The UK’s manufacturing industry accounts for almost a third (29%) of all the country’s CO2 emissions, and a fifth of the total energy usage (tinyurl.com/hweorpc).
On top of that, energy prices are rising. A recent Barclays survey (tinyurl.com/hjp353f) found that nearly one in ten UK manufacturers are paying between £50,000 and £1 million a year on their energy bills, and two-thirds see a significant price increase within the next five years.
All this means that manufacturers – and, indeed, all businesses – are seeing energy usage as increasingly critical issues for their short- to medium-term futures. “Investing in energy efficiency feels like something companies would like to do more of, but it has to be commercially viable,” says Mike Rigby, national head of manufacturing, transport and logistics at Barclays. “Historically, it hasn’t been. As prices keep rising – and we have a fairly good idea that they will keep doing so into the future – reliability of supply becomes the most important thing for the sector. What the survey shows is that manufacturers will make sound commercial choices for their business; what they won’t make are decisions that are just for marketing purposes. Increasingly, though, saving energy is becoming commercially viable.”
As a result, energy is a hot topic for manufacturers today. “Energy and manufacturing are becoming unified topics,” continues Rigby. “The government focused heavily on energy savings in their recent Industrial Strategy, and I think that reflects how our customers see this as well. Their overall manufacturing strategy is increasingly linked to their energy requirements.”
“People are becoming a lot more proactive about energy,” says John Hartley, head of propositions at Centrica. “The reasons for this are not just about saving money or reducing carbon footprints. We can put technology in people’s hands nowadays. They can get a data insight that they were perhaps lacking before, and every bit of kit, whether that’s a solar panel or a battery, can give you insight into their energy efficiency.”
So how can manufacturers cut their energy usage, and bills, without breaking the bank by investing in new technology? WM asked industry leaders in each major utility to share their advice.
Water is an inescapable outlay for most manufacturers, with dozens of processes in a factory using it in one shape or another. Saving water, therefore, is fast becoming a top priority for many companies. “In our experience, savings can be made across businesses of all sizes; especially large manufacturers with complex water or wastewater processes,” says Tony McHardy, corporate director of business water retailer Water Plus. “Large manufacturing businesses can particularly benefit from specialist water management expertise, which starts with understanding their water consumption. The data required can be obtained easily through smart metering and acts as the basis of identifying areas where money can be saved. This often leads to self-funding water saving initiatives on the customers’ network.”
To add an extra layer of complexity to proceedings, in April the industrial water market is being deregulated. This will mean that, much like the gas and electricity market, businesses will be able to choose their water provider. However, McHardy is adamant that while this initially may add a layer of complexity, the potential advantages this will bring to companies are extensive. “The existing system has created a great deal of duplication and inefficiency for customers,” he says. “Businesses with sites spread across the country could be dealing with up to 21 different water suppliers, which means volumes of paperwork and multiple points of contact, just for starters.
“The good news is the introduction of competition will give all organisations, including manufacturers, the ability to do something about that. From April 3, they’ll be able to consolidate all of their sites with one water supplier. There will also be a range of other benefits, including the availability of water efficiency solutions, which will bring about cost, time, and consumption savings.”
Industrial electricity consumption has fallen by, on average, 1.3% per year since 2000, according to the EEF report, Upgrading Power (tinyurl.com/jpcajt5). “There are many reasons for this, including global movement of manufacturing overseas,” explains Dipali Raniga, senior energy & environmental policy advisor at EEF. “A significant proportion of this drop, though, has come from energy-efficient measures being implemented. We estimate that we can still reduce electricity usage in manufacturing by a further 14%.”
By the end of 2017, the government will be introducing a new ‘Capacity Market’, aimed at controlling the amount of energy used by businesses at peak times. Energy providers will charge a higher levy on energy consumed between 4pm and 7pm, Monday to Friday, between November and February.
One way this can be combatted, says Ben Rouncefield-Swales, head of manufacturing at energy consultants Inenco, is through demand management. “Reducing consumption during peak times can avoid higher charges and mitigate the impact of rising energy costs,” he explains. “That can mean switching off non-essential kit and adjusting production schedules to avoid high consumption during these periods or switching to on-site generation where available, or even participating in National Grid’s demand response schemes to earn extra revenue.”
“Demand Side Response, turning your assets on and off at specific times, can earn you money that you weren’t earning before,” adds Centrica’s Hartley. “The financial motive is certainly a strong one. The other motive is around the resilience of your site. You need to ensure that the power stays on at your site, and that it’s reliable. This is where things like combined heat and power units are useful. If you are a manufacturer with a critical supply chain, where you can’t afford your supply chain to go down, that reliability is very important. If you can couple all that together, so that you end up saving energy, reducing your carbon footprint and generating an income, it suddenly becomes very interesting.”
Around a quarter of UK energy now comes from renewable sources, and this number is rising. Investment in renewable technology is also growing – look at Siemens’ new £310m wind turbine factory in Hull. “In the past few years there has been much more of a focus on renewable power and the changing face of electricity generation in the UK,” says Ashley Phillips, sales & marketing director of DONG Energy. “It’s become a key issue for UK manufacturers.
“There is a growing interest in energy efficiency amongst manufacturers,” adds Chris Armitage, CEO of Scottish company Heliex Power, whose technology generates power from ‘wet’ steam. “Many companies now have that as a key responsibility rather than just part of one individual's remit. They are now more aware of increasing their energy efficiency, not just from the economic perspective, but also from the green angle.”
The benefits of energy-efficient power generation are obvious: lower bills, a lower carbon footprint and government grants. Yet, the Barclays survey shows that around 25% of manufacturers haven’t invested in in energy efficiency at all, and the average planned investment in energy efficient technology in the future is below £10,000. So why is the manufacturing industry so reticent to adopt renewables?
“Awareness is the biggest issue,” says Armitage. “We have to make people aware that technology like ours is available and where to find it. Educating the market that they exist is key. There are a lot of things you can do to improve your energy efficiency - making people aware of them in a manner they can pick up is key.”
DONG’s Phillips agrees, but says that things are getting better. “In the past few years there has been so much more of a focus on renewable power and the changing face of electricity generation in the UK,” he explains. “It’s become a key issue within UK manufacturers. Manufacturing has a difficult job becoming, and remaining, competitive – lowering costs is the key thing on the agenda for boards, and having a sustainability focus is helping them do that.”
Many manufacturers will see investing into energy savings as a major outlay for little immediate reward. This may be the case, says Rigby of Barclays, but companies are now getting smarter. “The amount of ‘investment’ into energy savings means very different things to different companies,” he says. “The largest manufacturers will be looking to put in a waste-to-energy plant alongside their manufacturing facility, they will invest in a wind turbine or solar farm. Down at SME level, they may have an inefficient machine sat on the line that chews up a lot of power and needs investment to make it more efficient. It could be something as simple as installing LED lighting, which can save money pretty quickly.”
Phillips ends on a positive note: he is adamant that the manufacturing industry has the potential to lead the way when it comes to energy savings in the UK. “Quite a lot of the innovation in energy saving is being driven by manufacturing,” he says. “Whether that awareness travels across all the different types of renewables, I’m not so sure, but the sustainability agenda as a whole is certainly becoming more mainstream.”
Case study: Brushtec
For Newcastle-based manufacturer of industrial brush products, Brushtec, sustainability has become a key company driver. The company have made several changes to tackle rising waste levels and falling efficiency.
“We have adopted more energy-efficient technology, both as part of our manufacturing processes and the daily running of the factory,” says Barry Cracket, a designer at Brushtec.
Some of this technology is evident from a quick look around the factory. A solar photovoltaic system and ground source heat pump have helped use a greater proportion of clean energy within the factory’s total power consumption. But not all of the changes have been so drastic: “Instead of traditional lightbulbs, we’ve switched to LED lighting that has allowed us to cut down substantially on our electricity consumption and lowered our monthly bills,” continues Cracket. “We’ve also installed thermal cladding in our buildings to improve insulation, while making the switch to 93% efficient heaters as well.”
Technology is also helping Brushtec keep its waste levels down. The company have installed robots on its production line, not only to improve quality and increase output capacity, but also to reduce the waste produced by each product, as Cracket explains: “Automation has made manufacturing into more of an exact science, and has also reduced the margin of human error. This means we don’t find ourselves having to dispose of as much material that could still be used at a later date.”
The waste that is created is also cared for by Brushtec. The company deals with plastic, which ordinarily has a serious impact on the environment. “We undertook a review of the type of plastic that we use for our products, and discovered that there were more sustainable materials on the market,” says Cracket. “We soon switched to post-consumer plastic to mould our brush backs – most of which is sourced from a local car plant, allowing us to create almost 100% recycled products.”