Stop thinking of Energy as a Fixed Cost

Global investment in the clean energy sector has risen nearly fivefold, growing from $54 billion in 2004 to $269 billion world-wide in 2012.

Driving energy efficiency throughout industry is advanced manufacturing technologies such as energy aware control systems that can sense and report energy consumed in the process.

30% of the energy used in the U.S. goes to industrial applications and the majority of use goes to electric motors. That’s a great place to start.

With advanced manufacturing, companies can add the cost of energy to the raw materials cost, or the bill of materials (BOM). It’s a wise strategy because the amount of energy used to make products is as important as the raw materials – the copper, sheet metal, nuts and bolts, plastic and chemicals – used within those products.

A decade ago, this wasn’t possible. Communication in manufacturing was much like the United Nations, where everyone around the table spoke a different language. Nothing gets done until you find a common way to communicate.

The same applies to manufacturing. The control system and the machines need to communicate and share information to act faster, smarter, and more efficiently.

That’s the concept behind The Connected Enterprise, where automation is integrated with the rest of the enterprise. And when I say integrated, I mean with everything: supply chain data, customer data, and of course, energy information.

The entire concept – managing energy on the BOM – is possible because the technology has advanced so far that we can now collect granular information on energy consumption without adding new power meters.

With advanced manufacturing and new technologies we’re innovating and standardising, you can now measure energy at the machine and device level so you know how much energy every single machine is using.

Now, what to do with that information? By collecting the data so accurately and in real-time, you can start negotiating with the smart grid. With visibility to your energy usage right from your iPad or smart device, you can figure out what energy rates will be for the next 24 hours and schedule operations to minimise energy usage during peak times.

If you’re a big energy consumer and you have the right information, managing those fluctuations to your advantage can save millions of dollars by year end.

In the U.S. alone, a 10 percent reduction in energy equals $6 billion in savings. These are the kinds of things we can do with smart manufacturing enabled by better technology, constant innovation, updated standards and a connected enterprise.

Bottom line: many manufacturers look at energy as a cost of doing business – and that must change. Energy is not a pure cost if you look at it more like an element on the BOM. Companies are always negotiating the cost of raw materials; with advanced manufacturing solutions and active energy management, now they can start dynamically optimising energy consumption and reduce that cost rather than treating it as fixed.

Imagine what you could do with all the money and energy you save.