Energy management’s strategic role shifting for manufacturers
Business have often treated energy merely as a begrudging necessity — a commodity incurring costs which businesses would attempt to mitigate. Even as recently as several years ago, many firms would come to us looking to find a cheaper unit rate for their energy — that was the extent of their energy management strategy. Today, a simple cost avoidance strategy has become harder to achieve with the growing volatility in wholesale markets and scarcity of natural resources putting upwards pressure on prices.
Across sectors, the strategic role of energy management is starting to shift, with a renewed focus on energy efficiency. Tried and tested energy efficiency policies are being given a new lease on life by the introduction of better technology solutions.
Refocusing the mind on energy efficiency is helping manufacturing companies to go beyond cost reduction and instead pursue cost avoidance: the cheapest unit of energy is the one that is not used. And of course this also has an important impact on sustainability, with a greater emphasis on energy efficiency helping to reduce carbon emissions and to support the transition to a low-carbon energy system in a number of important ways. This growing strategic focus on energy efficiency is perhaps nowhere more visible than in the manufacturing sector.
The industrial sector has achieved dramatic decreases in the energy used per unit of output produced. According to the latest U.K. Government figures, industrial companies have collectively reduced the energy consumed per production unit by nearly one-third (30%) since 2000.
The long-term trends in consumption by sector since 1970 show that UK manufacturing has gone from being the largest energy consumer to the joint lowest, sitting at the same levels as domestic energy use. These figures cannot simply be explained by the reduction in the size of the sector over that period; while some manufacturers still treat energy bills as a fixed cost, many are taking a positive and proactive approach to energy efficiency, and to great effect.
The power of data
Many will feel that they have now picked off all the low-hanging fruit when it comes to efficiency improvements. However, the greater accessibility and usability of energy monitoring data means that new insights are available, revealing the often simple efficiency improvements still waiting to happen.
Firms working with EDF Energy’s PowerNow data monitoring tool, for example, have identified that simple changes can create significant savings. The most frequent energy conservation measures include installing low-energy lighting and occupancy sensors to control the lights.
One manufacturer, for example, is tracking real-time energy usage and this has identified a number of behaviors which are increasing energy consumption unnecessarily. They found, for example, that heating bills were significantly higher in one factory than in other similar ones, and after investigating found that engineers working there were regularly leaving doors open.
Of course, the manufacturer could have invested in automated doors to overcome the problem, but establishing behavior change is often the most sustainable way to reduce energy consumption. When organizations invest in a technical solution to help increase energy efficiency – such as automated doors or LED lighting – they often find their employees start ‘comfort taking’. This is when people end up counteracting any efficiency improvements by leaving the new, ‘more efficient’ lights on. A behavior change program or a technical solution such as occupancy sensors usually needs to accompany the more efficient technology.
Shift and save
The better a firm’s understanding of their side of the meter – when and where they are using energy, and at what cost – the more able they will be to be flexible with their usage and adapt to changing prices on the supply side of the meter.
For manufacturers who are in a position to be flexible with their energy consumption, demand side response (DSR) can create an opportunity to reduce the cost of energy. One of the simplest ways manufacturers can achieve this is by shifting or reducing energy consumption at times when demand is at risk of being higher than supply available on the grid.
The biggest fears around DSR are that operations will be disrupted, and that heavy investment in battery or other technology will be needed. But any industrial processes which can be paused – until demand surge has passed and energy prices have lowered again – offer simple savings.
For example, one tile manufacturer has been able to make annual savings simply by pausing its manufacturing processes between the hours of 4pm and 7pm each day, when energy prices are highest. This simple shift in manufacturing times generated major annual savings.
The reality is there is usually a lot of latent capacity in existing assets that can be monetized with no disruption to operations. Backup generators, for example, hold capacity that manufacturers can often monetize, with the help of an energy aggregator. Flexibility platforms, that enable users to control, trade and optimize their assets, are now making it easier than ever to generate extra revenue from energy.
Energy efficiency will have to become a strategic priority. There isn’t a single road to zero, but there are many paths manufacturers are traveling along with the help of tools like detailed data monitoring. The past decades have seen a dramatic improvement in the sector’s energy efficiency, and this encouragement should spur us all on to make further changes into the future.