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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.
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 & 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.
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.
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.
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.
Steve is currently the head of the ‘Energy Efficiency and Environmental Care’ programme in the Siemens “Industry Sector” business in the UK.
Steve is a charted engineer with over 25 years post graduate experience. After several year experience as a power engineer in both end users and OEMs, Steve joined Siemens in 1990.
Steve was part of Lord Teverson’s inquiry into private sector energy management that was launched in parliament in March 2011.
Steve is also a former chairman of an IEC international standards committee and is the current chairman of the VSD group of the UK industry association Gambica - as well as being an active member of the energy services and technology association (ESTA).