Manufacturers reap the benefits of energy efficiency

Manufacturers who put sustainability at the heart of their businesses have seen real benefits from doing so in the last 12 months with 40 per cent reporting increased profit margins and 30 per cent increased competitiveness as a result.

That is the result of research undertaken by Make UK and energy company E.ON prior to the lockdown that shows that sustainability and profitability go hand in hand.

The report, Towards a Net-Zero Carbon UK Manufacturing Sector, takes the temperature of sustainability and energy efficiency progress in manufacturing and shows that 90 per cent of manufacturers are aware of the 2050 net-zero target while almost half see this as a business opportunity which they are grasping as the roadmap to sustainable growth once the world opens up again.

Before COVID-19 and the global impacts hit, 30 per cent said they have made real inroads into energy efficiency investments in the last 12 months, with the majority of the changes in relation to building improvement, equipment and manufacturing processes. Improving the energy efficiency of buildings was the second most impactful of technical measure for 11 per cent of companies and was seen as a relatively simple step to take in the net-zero journey. Other simple measures, which did not require major investments, included buying energy from renewable sources, switching to LED lighting and control or replacing outdated equipment such as fans and pump systems.

Businesses revealed that one of the biggest barriers to moving further forward with major energy efficiencies is the cost of technology, further hampered by the fact that accessing available Government funding and grants is often difficult. Companies also said that better fiscal incentives to enable investments in energy-saving technology would provide a further boost to activity in this area. Despite this research being undertaken shortly before the COVID-19 crisis began, the recommendations remain even more valid and relevant in this context.

The study looked in detail at specific actions manufacturers have taken to respond to the net-zero target, with simpler measures some of the most popular across the sector. In the last 12 months, 40 per cent of respondents have renegotiated their energy contracts and 65 per cent were able to get a better deal. 

Businesses have invested heavily to reduce energy consumption in manufacturing processes (54 per cent) with a further 20 per cent looking at this going forward, while others opted to generate part or all of their energy onsite (17 per cent). Investment in more efficient equipment was seen as a quick fix with 71 per cent of companies taking this action. Making this change in equipment was seen as the most impactful measure overall as almost a third (27 per cent) of companies said the installation of energy saving technology had boosted their business. 

The majority of manufacturers (75 per cent) understood the benefits of digitisation and over half (57 per cent) have already installed smart meters while 78 per cent collect their energy usage data. A further 13 per cent plan to do so. Monitoring power with Industrial Internet of Things (IIoT) sensors analyses each phase of the production process, indicates actual energy performance highlights consumption pain while taking actions to optimise costs, energy consumption and actual CO2 footprint. Businesses are now recognising this as one of the most important drivers to improvement and are putting in resource accordingly.

Companies said they are also working closely with staff with two thirds (65 per cent) of manufacturers already having introduced behavioural change activities to convince their employees to improve energy efficiency. Interestingly, shop floor level engagement is on the increase with half of shop-floor staff across companies of all sizes actively involved in energy management strategies. Office staff are the least bought in (43 per cent) indicating a lack of awareness of the basic simple habit changes that could significantly reduce energy usage.

The main driver for implementing energy efficiency measures remains cost reduction, but improving company ethos is now seen as important as part of overall business strategy. Some 80 per cent of board directors and senior management are engaged in energy efficiency, up from 50 per cent in our sustainability survey last year.

Stephen Phipson (above) CEO, Make UK, commented: “While the response to COVID-19 rightly remains the priority for most manufacturers in the short term, the UK’s net-zero target remains the key challenge for our future. It is heartening to see from this research that awareness of net-zero is high and that manufacturers are investing in energy efficiency and seeing the commercial benefits.”

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