Siemens: Energy-as-a-Service a Win For UK Manufacturers

New research from Siemens Financial Services estimates Great Britain’s manufacturing industry could potentially save over 3 million tonnes of gas and electricity per year through the wide-scale deployment of energy-as-a-service arrangements. 

This news comes during the UK’s ongoing energy crisis, where the soaring cost of gas and electricity has impacted every industry sector. It's also increased the number of UK households in fuel poverty to 6 million as of April. 

This estimate comes close to meeting around two-thirds of official climate targets for this sector. This research, from the ‘Accelerating Change’ report also highlights savings opportunities for British regions.

In addition to the existential necessity of confronting climate change, manufacturers are also under extensive financial and regulatory pressures. The pressure to minimise carbon emissions by reducing energy use is growing due to shareholder demands.

Shareholders are becoming increasingly aware of how poor energy purchasing decisions, network costs and fuel costs are harming their investments. 

"Net zero is looming and, as one of the largest emitting sectors, the manufacturing industry must take serious steps towards decarbonisation,” comments Carolyn Newsham, Digital Industries Financing Partner at SFS.

“Investing in energy efficiency not only helps manufacturers meet regulatory demands but it is also vital to driving down costs and enhancing competitiveness.”

This investment remains a challenge due to the technological costs of achieving energy decarbonisation targets. This challenge will only grow as industry demand remains volatile and input costs rise.

Energy-as-a-service arrangements can secure operational cost reductions without heightened pressure on capital resources, ensuring expected savings and realised.

These financing schemes, which build on the growing popularity of SaaS models in manufacturing industries, remove the need for manufacturers to deploy their own capital.

Instead they pay a monthly fee against delivered cost savings, which can sometimes produce a net operational benefit. 

As the report makes clear, new business models, known as Energy-as-a-Service arrangements or energy performance contracting, can secure these operational cost reductions without putting pressure on capital resources and ensure expected savings are realised. 

An Energy-as-a-Service provider will cover all aspects of transformation, including performance management, installation, maintenance and operation, making this an enticing arrangement for British manufacturers. 

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