Every business is influenced by energy. From the largest manufacturer to the smallest start up, no company is immune from the combination of rising energy costs and environmental responsibilities as well as the significant impact regulatory compliance of energy consumption has on the effective day-to-day running of any organisation.
With energy prices predicted to continue to escalate over the long term, companies seeking to maximise efficiency and minimise use have to look at energy in a whole new light. The days of cheap energy provision are over and energy intensive manufacturers are being forced to re-assess their relationship with one of the most critical areas of their operation.
Siemens has recently commissioned research to assess general attitudes, strategic planning and practical steps being taken when it comes to tackling their current and future energy requirements. 600 senior decision makers, including board directors and energy managers, within manufacturing companies were questioned on a range of energy-related topics to allow a picture to be formed of where British industry currently sits on its energy journey.
The research looked in-depth at six key manufacturing sectors to unearth the energy management story for each market. Not only has this highlighted some great progress and examples of best practice, it also illuminates important areas where efforts need to be even more focused. This presents a great opportunity for many companies to further improve their strategic and practical response to the energy challenges that lie ahead.
Energy, its use and its cost, will continue to be a key battleground for manufacturing organisations wishing to remain competitive as competition on a local, national and international stage accelerates.
The overwhelming majority (89%) of UK manufacturers now profess to discuss energy management at board level, with the automotive sector leading the way. Underlining its importance, 79% also agree that managing energy is now a business critical function and 70% feel that energy management is on a par with other strategic decisions. More than two thirds (67%) said their organisation had a senior director charged with energy management responsibilities. It is heartening to witness the significance energy management is assuming at the top of UK manufacturing companies as this has not always been the case even in the recent past.
Key drivers and barriers
When asked about key success criteria for energy management projects within their organisations, one message came through very clearly: to achieve a competitive advantage. However, for some, significant barriers to investing in energy management still remain such as a ‘poor or uncertain return’, ‘budget and capital outlay’, ‘a lack of internal resource’ and ‘dealing with other priorities’. With the apparent importance attached to this area among senior management, there appears to be a disconnect between intentions around the board room table and actions on the ground.
Investment and engagement
Turning objectives into practical wins is at the heart of any energy management policy. This means providing the necessary investment funds to make progress. Over the past 12 months, 59% of UK manufacturing businesses have increased the level of investment in energy management, and, looking ahead, 69% say they plan to increase investment levels within the coming year. Primary areas of investment include renewable and self-generation technology, which shows a real intent among these energy intensive businesses to counter the risk of any future interruption to energy supply.
A scenario where the lights go out would have potentially devastating implications for many manufacturers in terms of lost production and has to be considered a major business risk. Almost three quarters (72%) of manufacturers also say they have a strategic plan to manage energy price risk and help protect themselves from unforgiving fluctuations which put energy costs at the mercy of a volatile global market.
Strategic approach?
Knowing the starting point is vital if any progress in managing energy is to be accurately assessed. This starting point is energy cost. Of those questioned, 73% said they were aware of their annual company energy spend. This relatively high figure augurs well as a number of previous industry studies have indicated that total energy spend within companies was often largely unknown. This is a positive step forward, but a significant 27% still remain in the dark regarding their energy spend.
When it comes to future targets, 70% had put goals in place for the next 12 months around energy management, but this dropped to just 50% for five year planning. It is the automotive sector that leads the way when it comes to long-term energy management planning and objective setting when compared to the other industrial sectors surveyed.
With ongoing measurement and monitoring a key part of any successful attempt to minimise energy impact, 76% said they have ongoing energy monitoring and measurement procedures in place. Despite this high percentage, it could be argued that the actual amount undertaking ‘effective’ measuring and monitoring is significantly smaller than this as, in the view of experts, it is only when measurement and monitoring effects real change and drives ongoing strategic decision-making that a culture of continual improvement over the long term can be achieved. Perhaps the true benefits of effective energy data analysis have yet to be totally understood?
What this means and what needs to be done
Leadership from the top, strategic long-term planning, proactive staff engagement, increased investment levels and an improved bottom line thanks in part to better energy management, are all to be welcomed.
Strategic, technological and practical answers exist today to help manufacturers overcome the key barriers some cite as preventing them from engaging with energy management issues. Such solutions can help them seize the energy management opportunities that are available and they should be encouraged to do so.
In addition, the 70% of manufacturers who view energy management as ‘on par with other strategic business decisions’ need to help inspire and educate others in the business community who say they still have to deal with ‘other priorities’ and which stop them from engaging in energy management activities.
Actions for business
- Priority needs to be given to total cost of ownership - that is, the correct analysis of the long term costs versus the benefits of effective energy management
- There is a need to re-appraise the efficacy of current awareness and training regimes – while the report showed this is happening, it may not necessarily be effective
- A better understanding of the financial opportunities of energy efficiency is key – this was reported as the main barrier to implementing measures
- There needs to be an alignment of stated objectives with actions delivered
- While there is a focus is on ad hoc measures, there needs to be more awareness of the benefits of a systematic approach
- The knowledge of the benefits of “good practice” compared to “compliance” are not well understood – more work needs to happen here.
Content on this page is provided by Siemens, one of the sponsors of the Big Energy Debate.
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