Why manufacturers no longer see energy as a cost

For many of the world’s biggest manufacturers, sustainability has become a key priority.

Philips is aiming to be carbon neutral by 2020. Building materials giant Saint-Gobain has committed to net zero emissions by 2050. And LEGO is already running 100% of its operations on renewable energy.

Far from being outliers, these are companies that reflect a changing corporate attitude to efficient energy usage and management.

In a survey of its customers in the manufacturing sector, Lloyds Bank found that 44% are looking at or implementing ways to reduce their energy use as a way of lowering their carbon footprint.

Part of the shift is because customers are now demanding greater transparency around sustainable business practices: 25% of companies say they have seen a boost to their reputation after investing in advanced energy solutions.

Traditionally, many businesses have viewed energy as a variable cost, rather than an asset. Our research reveals just how quickly these business attitudes are changing.

Centrica Business Solutions conducted more than 1,500 interviews with energy decision-makers in 10 countries and across seven vertical sectors for its Distributed Energy Future Trends report. The results differed significantly from those of the same survey two years ago.

Today, seven out of 10 businesses recognise the need for much more flexibility around energy usage and production, and a third are investing in their own on-site generation or selling to the grid.

Energy is now viewed as an important enabler of both resilience and sustainability.

“Awareness of how important energy can be in creating business advantage is increasing rapidly,” says Jorge Pikunic, Managing Director of Centrica Business Solutions.

How can companies take control of their own energy?

Distributed energy uses new technologies to decentralise generation and create more flexibility for both businesses and energy network operators.

“It allows businesses to align energy to their objectives,” says Pikunic. “Whether they want to improve cost efficiency, generate value or additional revenue, or increase the sustainability or resilience of their operations, they can use distributed energy to move towards those goals.”

There is a wide range of options for businesses wanting to improve their energy use and commodify their own energy, including physical technologies like energy generation and storage, but also digital tools that create additional value from those technologies, such as demand-side response and cloud monitoring.

As the National Grid moves towards zero-carbon operations, and with increased demand as a result of the electrification of power, demand-side response can help ease pressure on the grid and generate value for industry.

It works by financially incentivising companies to reduce their energy use during times of peak demand, helping to provide balance to the grid in real time.

Monitoring tools are another way for businesses to manage their consumption and increase their operational efficiency.

Energy insights from Centrica Business Solutions provide detailed intelligence around a company’s entire energy usage, right down to individual device level; identifying potential inefficiencies through sensor technology and analytics.

“The digitalisation of manufacturing processes goes hand in hand with monitoring energy consumption at a much more granular level,” says Pikunic. “That insight really shines a light on those inefficiencies and allows businesses to act very quickly.”

Having an energy strategy makes good business sense

Of those surveyed for the 2019 Distributed Energy Future Trends report, 67% have an energy strategy with specific targets, actions, or budgets, compared with 58% in 2017.

Pikunic says there is a clear link between businesses with a robust energy strategy and strong-performing companies. And he believes manufacturers have a built-in advantage because of the level of flexibility in manufacturing processes – flexibility that can be used in different energy markets.

“In some cases, we’ve seen customers use their data to alter shift patterns, so that their more energy-intensive manufacturing processes take place at the times of day when energy is cheapest,” he says.

Some are using the insights they’re getting from energy monitoring technology not only to keep track of energy consumption, but also to calculate their own KPIs. Of the firms interviewed in the report, 49% have met their emissions or environmental targets as a result of investing in energy technology.

Of course, it’s not just about the bottom line. Companies are also aware of how important decarbonisation is to the next generation of workers – 79% of millennials are loyal to socially responsible companies , particularly those committed to protecting the environment.

It is the companies who respond to this new set of priorities – and the manufacturers who embrace the potential of new models of energy distribution – who will thrive in a competitive business landscape.