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Balancing the Energy Trilemma for Manufacturers

Optimal use of energy is vital to the productivity, profitability and ultimate viability of a manufacturing business.

For many, it represents one of their biggest single costs, costs that they have seen rapidly increase over the past year. Even with a new price guarantee in place from Government to at least mitigate some of the expected additional increases over the winter, there is still more financial pain to come when it comes to energy bills.

Actively finding ways of mitigating these increases, whether that is through energy management, procurement or new technologies, is increasingly front of mind for many manufacturers. However, energy costs still only represent one aspect of what is known as the Energy Trilemma. While cost-effective energy is vitally important, the other two elements of the trilemma remain equally so: sustainability and power resilience. Any steps taken to bolster one aspect of the trilemma need to be carefully implemented to ensure that they do not negatively impact on the other two.

Energy Resilience

Power disruption events, even those that appear relatively minor at first glance, can be a disaster for the productivity of a manufacturer. Even a momentary dip in supplied voltage to a site can trip sensitive programmable logic controllers, increasingly used across manufacturing as the rollout of Industry 4.0 increases automation and digitisation. As a result, the minor disruption becomes a prolonged outage as equipment has to be reset and restarted. Alongside the huge amount of wasted productivity this can cause, additional costs can quickly mount up due to wasted or damaged products or raw materials, damage to equipment or loss of data.

Many manufacturers have invested in emergency and backup power in the form of UPS batteries and generators to allow their site to continue to operate in the event of a power disruption. While these represent a good solution when it comes to power resilience, they are less than ideal when considering the other aspects of the trilemma. Both can add significantly to a site’s carbon footprint, while also representing significant additional costs and lost energy efficiency.

Energy Sustainability

The majority of UK manufacturers belong to a trade association that holds a Climate Change Agreement, allowing them to access a 90% discount on the non-commodity portion of the electricity bills in return for measured, demonstrable improvement in their sustainability performance. Failing to meet the minimum standards laid out by a particular CCA holder risks them being removed from the scheme, meaning that they would be required to pay the Climate Change Levy in full.

Increasingly, manufacturers looking to work with large supply chain partners, particularly retailers, are expected to improve their sustainability to continue that relationship. Many of these large partners have already made significant strides in terms of addressing their own Scope 1 and 2 emissions, and are turning their attention towards Scope 3: those of their supply chain. Failing to make improvements risks alienating your business from your most important partners, or being replaced by a competitor with better sustainability credentials.

Energy Affordability

While energy costs will almost certainly seem the most pressing of the three aspects of the trilemma to most manufacturers currently, it is important that short-term cost benefits don’t outweigh an effective, long-term energy strategy. If a measure is taken that delivers low costs now, but at the expense of your future sustainability or power resilience, it risks causing more problems than it solves down the line.

Fortunately, there are measures that can be taken that bolster all three aspects of the trilemma. On-site generation is one example, replacing costly and potentially unreliable grid-supplied energy with clean electricity generated on-site. Battery storage can prove to be another, switching out inefficient UPS emergency power with much lower loss lithium-ion batteries than can also help to deliver a more intelligent, joined-up energy management strategy.

Ultimately, the cheapest and cleanest unit of energy is the one that you don’t use: energy efficiency is one of the most important tools when it comes to both managing current energy cost rises and ensuring a long-term energy strategy that balances each aspect of the trilemma efficiently.