Why be energy efficient?

Co-generation station

Co-generation station (iStock)

Waste heat minimisation and recovery are two of the most effective ways to reduce energy costs and greenhouse gas emissions. Reducing heat loss not only lowers energy and maintenance costs, but can also minimise emissions of air pollutants and improve the productivity of furnaces, ovens and boilers.

Investing in waste heat recovery can also provide alternative energy sources and yield significant energy savings in the industrial and commercial building sectors. Waste heat recovery technologies such as co-generation have the potential to produce electricity below the price charged by the local electricity provider. These technologies reduce dependency on the electrical grid.

For information on types and components of waste heat systems, see Technology background – Waste heat minimisation and recovery.

Companies should also be aware of any forecasted increase in costs of fuels, such as natural gas, as this will affect the choice of fuel for new co-generation facilities.


There are many opportunities to reduce energy costs through waste heat reduction and recovery strategies. For information on types and components of waste heat systems, see Technology background – Waste heat minimisation and recovery.

Minimise waste heat in existing systems

Before implementing waste heat recovery technologies, it is necessary to identify heat losses common to heating equipment and to then optimise the operation of this equipment. This includes reducing heat loss due to flue/exhaust gas releases, air infiltration, wall conduction and radiation in existing furnaces, ovens, and boilers.

Heat loss from industrial equipment can be minimised through regular maintenance, detecting and eliminating leaks, and improving controls.

Heat losses can also be limited in commercial buildings by insulating windows, walls, and roofs, and by optimising the airflow to and from ventilation and duct systems.   

Some examples of opportunities in this area are outlined below.

Minimise waste heat losses from industrial processes

In furnaces, boilers, kilns, ovens, and dryers, air and fuel are burned to generate heat. Part of that heat is transferred to the heating device and to the particular load. Energy transfer has a practical limit. When that limit is reached, spent combustion gases are passed through a flue or chimney. Those spent gases have significant thermal energy. Some waste-gas heat related losses are inevitable—however, reducing gas exhaust losses can save considerable energy. Some methods to achieve this:

  • Minimise exhaust gas temperatures – A cause of excessive temperatures in exhaust gas can be poor heat transfer in the heating system. If transferring the maximum heat possible to the heating system is not achieved, the furnace will be at an unnecessarily higher temperature.
  • Minimise exhaust gas volumes – Fuel-air ratios must be carefully controlled. Operating the heating equipment at the best fuel-air ratio for particular processes will also help control fuel consumption. Usually all that is required is correct maintenance of the equipment.
  • Use oxygen-enriched combustion air – Ambient air contains approximately 21% oxygen with nitrogen and other inert gases as balance. Exhaust gas volumes can be reduced by increasing the percentage of oxygen in the combustion air, even to the point of using 100% oxygen. There is potential for significant fuel savings. Making decisions on the level of oxygen content will involve balancing fuel cost savings with the cost of using additional oxygen.
  • Reduce air-infiltration in heating equipment through minimising gaps, eliminating leaks and using pressure-controlling equipment – A well-designed furnace, kiln, oven or boiler prevents air leakage into a heating system or leakage of flue gases. But with use over time, cracks and small gaps appear around doors and joints. Cold air is naturally drawn through such gaps and into the heated equipment, causing heat loss. By reducing air leakage in a furnace, air infiltration heat losses can be reduced. This can be done in a number of ways, including:
    – replace or repair seals or insulation where gaps have appeared
    – ensure furnace doors are closed properly
    – in the case of a major leak that cannot be sealed, install a pressure control system or a manually adjustable damper at the level of the leakage (with ‘draft gauge’ to monitor the furnace pressure) in the flue or chimney if a pressure control system cannot be used or is not economical.
  • Appreciate the benefits of taking an integrated approach – Any reduction in heat losses through wall, conveyor, air filtration or radiation losses will lower the amount of fuel needed to generate heat in the first place, thereby reducing the amount of flue gas needing to be released.

Minimise waste heat losses from industrial, commercial and office technologies and equipment

The operation of virtually all industrial, commercial and office technologies involves some degree of heat loss which means energy is being wasted. In almost all cases it is possible to reduce unnecessary heat loss by ensuring:

  • systems are switched off when not required
  • the most energy efficient technologies are used; for example, replacing incandescent lighting with LED, which release very little excess heat, yielding great savings.

Heat losses can also be minimised in buildings through improvements to insulation, use of double-glazing or low-emissivity windows, as well as insulation of ventilation and duct systems.

For more information, see the Commercial and Service sector page and the Heating, Ventilation and Air Conditioning technology page.

Minimise waste heat losses in refrigeration

The process of refrigeration generates waste heat which is then exhausted from the building. It is possible to reduce the demand, excess heat levels and other costs of a refrigeration plant via adoption of best energy efficient equipment and techniques. For example, supermarkets and other food retailers often have open refrigeration units for ease of customer access. Enclosing refrigeration units with glass doors, which customers can easily open, can reduce refrigeration loads substantially.

For more information

Optimise the operation of existing waste heat recovery systems

Energy savings can be achieved by ensuring good maintenance and monitoring the performance of heat recovery technologies and systems.

  • Monitor existing heat recovery systems Monitor the performance of waste heat recovery technologies to ensure that you are optimising energy and financial savings. Ensure the system is tested under a range of loads and in line with the manufacturer’s instructions.
  • Ensure regular maintenance of waste heat recovery technologies – To ensure the cost-effectiveness of the heat recovery system, it must run efficiently. This requires a regular maintenance schedule conducted in-house or by the equipment supplier.

For more information on maintenance of specific technologies, see the other Technologies on the EEX website.

Upgrade and invest in waste heat recovery technologies

For many industrial and commercial sectors, harnessing and repurposing excess heat with recovery technologies is one of the best strategies to achieve significant reductions in energy costs and greenhouse gas emissions.

Some examples of opportunities in this area are outlined below in relation to common industrial applications.

Upgrade waste heat recovery technologies (medium-high temperature applications)

The opportunities for heat recovery from medium to high-temperature processes are significant and mainly revolve around the use of furnace-kiln-oven-based operations.

Waste heat in flue gases can be recovered for the following applications:

  • preheating of combustion air
  • charge pre-heating
  • heating other equipment
  • steam and power generation using co-generation and tri-generation systems.

Pre-heat combustion air

Pre-heating of combustion air is one of the most popular uses of recovered heat from furnaces and kilns due to its high efficiency and reduction in primary fuel use. Equipment for combustion air pre-heating can be divided into recuperators and regenerators.

  • A recuperator is a device for waste heat recovery that works by counter-flowing hot gases and cold air through a heat exchanger. A modern recuperator using furnace exhaust gas of 1,000°C can preheat the combustion air to over 500°C, which results in energy savings of up to 30% compared to using cold combustion air.
  • A regenerator is a cyclic heat storage device. The choice of equipment depends on the efficiency of the device and where it is placed in the furnace. It is recommended that under circumstances where temperature profiles are critical within a furnace or kiln, both physical and mathematical modelling of the furnace/burner geometry is undertaken to establish optimum conditions.

Most conventional gas/air burners are only capable of operating with pre-heated air up to 300°C. Above this temperature, purpose-built burners must be used. While this adds to capital costs, combustion efficiencies are improved and operating costs are therefore lowered.

Charge pre-heating

When raw materials are pre-heated by exhaust gases before being placed in a heating furnace, the amount of fuel necessary to heat them in the furnace is reduced.

At its most efficient, charge pre-heating rivals the pre-heating of combustion air in economic viability.

For more information

Heating other equipment

The temperature of furnace exhaust gas can be 400°C to 600°C, even after heat has been recovered for pre-heating the charge or combustion air. The recovered heat can be used to heat water or to transfer heat to district heating systems.

Another possibility is to install a waste heat recovery boiler to produce steam or hot water, especially when large quantities are needed.

Exhaust gas heat can be used for heating other equipment to reduce fuel consumption, if the heat quantity, temperature range and operation times are suitable. One application is the use of exhaust gas from a quenching furnace as a heat source in a tempering furnace.

Steam and power generation using co-generation and tri-generation systems

The use of cogeneration and trigeneration technologies to generate electricity and steam from waste heat is well established in many industries. Cogeneration or combined heat and power (CHP) re-uses heat to power a generator (e.g. gas turbine) to simultaneously generate both electricity and useful steam. Cogeneration systems typically involve a prime mover to produce electricity or shaft power and heat, an electricity generator to convert shaft power to electricity, and a heat recovery system.

Steam turbines, gas turbines, and reciprocating engines are common types of prime movers used in industrial CHP systems, but fuel cells and micro-turbines can also be used for this purpose. Waste heat recovery normally takes place in a boiler, heat-recovery steam generator (HRSG), heat-recovery muffler or another type of heat exchanger.

An advantage of cogeneration systems is that by generating electricity locally, they avoid transmission and distribution network losses which can be as high as 10%. Additionally, by using heat that would otherwise be wasted, a cogeneration system can make use of 70–75% of the energy in the original fuel, compared to 25–30% for a conventional coal-fired power station.

For example, for 100 units of fuel, a packaged combined cogeneration system would typically produce around 30 units of electricity and 45 units of heat. To produce an equivalent level of heat and electricity, a conventional power station and boiler would need around 139 units of fuel, so cogeneration yields primary energy savings of around 39/139 or 28%. In practice, CHP can cut costs by 20% compared to the use of grid electricity and on-site boilers. This typically gives a simple payback period of five to eight years.

Industry can also implement trigeneration systems, where suitable. Trigeneration or combined cooling, heat and power is similar to co-generation, but also uses recovered heat to provide cooling, typically in an absorption chiller. Trigeneration can be a cost-effective option, for example, for major data centres which require both onsite electricity generation and large year-round cooling requirements.

Upgrade and invest in industrial waste heat recovery technology (low temperature applications)

Most unrecovered waste heat is at low temperatures. There are considerable opportunities for low-temperature waste heat recovery from the following typical plant processes.

Recover heat in distillation processes

Distillation separates components of a liquid mixture through the application of heat to take advantage of the different boiling points of different liquids. By applying heat, the component with the lower boiling point is evaporated. The waste heat manifests itself in the condenser, which cools the volatile component. Advanced distillation processes now exist where energy efficiency is increased by using heat exchangers to improve heat transfer effectiveness at multiple stages. This integrates heat transfer and separation into a single device, eliminating the need for external heat exchange equipment. This technology can achieve energy savings of up to 20%.

Recover heat in dyeing and finishing

Dyeing and finishing processes in the textile and fabric care sector provide good opportunities for waste heat recovery. According to the UK Carbon Trust, ‘Warm effluents can be a source for pre-heating incoming cold water and heat exchangers can be used on effluent-containing fibres.’ More specifically, autoclave (high temperature/high pressure) dyeing machines produce waste water at 75°C, which in many plants is simply treated and then sent down the line. Yet, in such plants, fresh water needs to be heated into steam temperatures. So heat exchangers can transfer some of the heat from hot waste water to help pre-heat the water for the boilers. A plate-type heat exchanger is usually recommended.

Another way to harness waste heat is through recovering steam condensate from hot water tanks. This approach can be combined with the strategy above to achieve still more effective overall waste heat recovery. Both strategies can be combined in the same heat recovery system. One application of this combined approach achieved fuel savings of 554 MJ/batch in autoclave machines.

Recover heat in pasteurisation

In the pasteurisation process, milk is heated to kill pathogens and then cooled down again for preservation. Heat can be recovered by using heat exchangers, so that the incoming cold milk is heated by the outgoing pasteurised milk, which is in turn cooled. Transferring heat this way leads to substantial energy efficiency improvements.

Heat recovery through process cooling

Process cooling is widely employed in many industries to recover heat by heating ‘cool’ water. This heated water can then be used for boilers or for space heating.

Recover waste heat from industrial equipment applications (low temperature)

The two main types of opportunities to recover waste heat are in commonly used compressed air and boiler technologies.

Air compressors

Up to 90% of the electricity supplied to an air compressor can be lost as waste heat. Studies show that 50% to 90% of this heat loss can be recovered to heat other air or water. For water-cooled compressors, waste heat could be recovered with a heat exchanger and pump. For air-cooled compressors, the heated cooling air could be ducted to where it is required. Case studies show that recovering waste heat in both water and air cooled compressors is cost effective.


It is possible to recover waste heat in a number of ways from boilers:

  • Use steam traps and condensate return systems to reduce the loss of water (and associated heat) by collecting water condensed as heat is removed from steam, and returning this condensate to the boiler.
  • Invest in blowdown heat recovery as the blowdown water contains significant energy that can be recovered.
  • Invest in heat recovery more generally. For example, heat loss from flue gas, usually represents the largest source of inefficiency. Flue gas can be redirected into either an economiser, which transfers heat to boiler input water, or to a pre-heater, which transfers heat into the boiler input air.

For more information

  • Heat Recovery Applications 2009 (Opens in a new window)
    • Energy Efficiency and Conservation Authority - New Zealand Government
    • PDF 494 KB

    This guide identifies some of the more common sources of waste heat and discusses a number of factors that need to be taken into consideration to help plant engineers and technical personnel recognise and investigate possible heat recovery opportunities. Also included is an overview of heat exchangers commonly used in recovering waste heat and examples of waste heat recovery applications.

  • Heat Recovery: A Guide to Key Systems and Applications 2011 (Opens in a new window)

    The application of heat recovery techniques can significantly reduce energy consumption, running costs and carbon emissions. This technology guide outlines the basic principles of heat recovery as well as some of the common terminology. It looks at applying heat recovery to various systems and processes within buildings. This guide is divided into six sections by heat recovery sector, namely the basics, boilers, refrigeration, ventilation, industrial processes and next steps.

Recover waste heat from commercial refrigeration (low temperature)

The two main strategies for heat recovery in this sector are from discharge gas and oil cooling, and from chillers and chiller-heat pump units.

Heat recovery from discharge gas and oil cooling

Optimum heat recovery is achieved by installing:

  • a common discharge gas de-superheating heat exchanger, either on the low-stage or high-stage discharge
  • a secondary oil cooler in series with the existing oil cooler on each high-stage compressor: the original oil cooler should be retained so that the critical function of oil cooling is not compromised and is independent of hot water demand.

Heat recovery from chillers and chiller-heat pump units

Chillers conventionally are used to generate chilled water or a chilled mixture of glycol and water. They reject the heat generated by condensation to the environment via air-cooled condensers or cooling towers. Modern chillers, in particular those using ammonia (R717) or carbon dioxide (R744) refrigerant, offer significant potential to recover otherwise wasted heat at useful temperature levels, i.e. greater than 50°C. This recovered heat can be used to offset the consumption of other operations, thus reducing overall site energy usage.

For more information


Recover waste heat in commercial buildings (low temperature waste heat recovery)

Two main methods of addressing waste heat loss in commercial buildings are by recovering waste heat from ventilation and air-conditioning systems, or by installing cogeneration or trigeneration technologies.

Waste heat recovery from ventilation and air-conditioning systems

The most effective way of recovering energy from ventilation and air-conditioning systems is to make use of recirculated air. Different types of heat exchanges recover heat from extracted air, that would otherwise be lost to the atmosphere, and use it to pre-heat (or cool) the incoming fresh air. The efficiencies shown below are useful in comparing the range of technologies available for heat recovery in ventilation systems:

  • Plate heat exchanger: typically 55–65%, maximum 80%
  • Thermal wheel: typically 65–75%, maximum 80%
  • Run around coil: typically 45–50%, maximum 55%
  • Heat pump: typically 35–50%, maximum 60%
  • Heat pipes: typically 50–65%, maximum 75%. 

Figure 1: Typical office ventilation system without heat recovery

Source: Carbon Trust UK HQ (2011) Heat Recovery: A Guide to Key Systems and Applications 


 Figure 2: Typical office ventilation system with a plate heat exchanger added for heat recovery

Source: Carbon Trust UK HQ (2011) Heat Recovery: A Guide to Key Systems and Applications

For more information

Consider installing cogeneration or trigeneration technologies

Cogeneration systems use heat, steam or waste gases to produce both electrical and thermal energy. Trigeneration produces cooling as well as electricity and heat. Systems typically have return on investment in the range of 5–20% and can reduce energy demand and greenhouse gas emissions by as much as 20–30%.

Both cogeneration and trigeneration are appropriate to use at commercial buildings that have high demand for heating, such as hotels and hostels, hospitals, laundries and swimming pools. According to the Property Council of Australia, ‘In many cases co-generation is financially and economically viable today’.

Trigeneration is cost-effective in applications where the demand for cooling is high, such as data centres which require onsite electricity generation and have large year-round cooling requirements. In such cases, the waste heat of the electricity generation process can be transformed into cooling energy by an absorption chiller.

Future developments

Future developments in waste heat recovery are outlined below.

Innovations to enable wider application of industrial waste heat recovery

Advances in the construction of heat exchangers are opening up additional waste heat recovery opportunities.  This includes the use of new materials that are resistant to corrosion, and novel design and manufacturing techniques which are producing heat exchangers that can tolerate higher temperatures and pressures. In the manufacture of nitric acid or sodium hydroxide (caustic soda), for example, this is resulting in more heat from the process being captured and utilised.

Cogeneration and trigeneration opportunities in greenfields urban development

According to the Australian Property Council: ‘A greenfields urban commercial or residential development, with a low planned carbon footprint, can be achieved through a combination of energy efficient design, onsite co- and tri-generation and district level heating and cooling.’

Compared to the traditional provision of energy services on a building-by-building basis, ‘green’ precinct level development offers numerous cost and energy efficiency benefits. Cost benefits include a lower capital outlay because conventional chillers and boilers are not needed. The total installed capacity overall will be less than what it would be if designed for each individual building. Building owners will also have reduced operating and maintenance costs.

Efficiency gains can be achieved through a highly efficient central cogeneration plant to provide more reliable base load electricity and heat to multiple buildings. This type of centralised co-plant:

  • can be run using a variety of low carbon fuel and alternative energy sources
  • has low transmission losses
  • can reuse waste heat produced locally for district heating and cooling.

Some users have reported barriers to project delivery including developing medium to large projects across multiple sites. Solutions include installing a larger cogeneration system or upgrading an existing system to service more than one building where buildings are next to each other, and developing medium to large cogeneration systems servicing multiple sites across a district.

For more information

Emerging technologies to enable greater levels of ‘low temperature’ waste heat recovery

Developments in small-scale cogeneration such as micro-turbines and fuel cells are opening up new opportunities for using cogeneration systems in low temperature waste heat recovery applications in industry and commercial buildings.

Case studies

  • Distributed Generation in Australia: A Status Review 2011
    • University of Technology, Sydney

    This report was undertaken for the Australian Alliance to Save Energy. It includes case studies on a cogeneration plant at the Crown Casino in Melbourne and a bio-energy plant. Electricity generation was a big advantage when planning the Casino, due to the high load of the complex. Cogeneration has proven a cost-effective way to provide energy for the site, including waste heat for hot water and steam. While a 3.9 MW cogeneration plant was installed at Earthpower’s food waste to energy facility in Sydney to produce biogas from municipal, commercial and industrial food waste. Electricity generated from these plants is considered renewable under the MRET scheme, and is sold as eligible renewable energy, and is also eligible for the NSW Greenhouse Gas reduction scheme.

  • Macquarie University saves with cogeneration (Opens in a new window)

    Macquarie University had to replace the 30-year-old chiller running their library’s air-conditioning system. The university seized the opportunity to examine the cost of cogeneration and discovered that they could shave $20 million off their energy bill over the next 23 years.

  • Innovative gas-fired cogeneration on display at Griffith Hospital 2003 (Opens in a new window)

    When Griffith Hospital closed down its laundry and catering services, the hospital was left with a central steam plant working under capacity. Griffith Hospital installed an innovative gas-fired cogeneration system which will reduce its energy bills by $140,000 each year and cut greenhouse gas emissions by over 1,000 tonnes per year, the equivalent of taking 240 cars off the road.

Key resources

  • Energy Saver Training: Cogeneration Feasibility 2014
    • NSW Office of Environment & Heritage
    • Website

    This training consists of an introduction course designed for decision-makers and a technical course for specialists – such as engineers – conducting cogeneration pre-feasibility assessments. The courses are designed to guide businesses towards determining whether a cogeneration system is the best technology for their organisation.

  • Energy Saver Cogeneration Feasibility Guide 2013 (Opens in a new window)

    This resource provides a guide and a tool to help companies decide if cogeneration is suitable for their site. The guide includes practical information about on-site cogeneration projects and a detailed step-by-step guide to assist companies to evaluate the financial viability of an on-site cogeneration system. The guide is aimed at asset/facility managers and is for sizing small to medium on-site cogeneration systems (up to 5 MW).

  • Heat Recovery: A Guide to Key Systems and Applications 2011 (Opens in a new window)

    The application of heat recovery techniques can significantly reduce energy consumption, running costs and carbon emissions. This technology guide outlines the basic principles of heat recovery as well as some of the common terminology. It looks at applying heat recovery to various systems and processes within buildings. This guide is divided into six sections by heat recovery sector, namely the basics, boilers, refrigeration, ventilation, industrial processes and next steps.