It’s estimated that 51% of energy used in manufacturing is wasted. That means that for every $1,000 allocated to electricity, a staggering $510 is squandered, translating into significant financial losses and missed opportunities for sustainability.
This alarming insight was shared by Philip Allen , industry veteran and Technical and Managing Director at Enigin Partners , during the Energy Efficiency and Load Shifting session at SIMPAC 2024. It underscores an urgent need, and a significant opportunity, for a strategic overhaul of energy consumption in the manufacturing sector.
If you are struggling to believe the 51% wasted figure, it aligns closely with the IEA’s below 2 degrees C scenario, where they have built into the modelling a 50% energy efficiency improvement by 2050 if we are to meet our targets.
“Australians have so far been pathetic at energy management and efficiency,” was Phil’s honest assessment. There are exceptions, of course, but the problem is that most CEOs think their business is the exception. “In reality, most have not embraced efficiency and are not getting the full benefit.”
The challenge is not just in recognising the inefficiency but in uncovering the hidden processes and outdated practices that contribute to this waste.
Moving from awareness to action
Energy wastage isn’t always obvious, Phil points out. It occurs when outdated equipment idles, usage is mistimed during peak periods, and inefficiencies within operations go unnoticed. The consequence? Escalating costs that hinder productivity and add pressure on businesses to demonstrate their commitment to sustainability.
Energy inefficiency also hinders the energy transition, according to Christopher Quint , Senior Business Development Manager at Enel X. Chris pointed out that with 9,000MW of coal-fired generation set to go offline by 2032, renewable energy sources may struggle to consistently meet demand due to their intermittent and variable nature.
For Chris, energy efficiency is just one aspect of a robust renewable grid. The other key component is demand-side participation, a trend Chris believes will continue to expand. “It’s not going to go away, and it’s going to be in every state.”
Demand response as a new revenue stream
The good news is that any existing asset that uses electricity – such as crushers, data centres, and cooling systems – can participate in demand response initiatives. Through these programs, businesses are paid to reduce their energy usage during peak grid demand or high-cost periods, effectively transforming energy consumption into a source of revenue.
Traditionally reserved for large consumers, demand response is now an option for everyone, thanks to distributed energy resources like rooftop solar, batteries, and electric vehicles – enabling anyone to engage in, and be rewarded by, demand response programs.
“You can be paid like a generator for reducing consumption when the price is high, simply by using your existing equipment in a better way,” said Chris. “Relieving the grid from having to supply that volume of energy is just as valuable as if that energy were generated into the grid – without the need for new transmission infrastructure.”
Demand response is also built into the International Energy Agency (IEA) future modelling, where it will play a critical role in the energy transition. The IEA are predicting that demand response will provide 25% of all energy storage, with batteries providing another 25%. This means for every MW of battery storage we build today, we should be putting in place a MW of demand response. Australia is way, way behind those figures.
Unlocking the value of energy assets with responsive demand
To begin to understand how they can unlock value from the energy transition and their energy assets, Garry Harding , CEO and Co-Founder of EnergyFlex, an energy data and insights company, says businesses should strategically manage the timing of their energy use through responsive demand.
In contrast to demand response, where manufacturers get paid to avoid short periods of very high prices, “responsive demand” says Gary, lets them actively control energy use based on real-time market signals. This aims to cut costs overall, not just during demand response events. This way, manufacturers can lower their energy bills and turn energy use into revenue by timing their usage strategically.
Garry introduced the concept of “energy asset value”, which encompasses the financial, environmental, and community benefits that come from strategic energy use. He emphasises the importance of viewing energy not as a constant, readily available resource, but as a fluid asset that requires strategic management and governance.
“The way you use energy is extremely valuable,” said Garry, adding that energy use is no longer just a bill to pay but a powerful resource with untapped potential.
“Every business, whether a warehouse or a café, has an overlooked energy ‘asset’ that’s hidden in plain sight,” explains Garry. “EnergyFlex helps you understand that your energy asset is built into your daily choices, and it’s reflected in your personalised EnergyFlex Rating. It’s every choice you make about when and how energy fuels your operations, like machine runtime, lighting patterns, and refrigeration setpoints.”
“Most importantly, it’s about the timing of your energy use. At EnergyFlex, our mantra is: ‘when you use energy is more important than how much you use’. If you can shift most of your usage into renewable generation periods, you’ll notice an improvement in your EnergyFlex Rating and see a significant decrease in your energy costs and carbon emissions.”
Simple steps towards big savings
While strategic asset management and demand response represent innovative approaches to energy efficiency, the foundation of sustainable change often lies in simpler, more accessible steps. Starting with basic energy-saving measures can pave the way for larger gains and more substantial savings, says Lena Parker, General Manager of Energy Solutions at Ventia.
According to Lena, being “energy smart” isn’t about investing in complex equipment and system overhauls. Instead, it’s a journey of step changes that begins with the little things, like lighting.
“When we speak about energy efficiency optimisation, we don’t mean installing a fancy new, whizbang heat pump – although those are no-brainers. It means starting with the simplest inputs, like lighting, and building from there. With a plan in place, you can reduce consumption within your organisation and across your processes tomorrow; you’ll save money and reduce your emissions and get better outcomes for your employees.”
Phil agrees, saying it’s not difficult for any organisation to start addressing energy waste and inefficiency. “The key is, simply, constant improvement. Small steps add up very quickly.”
Cultivating an energy-efficient culture
As businesses begin to implement basic energy-saving practices, the importance of fostering a culture of efficiency becomes evident. Encouraging a mindset shift across the organisation can amplify the impact of individual actions, driving collective progress towards sustainability.
Fostering an energy-efficient culture hinges on incentivising and rewarding employees who embrace energy-efficient practices, said Nick Palousis, CEO and Founder of 2XE.
“When all team members are actively engaged in conserving energy, they can collectively drive long-term efficiency and bring about substantial operational enhancements”, says Nick. “Through education and awareness, employees gain a deeper understanding of the impact of their actions and become more attentive to the equipment and systems they use”.
“To build an energy efficiency culture, you need to give more control to your staff and trust them to make the right calls about running things more efficiently.”
With the groundwork for an energy-efficient culture laid, the next step is to outline a concrete action plan to reduce waste and enhance efficiency.
An action plan for manufacturers
Here is the top advice from the speakers for manufacturers aiming to reduce inefficiency and waste and transform their energy consumption into a strategic advantage:
· Begin by enhancing your situational awareness. Conducting a thorough assessment of your current energy usage can reveal opportunities for improvement. The EnergyFlex Rating provides a baseline from which you can improve. “Having a clearer view and deeper understanding of your energy consumption allows you to manage your way to a better situation,” says Garry.
· Establish targeted and ambitious goals: Phil says businesses are not ambitious enough when it comes to reducing energy waste and inefficiency. He highlights instances where businesses achieved waste reduction of up to 80% without costly upgrades. Rather than vague reductions, Phil encourages targeted thinking, such as exploring ways to reduce a specific machine’s operating time by 10% daily. His advice? “Set a target and give it a go.”
· Implement basic efficiency measures. Start with quick wins, like optimising lighting, powering down idle machinery, and proactively maintaining equipment. Monitor your energy consumption for unexplained spikes and opportunities to shift usage to greener, more cost-effective periods.
· Optimise the timing of energy consumption: Shift as much energy usage into the daytime hours when clean, affordable renewable sources dominate the grid, reducing dependence on expensive nighttime fossil fuel generation.
· Prioritise monitoring and targeting: For Phil, monitoring and targeting are the crucial – but often overlooked – aspects of energy efficiency. “Too often, the emphasis is on hardware solutions, but control and action are far more important than ageing equipment.”
The future of energy management
As we navigate the complexities of renewable energy management, the collective effort towards efficiency and sustainability becomes crucial. By reassessing energy use, embracing demand response and responsive demand, and being strategic about when they use energy, our experts believe businesses and individuals alike can play a pivotal role in shaping a sustainable future.
Perhaps we can leave the sum up to Lahiru Wimalasuriya , Digital Products and Platforms Manager Future Energy, CS Energy . CS Energy is Queensland Government owned traditional thermal Gentailor that rapidly transforming to a diverse energy business.
“We see the future to be not just one way power flow from generation to customer, but a more integrated ecosystem of energy”.
Customers want more renewable energy penetration on their sites, but also more equitable market and financial incentives, where the customers behaviour is modulating generation as well as consumption, so they get a better and fairer return, not just the capital payback periods.
“So customer bills will be changing rapidly”.
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