Waste Heat Recovery and Utilization: The Resource is Substantial: Absorption Chillers Use Waste Heat for Cooling, and Heat Pumps, Heat Exchangers, and Turbines Convert it to Electricity

      Kathleen "Katie" McGinty, Vice President and Chief Sustainability and External Relations Officer for Johnson Controls, argues that much more waste heat can be recovered from U.S. industries. She says the most effective waste heat recovery projects will be those that are deployed faster, more prices in operation, and those that are the most adaptive under pressure. These projects are enabled by “smaller, cheaper and more agile technologies are proving capable of outpacing far more complex, capital-intensive systems built for a previous era.”

     Her argument is basically one that prioritizes efficiency improvements by getting more from systems in place rather than building new, costly systems. She cites data that shows that 20-50% of the energy in some of our industrial systems is effectively wasted, most often as heat. She cites a McKinsey report from 2023 that concludes there is more than 3,000 terawatt-hours of usable waste heat that remains untapped globally each year, equivalent to three-quarters of total U.S. electricity consumption.

     The U.S. DOE notes that industrial waste heat consists of:

“…hot exhaust gases, cooling water, and heat lost from hot equipment surfaces and heated products.”

     They also note that there are many waste heat recovery technologies available, but they are not being utilized enough due to material constraints and higher maintenance costs.

     McGinty notes that AI systems are both increasing power demand with data center buildouts and being employed to make energy and heat recovery systems more efficient. The data center industry itself can be made more efficient.

“Industry-wide, average power usage effectiveness (PUE) remains around 1.5-1.6, meaning roughly one-third of total energy is wasted on non-compute work.”

     Cooling by far makes up the bulk of the “non-compute work” of data centers.

“Leading operators have demonstrated compliance with <1.3 annualized PUE targets while eliminating water evaporation from the cooling process. In other words, these data centers can cut non-compute related energy by 50%, while avoiding reliance on community resources such as water. At scale, that saved energy becomes immediately available capacity.”

     McGinty continues:

“Heat is the dominant form of energy in the global economy, accounting for nearly half of final energy consumption, yet it is rarely treated as a resource once generated.”

“That is a missed opportunity.”

“That is a missed opportunity.” Technologies like absorption chillers make it possible to use heat—not electricity—for cooling. When integrated into systems such as data centers, they can reduce chiller electricity by 90% while converting waste into a valuable workhorse.”

     Again, she emphasizes that both efficiency improvements and waste heat recovery have much faster deployment times, months, not years, which confers competitive advantages as well as reduced environmental impacts. Avoiding new buildouts of energy systems also leads to very significant cost-savings, which often keeps efficiency and waste heat recovery as low-hanging fruit.

“The winners in energy will not simply be those who only build the biggest systems. They will be those who combine scale with agility, delivering capacity more quickly, efficiently and intelligently.”

     Below, the chart estimates potential savings from the two classes of heat recovery: heat-to-heat and heat-to-power.

     McGinty also encourages those who keep statistics to keep better tabs on the amount of potentially recoverable energy through efficiency upgrades and thermal recovery.

     The McKinsey report from November 2023, the source of all the graphs in this post, is mainly focused on thermal recovery to reduce carbon emissions, but it gives some very good data and details on the size of the resource, types of thermal recovery, and possible ways to optimize it. Below, McKinsey gives the approaches and technologies of waste heat recovery. The three approaches are reuse, upgrade, and convert to electricity. Heat exchangers facilitate reuse. Upgrades include mechanical vapor recompression (MVR), heat pumps, and heat separation. Thermal energy is converted to electricity via steam turbines and Organic Rankine cycles (ORCs).

“Much of the reduction in the cost of waste heat recovery is due to the modularization of equipment and standardization of design, with further reductions when technologies scale up.”

     Those can be seen as scale-up features that lower costs.

     In buildings, better insulation and combining floor heating with heat pumps have resulted in better heat management and improved efficiency. They note that newer district heating systems can effectively harness much lower temperature heat sources than older systems. Thus, now industrial waste heat can power district heating as is being done increasingly in Europe.

     Below, they show the significant waste heat recovery potential of the refinery and cement sectors, emphasizing the economic factors. Both sectors generate a lot of waste heat, only some of which is directly reusable onsite.

     Some methods and strategies of thermal recovery are given below, but industries vary, so how each industry can best optimize recovery will vary as well. 

     Below, they illustrate that NPVs are positive for nearly all thermal recovery investments in all sectors. They also have very significant CO2 abatement potential, which is why they can overcome lower capex efficiency and poorer economics than competing projects. Different industries generate different CO2 stream compositions and purities and thus have different abatement costs.

     They recommend three strategic actions given below. Every industry that produces waste heat should evaluate and model its energy and heat management and seek to optimize recovery and efficiency.

 

References:

 

Katie McGinty: The energy economy’s biggest waste problem is already inside the system. Kathleen “Katie” McGinty. Fortune. July 6, 2026. Katie McGinty: The energy economy’s biggest waste problem is already inside the system

Waste not: Unlocking the potential of waste heat recovery. McKinsey Sustainability. Marcin Hajlasz, Stefan Helmcke, Friederike Liebach, Thorsten Schleyer, and Ken Somers. McKinsey Sustainability.  November 30, 2023. Unlocking the potential of waste heat recovery | McKinsey

Waste Heat Recovery Basics. U.S. Dept. of Energy. Waste Heat Recovery Basics | Department of Energy