Why it's time for industrials to step up their energy management

Why it's time for industrials to step up their energy management

Manufacturing image via Shutterstock.

Although some industrial and manufacturing companies have upped their energy management efforts, they need to do more to stay cost competitive, a market intelligence firm warns.

With industrial and manufacturing companies consuming nearly one-third of all energy in the U.S each year, improvements in energy efficiency can have a big impact on their bottom lines, according to a report this month by Pike Research in Boulder, Colo.

As mid- to large-size industrial companies increasingly wake up to this reality, the energy management software will boom, growing from $960 million a year to more than $5 billion by 2020, the report predicts.

"Energy efficiency is an area where American industry can increase its competitiveness. Labor costs will be hard to compete on, for example, but energy is an area with opportunity to reduce costs," said Eric Woods, a research director in Pike’s London office.

It’s a step process, he said, starting with pinpointing where the energy costs come from. Companies can then focus on this hot spot, conduct an energy audit and assess their energy profile to see where the biggest impacts can be made, in terms of investments for new equipments and processes.

Mid-sized firms ‘compelled’ to take action

The big growth in energy management will come not from the top or the bottom tiers of industrial companies, but from the critical middle segment, with medium to large companies in areas such as light to heavy engineering and automobiles.

"A key driver of growth will be adopting these measures, which the top energy consumers have already put in place, but the mainstream will get sophisticated about it in the next few years," Woods said.

The report looked at four categories: energy intensive industries; large non-energy-intensive industries; mid-sized non-energy intensive industries; and small manufacturers.

Energy intensive industries of all sizes will maintain their 20 percent market share in energy management services. Small manufacturers will continue to be an underserved market until a profitable, affordable technology is offered.

But the sweet spot where most of the action will occur is with large and mid-sized non-energy intensive industries, such as computing and electronics, transport engineering, metal/wood/plastic product manufacturing and machinery manufacturing.

"Over the forecast period, as competitive and supply chain pressures mount, the mid-sized companies in the non-energy-intensive industries will be compelled to finally start taking action," Woods said, pointing to the report's highlights. "Although their resources are not as great as those of the large companies, the greater number of mid-sized companies will make up for the difference."

Growing demand, greater software options

This will lead to more demand for software vendors specializing in this field, such as EnerNOC, a leader in demand response software and services.

Woods also pointed to firms ETAP, Invensys, OSIsoft and Dynamic Energy Solutions, all of which provide solutions for industrial clients that undertake energy modeling and simulation, process control and optimization, troubleshooting, cost analysis, virtual billing and other energy management practices.

Energy management software (EMS) can help companies establish an energy use baseline, model future requirements and identify opportunities to take advantage of demand response and load curtailment programs. The bulk of EMS growth, the report found, will come from applications for monitoring and improving building energy efficiency, providing hardware control for demand response and general hardware monitoring and control.

A niche area in EMS is providing solutions for data centers that rely heavily on uninterrupted and high quality power, something that Power Analytics does.

"This is an ever more critical aspect of power generation," Woods said, "due to the instability of renewable generation sources, an aging power infrastructure and electric vehicles." 

Manufacturing image via Shutterstock.