Energy optimisation through smart finance could save the manufacturing sector billions

Siemens Financial Services (SFS) has released an insight study which estimates the cost savings that implementing energy optimisation could bring to manufacturers in China ($115.2bn), Europe ($40.3bn), United States ($26.2bn) and India ($22.6bn) over a five-year period.

Part of an insight series; ‘Financing Decarbonisation: Manufacturing’ looks at the many pressures – shareholder, environmental, and regulatory - facing manufacturers to cut their carbon emissions, improve energy efficiency and reduce operating costs. While the current economic climate has caused greater caution over capital spending, the research explores how investment in outcomes via smart finance solutions can render the investment sustainable and affordable.

In collaboration with specialist vendors and financiers who are focused on delivering outcomes, the research finds manufacturers are approaching energy optimisation via two key strategies:

1)         An holistic optimisation strategy that helps to future-proof energy supply, drive down consumption costs, reduce exposure to unpredictable cost hikes, drive carbon reduction achievement, create new revenue streams and deliver financial benefits in the short-term.

2)         Incremental investment stages where typical steps include combined heat and power; lower energy consumption variable speed drives; production line energy recovery; membrane filtration, anaerobic waste treatment; transmission-efficient switchgear; digital twin virtualisation; and energy-efficient building technologies.

For large-scale projects, arrangements known as Energy-Optimisation-as-a-Service - typically supplied by specialist private financiers - can deliver budget neutral financing. At the smaller-scale, smart financing arrangements (usually based on asset financing structures) help organisations acquire energy-efficient solutions without having to deploy retained capital or over-burden their banking facilities. They can often make it possible to acquire higher specification solutions that deliver greater energy optimisation benefits more quickly – a greater contribution to overall competitive advantage.

“Smart financing solutions and new business models can enable manufacturers to secure cost and energy savings without putting capital at risk,” explains Jo Harris, Sales Director, Commercial Finance UK, Siemens Financial Services. “Manufacturers only need to ask themselves which energy solution aligns best with their goals.”