With energy making up as much as 20% of overall costs for some industries, manufacturers are increasingly looking at their gas and electricity procurement and consumption to unlock much-needed savings.
For the most energy intensive industries in certain sectors such as metals and minerals, where energy is more than 20% of their total site costs, there may be support from the Energy Intensive Industry Exemption Scheme. If you think this might describe your business, you can find out more here.
Growth in Non-Commodity Costs
The urgency for manufacturers to address their energy strategy and reduce costs is compounded by the fact that energy bills continue to rise, driven primarily by the rapid growth in non-commodity costs. While wholesale prices have seen some volatility but little overall increase in recent years, the additional costs added to bills, such as green levies and distribution costs, remain on a disturbing upward trend.
A range of charges used to support renewable energy generation and other green energy measures are the primary driver for these increases.
For many manufacturers, green levies can make up around 30% of your total energy bill, including renewable obligations to support grid-scale renewable generation, domestic feed-in tariffs and Contracts for Difference that followed the government’s reforms of the energy industry.
The growth in network or ‘system’ charges adds further pressure, rising around 10% year-on-year, as National Grid faces the increasingly difficult task of adapting the ageing grid to a rapidly-changing energy mix.
The first step towards both mitigating rising costs and securing savings is to better understand how and when you are using energy. Energy intensive manufacturers will almost certainly already have personnel in-house responsible for energy procurement, however, the in-depth expertise of an experienced energy consultancy can deliver a number of important insights that offer substantial energy savings.
As part of this process, analysis of your overall usage by experienced energy specialists can offer a number of opportunities to achieve cost savings. Most manufacturers pay higher prices for electricity use during peak periods. Having the flexibility to shift activity away from these can reduce costs, while also offering potential to generate additional revenue by entering into a demand side response agreement in return for reducing consumption during peak demands.
Analysis of your overall usage also allows further energy reduction options to be identified and the impact of potential investments in new technologies assessed. Identifying opportunities to reduce consumption through changes in process, staff behaviour or equipment can all help to reduce costs without impacting on productivity.
To find out more about how Inenco helps manufacturers to meet the growing need to address energy costs, contact us on 08451 46 36 26 or click here.