What can we do about the consequences of our current energy challenge?

There is no doubt that ongoing issues surrounding energy have created significant challenges for global industry. However, the varied nature of global industry means it can be difficult to see the big picture. That’s why we at ABB conducted a survey of 2,300 leaders across key global markets: US and Brazil, Germany, the UK, Sweden and Italy, China and India, and Australia.

Our research reveals that businesses face several serious challenges. The first is business competitiveness: the majority of leaders – 92 per cent of those who took part in the research – report that the energy crisis poses a threat to their organisation’s profitability and competitiveness.

One in three leaders say they plan to cut the budget for R&D, infrastructure and technology, or marketing. Three in five plan to cut investments in the workforce, and two in five plan to cut salaries, overtime and bonuses, and training and development.

These business consequences are significant. By reallocating funds to cover operating expenses, businesses are taking money from areas that are essential to future growth. Those that can limit the impact of high energy costs – including by investing in energy efficiency – will have a competitive advantage.

In addition to issues stemming from costs, there are also logistical concerns. Most leaders worldwide – 83 per cent – believe that blackouts, power outages, or energy rationing could pose a challenge for their business. Thirty-five per cent of respondents are considering installing on-site generators to address these issues, but this increases a site’s carbon emissions.

The other major challenge is to achieve organisations’ environmental targets. Almost three in five business leaders report that the high price of energy could delay progress toward their sustainability goals by up to five years. This is hugely concerning, as we cannot afford to delay the decarbonisation of the global economy.

There is no quick fix for the ongoing energy challenge. However, by combining several tactics, businesses can maintain profitability and continue to make progress toward sustainability.

Organisations can also seek support from business networks or government schemes. For example, more than one in three (36 per cent) have already entered a power purchase agreement – a contract with a utility that ensures more consistent electricity prices.

One valuable tactic is on-site renewable energy generation. Many industrial sites are well suited to solar panels and wind turbines, and the power these generate can supplement grid power, something that two in five businesses are considering.

For example, ABB’s Luedenscheid production site in Germany, pictured above, has installed 7,300 square metres of solar panels on the roof of the parking lot. The panels generate 1,190MWh of zero-carbon electricity every year. This makes the facility carbon neutral in terms of electricity, cutting 630 tonnes of carbon dioxide emissions every year.

In cases where a site generates more power than it uses, it can sell power back to the grid. Alternatively, excess power can be stored using on-site battery energy storage – something that 35 per cent of the leaders we surveyed are considering.

Another effective tactic is investing in energy efficiency. By using energy more efficiently, facilities can achieve the same outcomes with less power. This means lower operating expenditure, considerable savings, and is better for the planet.

The Luedenscheid site has also taken steps to operate as efficiently as possible. It uses smart building technology to manage energy use continually and autonomously. The system takes in data on the generation, consumption and storage of power and adjusts its approach in real time to maximise energy efficiency.

To identify opportunities for improving efficiency at an industrial facility, operators can invite experts to conduct an energy audit. This reveals opportunities for potential savings – including the cost and return on investment from specific improvements.

A quarter of decision makers are also investigating converting facilities to operate from a self-sustaining microgrid, a small-scale power grid that can be connected to the larger grid.

In Greater Manchester, for example, a local authority has begun rolling out a microgrid at its environmental services site. The first phase of the program will integrate generation from solar panels with electric vehicle charging points and an air-source heat pump.

The second phase of the microgrid project, which is currently seeking funding, would involve battery energy storage, biomass gasification units, and a combined heat and power system. Once completed, the microgrid would be carbon negative – it would only consume tree clippings and would feed power back to the national grid. This model is entirely within reach for many industrial sites.

Our ongoing challenge with energy threatens growth and sustainability for industrial businesses. However, businesses are not helpless. There are decisions they can make today – and the same measures bring both financial and environmental benefits.

David Lowen is lead business manager for ABB Electrification in the UK.