After weathering the energy price shocks of recent years and now seeing prices decline, companies are losing focus on energy efficiency. Producers have grasped the initial, easy-to-achieve savings, and now further improvements require more effort for diminishing returns. In this blog article entitled ‘Energy Efficiency Programme: Has yours run out of steam?’ we discuss energy efficiency planning, and take a look at developments in energy metering.
Initially, businesses responded to rising energy costs with a flurry of measures aimed at reducing expenses. However, as we adapt to higher costs and they start to decline, energy-saving initiatives often stall. Even more so when the financial returns become less appealing.
A management accountant remarked that there was no need for an energy-saving programme because the higher energy costs were already budgeted. Consequently, there was no capital expenditure allocated for energy-saving schemes. This mindset assumes that for some processes energy consumption is unavoidable. Yet technological advancements can quickly change what is feasible.
Energy Efficiency Planning
According to Schneider Electric, lower costs are just the beginning of the benefits from comprehensive energy efficiency plans. Increased efficiency not only reduces wear and tear on expensive equipment but also extends its lifespan. Furthermore, it boosts factory throughput by minimising downtime. Lower maintenance costs and enhanced reliability can also generate savings for reinvesting in future growth.
As energy costs fall, there is a risk that energy efficiency programs may remain stalled without buy-in from senior management. However, all it takes is the right approach and knowing who to involve.
One of the critical first steps to maintaining or initiating a successful energy efficiency program is developing an effective business case. This not only sells the project internally but ensures performance during the implementation phase. It is also important to recognise that not every plan delivers the expected return, and others may be deemed unsuccessful due to mediocre performance.
Products and technologies continue to improve, and projects that were not viable in the past should be subject to periodic reviews. The Japanese concept of Kaizen, which involves continuous improvement of all functions and engagement of all employees from the CEO to the assembly line workers, is applicable here. This approach encourages revisiting earlier decisions, such as the benefits of introducing robotics to improve productivity. Kaizen also applies to processes like purchasing and logistics, extending into the supply chain.
Developments in Energy Metering
Another advancing technology is the availability of networked electrical energy metering. Flexible and easy-to-install systems from suppliers such as Schneider Electric, SICK, and Wago automatically collate energy usage data. Activity-based costing assigns costs more precisely by linking them directly to the activities that drive those costs. Their accuracy aids in better pricing decisions and resource allocation, identifying specific activities that consume resources and contribute to costs. This insight allows organisations to focus on optimising these critical activities and enhances process optimisation by highlighting inefficiencies, enabling managers to target areas for improvement based on cost drivers and resources.
Here to Help
The challenge for most SMEs is where to access the knowledge and skills needed to complement their in-house capabilities. As the UK’s only Schneider Electric Alliance Master Distributor, BPX has proven expertise in industrial automation solutions and advising customers. With five Master-level professionals on our team, we can guide you on best practices and evolving technologies. To learn more about how we can assist you, please use the contact form below.
