Making it Green: Utilizing Energy Efficiency in Manufacturing

March 18, 2016

Manufacturing consumes one-third of the world’s total energy. This high level of dependence underlines the need for developing energy efficiency in the manufacturing process. Combined with the associated wastage of energy in manufacturing – which can significantly impact a company’s profit margin – and growing national and international efforts to develop alternative sources of energy, leading manufacturers around the world are now increasingly looking to integrate energy efficiency into their operations.

Manufacturers use energy at various points of their production cycle. Electricity, natural gas and transportation fuels all include various channels of energy utilization. Energy efficiency in manufacturing works at various levels – the replacement of hardware, automation of manual processes, and skills development for technical processes all contribute to building an energy efficient manufacturing unit, which in turn can develop an energy efficient manufacturing sector.

Is energy efficiency a means to reduce the cost of manufacturing?

Energy costs inevitably become a major driver in determining the economic viability of a manufacturing operation. The International Energy Agency (IEA) states that, in 2013, US$80 billion worth of electricity was wasted due to outdated manufacturing practices.

Energy efficient firms in the manufacturing sector stand to reduce costs and maximize profits. A report by the Economist Intelligence Unit (EIU) notes that around 75 percent of executives they surveyed believe that energy efficiency is critical for success. It has a direct impact on the cost of production. The report additionally suggests that nearly 50-60 percent of manufacturing costs are attributable to energy consumption.

Energy efficiency as a means to ensure sustainability

Manufacturers are coming to realize that energy efficiency is essential to ensure sustainability. Sustainability is a key driver for the long-term success of a manufacturing company, especially in the face of growing environmental degradation. In addition to saving cost, energy efficiency allows companies to pursue three distinct sustainability objectives, namely: developing an environmentally responsible reputation, fulfilling Corporate Social Responsibility (CSR) obligations and, in the process, ensuring long-term sustainability.

Companies recognize that consumers value environmentally responsible behavior. The dipping volume of sales that Volkswagen faced after the revelation of their faulty technology – which hid the real level of emissions – is a prime example of this consumer preference. Energy efficiency therefore becomes desirable from a range of different standpoints.

Applications of energy efficiency

Manufacturers can save energy in the following order:

  1. Device
  2. System
  3. Process
  4. Facility
  5. Enterprise
  • Device

Manufacturing in its current form relies on several devices. Improving the energy efficiency of these devices is often the easiest way to alter the energy efficiency of the overall manufacturing process. The efficiency of a device is linked to its capability to convert one form of energy to another.

For instance, a water pump will convert electrical energy into mechanical energy by pumping water from one location to another – generally from a reservoir to an overhead tank. Replacing such a device with a pump that consumes less energy to pump the same amount of water ensures device efficiency, which in turn develops energy efficiency.

A project undertaken by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) to improve the energy efficiency of the Water Authority of Jordan (WAJ) is illustrative of the benefits of replacing inefficient devices. GIZ was tasked with identifying and replacing devices that waste energy for water pumping stations. GIZ recommended that more efficient pumps that require less energy replace energy inefficient pumps. The modern technology would be complemented by energy conservation plans that GIZ recommended. Because of the new pumps and effective energy management practices, the pumping stations reduced energy consumption by around 30 percent. The WAJ also saved US$ 170,000.

  • System

A system in a manufacturing process comprises devices, the associated control mechanisms for the devices, as well as any sensors linked to the device. Using energy efficient devices creates and improves system efficiency.

For a water pump, the system will comprise the pump, the associated pipes and drains, the controlling mechanism for the operation of the pump and any sensors that may be connected to the pump. Energy efficient pumps, pipes and sensors will ensure that the system is efficient. The development of sensors that are cost effective and optimize energy consumption – and an integrated system where such sensors are interlinked – will form the core of an energy efficient manufacturing process. Therefore, system energy efficiency is intricately linked to device energy efficiency as well as optimal usage of ICT in the form of sensors and other devices.

A case study of Steelcase – one the world’s largest office furniture suppliers based in Michigan, U.S. – is a perfect example of system efficiency that is achieved through intelligent sensors. The company used a boiler system, which was environmentally compliant and had an ISO 140001 rating for such compliance. However, the system collected water, air, gas, electricity and steam (WAGES) data manually. In 2012, the company hired a vendor to create an intelligent sensor-based automated system to collect WAGES data. By using such sensor-based automation, Steelcase was able to reduce its energy consumption by 15 percent and its carbon footprint by 25 percent.

  • Process

All systems are part of a larger manufacturing process. Processes are essentially the manner in which different systems in the manufacturing cycle interact with each other.

A water pump can limit the load for each day in order to optimize energy utilization. However, the process to limit the load might be dependent on a machine that operates through a sensor, or it may present viable options to a manager who could then make a decision on whether to limit the load and, if so, what the load should be set at. If the interaction time between the various systems can be minimized without an impact on the outcome, it would create energy efficiency at the process level within the supply chain.

  • Facility

Facility level energy efficiency relies on smart manufacturing. It creates integration of all processes and systems.

For instance, a company uses two separate systems to manage machinery and accounting, respectively. Smart manufacturing will create a synergy between the two systems. The integration will ensure that the information from the system that manages machinery is transferred automatically to the system that manages accounting. Information about required maintenance for a water pump will therefore be transferred from the system that manages machinery to the system that manages accounting to ensure that the accounting system manages the expenditure for the required maintenance.

The automated flow of information between two independent systems minimizes the energy expended in the transfer of information. Collection of WAGES data mentioned in system-level energy efficiency improves the energy efficiency of data collection. Facility-level energy efficiency, meanwhile, ensures that the efficiency of the data collection process also has a direct impact on another system. The other system in such a scenario will be one which coordinates maintenance based on the WAGES data. The automated transfer of data from one system to another facilitates energy efficiency for the system that also coordinates maintenance.

  • Enterprise

Enterprise level energy efficiency implies an integration of various production facilities. The integration reveals resource utilization in the manufacturing facilities to the relevant decision-makers. Executives can then integrate all aspects of the market, including consumer demand, market conditions, and storage capabilities to determine the optimal level of production. This in turn generates an energy efficient enterprise, as energy will not be wasted on over production.

What are the roadblocks to pursuing an effective energy efficient strategy?

One of the major roadblocks to an effective energy efficiency strategy is the volume of investment it requires. Companies widely believe that pursuing energy efficiency at all levels of production is very expensive. In addition, companies that do undertake such investment seek an exponentially higher level of return on investment (ROI). Industry analysts state that returns from energy efficiency only take shape after a gestation period of around two to three years. This often means that companies choose to prioritize investments which bring higher returns in the shorter term.

It is interesting to note that companies and manufacturers do not cite a lack of information as a roadblock to investing in energy efficiency. This implies that there is a growing volume of R&D that studies energy efficiency and its associated gains. The provision of intelligence that clearly informs decision makers of the intricate links between energy efficiency and profitability is therefore essential to promote a culture of energy efficiency.


Energy efficiency is vital to improve sustainability and cut costs for manufacturers. Most companies recognize the importance of energy efficiency, but nevertheless often prioritize short-term gains due to the long gestation period for returns on energy efficiency. This disincentivizes companies from making large investments into energy efficiency. Manufactures often only seek to improve energy management practices and limit the investment that they actually divert towards energy efficiency in plants and machinery.

In the future, energy efficiency will be highly dependent on the Internet of Things (IoT) and ICT.  The sooner that manufacturers form a synergy with technology, the easier they will find it to achieve an energy efficient manufacturing process.

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