From NZ Manufacturer magazine March 2025     www.nzmanufacturer.co.nz

NZ Manufacturer March 25 by Media Hawkes Bay Limited – Issuu

 

-Insa Errey, Advisor to NZ Manufacturer, Genesis, Senior Manager Future Fuels.

Energy efficiency is increasingly becoming a key factor to drive cost reductions, especially in the manufacturing sector. As manufacturers seek ways to remain competitive and reduce operational expenses, energy costs should become the primary target for cost-cutting measures. By improving how energy is used, it can reduce bills, boost productivity, and contribute to long-term sustainability.

The Link Between Energy Efficiency and Costs

In manufacturing energy cost can account for up to 20% of total operational expenses, these costs can vary depending on the industry and the energy intensity of the product. Energy costs, in many cases, are second only to labour in terms of operational spending. Leading to improving energy efficiency delivering substantial financial benefits.

Energy efficiency involves the reduction of energy consumption without compromising output or quality. The savings generated from these measures can translate directly into reduced operational costs and higher profit margins.

Significant savings can be realised with low to no cost process optimisation. While other opportunities may involve initial investment which can seem significant, the return on investment (ROI) is often reached quickly through reduced energy costs.

Global insights from the International Energy Agency (IEA) show that in some industries, energy efficiency projects can pay for themselves in as little as 2-3 years.

Beyond immediate savings, energy efficiency improvements can provide long-term financial benefits. Energy efficiency can help mitigate the impact of rising energy prices, making it easier for manufacturers to predict future costs and avoid unexpected increases in energy expenses.

Even small reductions in energy costs can make a big difference to the bottom line.

Another consideration is that energy efficiency can also provide manufacturers with a competitive edge in the global market. As international consumers and businesses become more focused on sustainability, manufacturers that prioritise energy efficiency and reduce their environmental impact are more likely to attract customers and partners who value responsible production practices.

International Examples of Energy Efficiency Promoting Cost Reduction

The IEA call energy efficiency the ‘first fuel’ and has long advocated for energy efficiency to reduce costs and improve global competitiveness. According to the IEA, improving energy efficiency in industrial processes could save billions of dollars annually. For example, upgrading industrial motors and optimising production lines could reduce energy consumption in manufacturing by 10-20%.

The IEA also emphasises the importance of implementing best practices in energy management and fostering the adoption of low-carbon technologies. The IEA’s annual Energy Efficiency Market Report outlines how energy efficiency measures can save billions in energy costs globally over the coming decades.

Germany are leaders in manufacturing and industrial production and has set ambitious goals for energy consumption reductions as part of its Energiewende (energy transition). Germany set a binding target to reduce energy consumption by 30% by 2030.

The manufacturing sector in Germany is already undergoing significant transformations, with companies integrating energy-efficient technologies and working in energy efficiency networks to reduce energy use and cut operational costs.

These networks bring together businesses, local authorities, and other stakeholders to collaborate on improving energy efficiency across various sectors.

The idea behind these networks is to foster knowledge exchange, best practices, and joint solutions for reducing energy consumption.

By participating in these networks, organisations can set and achieve energy efficiency goals, benefiting from shared experiences and resources.

This collaborative approach helps companies identify and implement cost-effective energy-saving measures, which ultimately supports Germany’s goal of reducing greenhouse gas emissions and becoming less reliant on fossil fuels.

Energy efficiency is a game-changer for reducing operational costs in manufacturing. With energy consumption being a major expense, manufacturers can realise significant savings by adopting energy-efficient technologies and practices. EECA (Energy Efficiency and Conservation Authority) Sector programme have tools a resource to help businesses optimise their energy.

By embracing these strategies, manufacturers can not only reduce operational costs but also increase their competitiveness, contribute to a sustainable future, and position themselves as leaders in a rapidly changing market.