy source. 

  1. Improved Energy Efficiency: 

CHP systems are known for their high efficiency as they simultaneously produce electricity and capture and utilize the waste heat generated during the process. Integrating solar power into a CHP system enhances overall energy efficiency with over 4x the energy capture over traditional solar power systems. 

  1. Lower Environmental Impact: 

Solar power is a clean and renewable energy source, generating electricity without emitting greenhouse gases or other pollutants. By combining solar energy with a CHP system, food processors can significantly reduce their carbon footprint and environmental impact, aligning with corporate sustainability goals and meeting regulatory requirements. 

  1. Energy Independence: 

Solar-powered CHP systems provide a degree of energy independence for food processors. By generating electricity on-site, businesses can become less dependent on external power sources and mitigate the impact of fluctuating energy prices. Solar powered CHP systems are immune to fluctuating fuel prices including natural gas price volatility and inflation. 

  1. Reliability and Resilience: 

Solar energy is a reliable and predictable resource. Integrating solar power into a CHP system enhances energy reliability, with energy storage options ensuring a continuous and stable power supply. This is particularly valuable for food processors with critical production processes that require uninterrupted power. 

  1. Financial Incentives: 

Food processors using solar-powered CHP systems may qualify for utility incentives, rebates, and tax credits, further reducing the overall cost of implementing such a system. Governments and utilities often encourage the adoption of renewable energy solutions through various financial incentives. Leveraging federal and state carbon credits and tax incentives can create new revenue offsets, enhancing your company's financial performance. 

The long-term benefits in terms of cost savings, environmental responsibility, and energy resilience make renewable energy fueled CHP an attractive and sustainable choice for food processors committed to improving overall business performance. 

Our Commitment to Transforming the Food Industry 

As a leading integrated energy solutions provider, Green CHP is committed to working with the food and beverage industry facilitating the transition from higher-cost, utility-dependent energy to lower-cost, renewable energy. Our hybrid thermal solar panels are designed to lower costs for both hot water and electric power. 

Companies partnering with Green CHP gain a competitive advantage. By meeting environmental compliance and emissions goals, they position themselves as market leaders while simultaneously improving profitability and overall business performance. By leveraging your existing infrastructure, our proven solution ensures a seamless and simple transition to a hybrid solar water and power system, transforming what was once a liability into an asset. This enables our customers to meet environmental goals, reduce emissions, and enhance profitability, gaining a competitive edge in the market. 

The adoption of efficient and green solutions for energy in the food processing and food and beverage industry is not merely a trend; it's a strategic imperative. Innovative solutions are paving the way for companies to achieve sustainability goals, reduce costs, and gain a competitive edge in an ever-evolving business landscape. As the industry continues to embrace alternative energy solutions, the transformative potential of solar and combined heat and power promise a brighter, more sustainable future for the food sector. 

Free Custom Energy Audit and Cost Reduction Report 

To get a more accurate estimate of the percentage of energy costs attributed to hot water in a specific context, it is recommended to consider factors like the type and efficiency of the overall system, local energy prices, and plant usage patterns for any given facility. Green CHP can provide you with a free audit and report on your potential cost savings and ROI. Contact our Chief Commercial Officer Glyn Strong directly at glyn.strong@usgchp.com or visit http://www.usgchp.com.   


About Terry 

Terry Bickham has driven success over the past three decades in a variety of leadership roles, including as the national services director for an energy services company, an energy engineer and energy engineering instructor, and an energy manager for a multinational firm. He holds a degree in engineering from the U.S. Naval Academy, and his professional qualifications include Certified Energy Manager (CEM), LEED AP, Certified Sustainable Design Professional (CSDP), and Certified Demand Side Management (CDSM). Terry is a sought-after speaker in national forums on topics including energy storage, the Inflation Reduction Act, integration of energy services within performance contracts, and energy as a service model.