Business Unusual: How One Manufacturer is Leading on Carbon Neutrality

Operating with a business-as-usual attitude can make it difficult to act in the best interests of the planet. Danfoss, however, is not your typical business. A global manufacturing company working to engineer best-in-class products, it has a goal of decarbonising all its operations by 2030. 

Founded in 1937, the family-owned engineering firm first made its name with an expansion device used to control the flow of energy in refrigerators. It today employs about 40,000 people worldwide and takes an innovative approach to how it optimises energy and repurposes wasted heat at its headquarters in Denmark. 

Jonas Hamann works in Danfoss’ climate solutions division and is interested in sustainable energy, heat pumps and food production. GridDuck spoke to the business process expert from his base in Copenhagen to find out how Danfoss has put the planet first without settling for second place. It should provide a blueprint for other businesses wanting to do the same.

Many people believe that being sustainable is no longer an option. What convinced you to focus on solutions that are less damaging to the environment? 

On a personal level, I’m a vegetarian and it makes sense for me physically – I feel better about myself, I feel more fresh. It also makes sense for the planet. I know it’s just a small part, but I feel like I am doing something. 

It’s the same when it comes to the area I work in. It makes sense to me that you produce something which makes a positive impact on the world; but it also needs to make sense from a business perspective. 

I think if you have a business that does better for the environment and for people, then that is a good place to be, because then you can make a bigger impact. There is a good balance there. What we advocate for is finding that balance between optimising on one end and integrating renewables on the other end. I feel passionate not only about the sustainability piece, but where I am in the organisation. 

Danfoss’s Jonas Hamann

For those who don’t know Danfoss, tell us what you do and how it’s changing. 

It started with an expansion device, a valve, which you find in your fridge. The guy who invented this had gone on a trip to the US and seen his first refrigerator. Today, we have more than 500,000 different product numbers but the DNA of the company is still to make something better – and that means the most efficient and the most reliable. 

We are now on a journey – we started with perfecting the expansion device and now we’re looking at the full system it fits into. So, is there anything that can be optimised in terms of energy consumption? If we have good optimisation, how can we then repurpose the energy that is already there? We want to show that it’s possible for a manufacturing company to become carbon neutral. We want our headquarters to become carbon neutral this year and our global operations by 2030. 

How are you using excess heat at your headquarters in Nordborg? 

Our data centres consume a lot of energy to cool down the data being processed. We work on the cooling side of it with oil-free technology that is very efficient. When heat is rejected out of the data centres, we boost the temperature from about 30ºC to 67ºC and then distribute the heat using district heating pipes. It works for domestic hot water and to heat our factories and offices. 

There are some times of the year when we generate too much heat, so we have an agreement with the local municipality. They take the heat and use it for their community, getting cheap, decarbonised heating.

Sharing heat is a logical next step. Take London where you have these terraces. Instead of each one of them having a boiler or a heat pump in the basement, you could have one pipe that comes from the energy provider and then you share the heat from a big heat pump that’s operated by a company or council. All of this requires collaboration. In our case, the municipality and data centre operator have to be okay with it. This is one of the most cost-efficient ways to decarbonise heating. 

What do you see as one of the biggest barriers to using heat pumps more widely?

One of the big issues is the lack of education. If you come out of a vocational school, you’re not likely to be trained in heat pump technology, and installation can go wrong. Either it will use more energy or it could overheat, making cooling an issue. It is critical that we focus on educating more people to ensure that we have the right skills to decarbonise. At Danfoss, we also have a responsibility: we use a learning platform to share knowledge about our technology.

I have absolutely no doubt that the technology works across different applications, not only residential but also commercial and industrial. But there aren’t enough trained installers – not in Denmark, not in the UK, not in Germany, not anywhere. It’s a massive issue. There needs to be upskilling and training. 

The European Heat Pump Association estimates that 40 million heat pumps will be installed by 2030 in Europe, so there’s going to be massive growth.

GridDuck works to reduce wasted energy. How is Danfoss optimising energy with its own clients in refrigeration and cooling? 

To optimise refrigeration efficiency, it’s important to match capacity to demand. Too much cooling, and you waste energy; too little, and you risk system damage and food loss. An adaptive case controller can balance refrigeration performance with the needs of a customer.

As the likes of supermarkets get better at energy efficiency, the fastest cost reductions are increasingly found in managing demand patterns. In some cases, this flexibility can enable a retailer to receive incentives from their energy provider. Utility companies are increasingly looking to match energy production to demand – discounting off-peak energy or seeking a temporary reduction in power use to manage short-term “demand response” events. 

There are also digital insights you can provide, such as if there’s an alarm on a refrigeration system. You need to have as little downtime as possible, because the worst for the climate and the worst for the business is that the food is spoiled. We can reduce food waste up to 25% on average by having these alarms.

You are offering clients a new service that could be a gamechanger. Tell us about it. 

We have now entered into a partnership to offer refrigeration as a service to some supermarkets and stores. We will basically be responsible for the energy and refrigeration components, with the supermarket only paying a monthly heating or cooling bill. That also incentivises us to use the best equipment, because we are now paying for the energy bill and it’s in our interest to reduce that energy bill.

What do you think we need to be doing in the next decade? 

As a society, we have to be smart about where we spend our time, resources and money. We need to focus on the technology that can already do the job today, not wait for something that might be a miracle cure in five years. I know how long it takes to engineer a new product and then there are a couple of years where you have to re-engineer and improve it, so it takes time. 

Companies need to look at new business models, like refrigeration as a service. How can we make that work? If we need to scale up as fast as it’s projected, then we are in a hurry. I don’t think business as usual is enough, we need to do business unusual. 

Look at the disruption of the tech market a few decades ago. It might be the same with energy because there’s such a big focus on it and a lot of investment. Companies like GridDuck and others are working on new ways of optimising energy. I think that would be essential for any company wanting to survive; you need to find your niche within that market. It’s going to be very interesting to see what happens, and that’s why it’s fun to be in this field. 

GridDuck works with companies to optimise their energy use and reduce their carbon emissions. To find out more about what we do, visit our website or contact us. We’re a friendly team and happy to answer your questions.