Distilling = Energy

There’s currently an energy crisis. The primary cost of distilling is energy, so there’s also a distilling crisis.

Of course for established whisky producers with plenty of old stock, high margins and strong cash flows it’s a problem but it isn’t a disaster. Producers with large inventories can rely on mature spirit which was laid down when costs were lower, and they can look ahead to when costs will stabilize.

However for a new whisky producer at the start of their journey with no saleable stock and very little cashflow it’s another headwind in what is becoming a perfect storm. Energy costs are rising throughout the supply chain, increasing the cost of wood and glass and shipping. Now grain costs are also rising, likely doubling by next year.

Twinning a distillery with an energy generator gives the producer a cost edge.

The Trends

So what are we seeing happen here? Firstly a transition away from oil and gas for green, branding reasons, secondly increased energy security though local generation.

Clearly the optimum answer for security of supply and cost efficiency is for the distiller to generate their own power. Local power generation gives remote sites an advantage which they never had before, providing they can hook directly into sources of heat; forests, wind farms or future hydrogen generation.

There are just a small number of local micro-renewable options available to new distillers, some established, some just emerging. Luckily all are also low-carbon: Biomass in the form of wood cut from local forests, electric heat pumps – usually taking heat from ground water, hydro power or hydrogen. What are the advantages and disadvantages of each:

Biomass boilers are certainly not the ideal power source for the occasional generation of large amounts of steam. They would prefer to chunter away, constantly making low-grade heat. However they can be commissioned to power the distilling process – see Ardnamurchan and NcN’ean Distilleries.

This kit is big. Big. It needs another building to put it in.  At least biomass creates conventional steam so the production equipment can be conventional. Unfortunately biomass boilers also come with a huge price tag. Take your existing startup costs and add at least £1 million for the boiler. If you can get grant aid to pay for it that’s fantastic, but the days of generous grants being pumped into new distilleries seem to have gone.

Another serious consideration with biomass is the amount of wood needed: It takes around 90 acres of woodland to produce every 100,000LPA of spirit. That’s 60 football pitches cut down annually, which is a lot of trees.

As with any micro-renewable the selection depends upon the exact conditions local to the distillery. On the wooded west coast of Scotland, where timber export costs make woodland unviable to cut and export, it makes sense. Biomass is the wrong choice far from commercial forests.  

Local woodlands are immune to geopolitics - energy security is all but guaranteed.

Electric heat pumps are just coming into distilling. Again they are costly and large and therefore out of the reach of most start-ups without grant help. Heat pumps have a coefficient of performance (the amount of energy input to give the output) of 3-4. Meaning a third to a quarter of the electrical output must be input. Consider the electricity costs if 1/3rd of all energy costs are generated electrically – it’s not going to be a tremendously cost effective option.

Heat pumps then are not remotely close to giving free heat. In theory they are zero carbon if the input power is generated by renewables, a fact that is complicated by the use of fossil fuels to make the renewable equipment, but it depends how far down that rabbit hole you want to go.

The temperatures necessary to generate steam are a real challenge to heat pumps. The McAllister Distillery which is under construction in County Galway has one on order, we’ll report on it over time.

Using Hydro Power electricity can be used to make steam directly. Initially costs will be higher, but if local renewable projects are under development then an electric boiler may be powered direct wire from local green energy.

Hydrogen is the great hope of distillers. Current thinking on hydrogen is that large users will be favoured over small, in other words an industrial plant is more attractive to a hydrogen developer than individual cars and vans.

Micro hydro generation plants are under development which will be sited near to large energy users. Given that some of the larger distillers use the energy equivalent of 100,000 litres of fuel oil each week it is inevitable that distilling will be seen as an attractive opportunity to such firms.

Hydrogen can be generated by splitting water through hydrolysis, using large amounts of electricity, so it will be happily twinned with large generators like wind or hydro schemes.

If you as a distiller have any hope that hydrogen may become an opportunity just specify a boiler which can use natural gas now and hydrogen later. Then wait until the technology develops.

Gareth Roberts

Organic Architects – Distillery specialists

July ‘22