Financial managers in UK industry are unaware that electricity prices have tripled since 2004, a survey from leading engineering company ABB, carried out by Benchmark Research, reveals.
The financial managers also have very limited knowledge of how electricity costs can be reduced, many believing that a change of electricity suppliers will be the best way to reduce costs significantly.
Only 2% of financial managers in the UK realise that electricity prices tripled between 2004 and 2007. Few of them have any detailed knowledge about the most effective ways to save energy, yet 54% of them believe that it is extremely important to reduce electricity costs.
The result of our survey is worrying, as financial managers’ control the investments companies make to become more energy efficient, says Steve Ruddell, energy spokesperson in the UK for ABB, the company behind the survey.
In 2004, the cost of electricity paid by medium size manufacturing industry in the UK was £22 per MWh. Three years later, this had risen to £68.
The rising cost of electricity can be crippling for many companies. But if the financial managers do not know about the impact of the electricity cost or what they can do about it, they cannot be expected to make the right investment decisions, says Ruddell.
When it comes to saving electricity costs, over 50% of the financial managers thought the most effective way would be to change electricity supplier. Clamping down on visible waste, such as non-efficient lighting and compressed air leakage, was also favoured by the financial managers. Investing in equipment that makes industrial processes more efficient came at the bottom of the list.
This list is back to front, says Ruddell. Making industrial processes more efficient can save much more than the other methods, but financial managers are simply unaware of the savings they can make. Most companies can save thousands of pounds worth of electricity and some can even save hundreds of thousands of pounds by upgrading existing processes, often at comparatively low cost.
Changing electricity suppliers is not going to make much difference at all in a market where prices rise across the board. In addition, this does nothing to reduce the company’s carbon footprint, which also ought to be a priority, says Ruddell.
It concerns me that the people tasked with allocating the resources in industry are not more aware of how electricity is used. If equipment is purchased on the basis of first cost alone but at the expense of high running costs, nothing is gained. Additionally, process efficiency in industry needs to be addressed in order to get CO2 emissions down. 65% of electricity in industry is used by electric motors, but only 3% of motors have efficient speed control, Ruddell says.
Most processes in industry are designed for a worst-case scenario that only occurs infrequently, if at all. Yet, motors tend to be left running at a fixed speed which is much higher than what the production requires. Most motors can be reduced to 80% speed without any negative effects on the process. Pumping is the most common application in industry and if a pump motor is controlled electronically by a variable speed drive, a 20% reduction in speed can save nearly half the energy.
The potential energy savings in industry are staggering. Realising these savings could help to substantially reduce CO2 emissions. However, our survey suggests people are looking for savings in the wrong places, Ruddell concludes.