How new energy technologies can help drive innovation in manufacturing
How the right approach to energy can help drive sustainable growth and innovation.
The COVID-19 pandemic has proven why manufacturers need agility and innovation. When production lines were threatened by scarce resources, absent workers and slowing demand, they needed to quickly adapt. As the global management consulting firm McKinsey noted, manufacturers that had already harnessed innovative, digital solutions were better positioned to weather the storm, since they could move faster and further than their peers during the crisis.
A global survey from PwC found that 92% of industrial manufacturing executives believe innovation is important to future revenue growth. After all, manufacturers operate in an increasingly competitive environment. Margins are being squeezed and costs continue to rise – but they still need to find ways to increase production efficiency, respond to changing customer expectations, minimise production downtime, ensure right first-time production, and meet stringent just-in-time delivery schedules. Innovation is required, to address these complex and intertwined challenges.
The catalyst for change
Innovation can take many forms, and energy is one important focus area. A Centrica Business Solutions survey revealed that 23% of manufacturers see energy as an asset that can generate revenue and competitive advantage. Focusing on sustainability is one of the ways that manufacturers can unlock this opportunity.
There’s pressure for all businesses to become more sustainable. But manufacturers are likely to feel the pressure more than most, since they’re typically very intense energy users. So much so, that cement manufacturing alone is responsible for 8% of the world’s CO2 emissions.
Customers want to buy from businesses that care about the impact they have on the world. This preference is underpinned by governments and regulators, who are implementing more and more legislation around decarbonisation.
Disruption is often the catalyst of change. In the same way as the COVID-19 pandemic forced manufacturers to quickly adapt, customers’ preference for greener products is encouraging them to rethink how their business acquires, uses and manages energy. There’s no one-size-fits-all approach, so the outward shift towards sustainability is helping them to focus inwards on innovation within their operations.
New energy technologies offer significant opportunities for manufacturers to enhance their sustainability credentials, while also helping power their innovation and growth. This means adopting the right energy technologies, in the right way and at the right time, is imperative. So, what does a robust energy project look like?
Harnessing Demand Side Response is delivering significant cost and carbon savings, for leading cement manufacturers LafargeHolcim
Moving forward with new energy technologies and approaches
There are three key areas to focus on when building an energy project that will unlock innovation at your organisation.
Firstly, the energy solution itself. New energy technologies offer many opportunities for manufacturers to improve the flexibility and scalability of their energy supply, whilst also reducing carbon emissions and energy costs.
These technologies include renewable on-site generation, such as solar. Powering your production lines with 100% renewable energy can boost brand reputation. It’s also one of the most cost-effective methods of improving environmental performance, since it has the added benefits of enabling organisations to generate revenue by selling excess power back to the grid; reduce energy costs during peak price times by combining solar with battery storage; and earn revenue from supporting the grid through Demand Side Response programme. Another option is Combined Heat and Power (CHP) – which can cut a site’s energy use by up to 25%, reduce carbon emissions and ensure a more scalable supply of energy to support the adoption of new production technologies.
Whichever energy solution you choose, it’s critical that you also consider how it will be operated and maintained. Manufacturers cannot risk assets causing production downtime. Reliability is critical, particularly for operations that run 24/7. What’s more, if you’re making a significant investment, you’ll want to ensure you drive maximum value from it. An effective operations and maintenance (O&M) solution will maximise the effectiveness and lifespan of your energy technologies.
The second area to consider is insights. Harnessing technologies such as our energy insights solutions, manufacturers can get insights into real-time, device-level data on energy usage within production processes, which can unlock opportunities for innovation. With the right data, your organisation can identify new ways to reduce carbon, improve operational efficiency, lower energy costs, and prevent costly downtime.
The third area that’s important to consider is funding. Flexible funding and contractual models provide the opportunity to reduce your reliance on CAPEX, to free up resources to invest in growth innovations and new business models. It also means that you can overcome capital constraints that may previously restricted you from implementing more innovative approaches to energy management.
How sustainability in manufacturing can drive innovation
With so many options, choosing and implementing the right energy technologies that will drive sustainability – and ultimately, innovation – might seem complex. At Centrica Business Solutions, we offer not only a wide range of energy services and distributed energy technologies, but also the power of our expertise to guide you through.
Whatever stage you’re at in your sustainability journey, our Energy Pathway provides the structured approach needed to help manufacturers to reduce their carbon footprint, but also to reduce the complexity you face as you drive innovation throughout your operations.