An energy market in rapid transition

Strong dynamics in the energy market

The need for improved energy efficiency in societies, industries, and households in all parts of the world remain as the single most important driver of growth in the Energy division. In addition, a maintained high activity level in the oil and gas sector and increased investments into the new energy landscape drove order intake growth of 18 percent to a new record level of SEK 20 billion in 2023.

2023 marked a year in which the division initiated the first steps of the significant capacity increases announced for the coming years. The increase in production capacity reached a historical high which was a vital response to a sustained high demand and ensures the ability to serve customers in the best possible way. Several years with exceptionally high growth in the Brazed and Gasketed business units created bottlenecks in parts of the production system that are now being better balanced as new capacity gradually comes on-line. The growing demand for energy-efficient applications and the decarbonization of heating is expected to continue, and Alfa Laval will continue to invest in sufficient capacity to serve and support this transition in the years to come. The division also successfully executed on restructuring measures in the Welded business unit to better balance the organization to the new demand levels in the oil and gas industry.

Energy efficiency and the electrification of heating

Sales of products and services related to energy efficiency account for more than 80 percent of the division’s business and is evident in all industries. Annually, it contributes to 100 GW and 50 million tonnes CO2e in emission savings. The need for more advanced and energy efficient solutions drive demand for new equipment as well as for services and expertise.

The importance of energy efficiency in reducing emissions is driving increased demand for services and ensuring the smooth operation for customers during the lifetime of their equipment. Service offers a significant growth potential with continuous expansion, including the development of new service models and partnerships with customers to support them in reducing emissions. Product sales are increasingly linked to long-term maintenance agreements that include energy audits to identify energy savings in the customer’s equipment to ensure optimal usage.

There are also areas where energy efficiency and water supply are connected, such as in clean hydrogen production. Excess heat from the electrolyser can be used for desalination and provide the clean water needed in the hydrogen production process from sea- or river water instead of valuable portable water.

As efforts continue in Europe to reduce gas dependency, electrifying residential heating by substituting gas boilers with more efficient and environmentally friendly heat pumps is a key action. Heat exchangers play an important role in the overall efficiency of the system. With a strong global footprint, long-term relationships and a broad product portfolio to manage the full range of refrigerants, Alfa Laval is well positioned to support customers in this growing sector.

Accelerating the energy transition

The shift to alternative fuel and energy solutions is accelerating. To speed-up the journey to net zero, where heat transfer optimization is a key enabler, the focus on innovation is high in the Energy division. This resulted in a large amount of product launches during the year and the heat exchanger product portfolio now represents the most comprehensive range of heat exchangers in the company’s history. Investments in innovation will increase significantly going forward and can be categorized into two primary focus areas:

• The first one covers incremental as well as more radical innovations of the existing portfolio and will also include optimization in the supply chain and manufacturing landscape.
• The second focus area addresses certain technological and scalability gaps in the transforming energy landscape. The hydrogen market is one example where there are high innovation needs. The Division has been present in the hydrogen market in recent years, pioneering products and technologies in the areas of electrolyzers and fuel cells. Recognizing the potential, Alfa Laval has decided to establish a new Business Unit responsible for Electrolyzers & Fuel Cell Technologies, and is developing new products in hydrogen applications in collaboration with industry leaders. Drawing upon the company’s extensive expertise in heat transfer, metallurgy and industrialization, Alfa Laval is uniquely positioned to accelerate the hydrogen economy.

To drive these two innovation categories forward, a new innovation centre will be built in Lund, Sweden, to significantly increase R&D capabilities and the pace of innovation.

Helping data centres keep cool

With digitalization and data-centric operating processes as fundamental enablers to create net-zero industries, optimizing data centres is crucial to creating a more sustainable society. Data centre servers, which are responsible for managing and transmitting vast amounts of data globally, generate large quantities of excess heat that must be efficiently removed to ensure seamless, uninterrupted operations. Alfa Laval, a pioneer in heat exchanger technology, has emerged as a key player in addressing this critical aspect of data centre management.

Alfa Laval’s heat exchangers play a crucial role in maintaining optimal server temperatures. Not only do they efficiently cool servers, but they also convert the challenge of excess heat into district heating and even to help produce food by heating greenhouses and fish farms. However, many data centres around the world do not currently recycle excess data centre heat, which highlights a huge untapped potential.

Projections indicate that by 2030, if all data centres adopted waste heat recovery, 3,000 TWh of energy could be saved – equivalent to heating 300 million European homes. The Nordic region stands out as an ideal candidate for such waste heat solutions due to its well-established district heating infrastructure. Several successful installations, including a Danish data centre where Alfa Laval’s heat exchangers annually provide domestic heating to more than 7,000 households, showcase the substantial benefits of this innovative approach.

With almost 100 years of experience in thermal technology, Alfa Laval has become a trusted partner in designing reliable and sustainable cooling systems for data centres. The company’s industry-leading plate heat exchangers that offer optimal heat transfer efficiency are not only paving the way for greener data centres but also enabling net-zero industries around the world.