Flexible energy models for manufacturers

The energy price surge is making it increasingly costly for manufacturers to maintain output.  A recent report by Make UK, the manufacturing industry group, shows that 17% of companies have had to temporarily halt production of products that are energy intensive to fabricate. Other manufacturers are resorting to temporary shutdowns to deal with high and volatile energy costs.

Indeed, manufacturers reliant on the National Grid could be trapped in a cycle of ever-rising bills, and those coming to the end of their fixed price contracts could be faced with expensive new energy tariffs. 

High energy-using industries are calling for urgent support from the UK Government. European competitors are benefitting from national measures put in place to shield industry from the direct impact of price rises. With electricity costing UK firms up to 60% more than in the EU, companies are warning ministers that the UK will suffer from less competitive rates, putting UK businesses at risk. 

Our own research, conducted in April 2022, highlights the importance of energy prices on industry’s competitiveness. 73% of the 500 industry decision makers surveyed, cited increasing energy costs as impacting their company’s competitiveness. But while this situation might seem extremely unfavourable, industry has been hard at work identifying potential solutions.

On-site, decentralised power generation has emerged as one possibility, allowing company stakeholders greater control over how, where and when they supply power, in a bespoke approach improving the affordability of energy. However, with capex budgets constrained, many organisations may not be able to afford the often-exorbitant costs to purchase power generation equipment outright. Once again, this leaves manufacturers in an ever-worsening position, hamstrung by rising costs without the finances to take action to improve their situation.

‘Energy as a Service’

Faced with this added affordability challenge, ‘Energy as a Service’ (EaaS) models have been identified as a way of boosting resilience, without high upfront purchasing costs that can be associated with decentralised energy solutions. 

These sentiments have been echoed in our report, ‘Energy in Manufacturing: A Flexible Future?’ report which surveyed 200 senior personnel at large UK manufacturing companies on the state of the market. The outcomes made for interesting reading, with almost every business saying they would prefer to be able to take control of their energy supply through distributed energy technology without investing capex. Similarly, 90% wished for more flexibility and control when using on-site generation technology.

Though these conclusions are extremely clear about decentralised energy models, it must be noted that sizeable obstacles were hindering uptake. As well as identifying issues in raising the business capital required to invest in power generation equipment, 68% of respondents also cited depreciating assets as a major concern.

Hiring strategies

Consequently, and with these findings in mind, it is incumbent on equipment suppliers to provide not only flexibility insofar as equipment is concerned, but also in how these solutions are financed. By engaging in innovative purchasing strategies, including long-term hire, manufacturers may be able to access the best of both worlds – greener, decentralised energy technologies and added site resilience, while bypassing capex investment issues.

Engaging in such an approach, referred to as Hired Energy as a Service’ (HEaaS) would also negate concerns around stranded assets that could occur as energy technology continues to advance. Suppliers such as ourselves are able to offer the latest solutions to scale power up and down depending on site requirements, providing a fast, flexible and modular energy system.

In conclusion, with energy prices rising, manufacturers must take action to avoid a worsening set of circumstances. With this in mind, HEaaS may ultimately provide the means by which businesses can take control of their energy supply - building site resilience, increasing flexibility and reducing reliance on the national grid.

You can find out more about Aggreko's Hire HEaaS offering by clicking below.

Aggrkeo Flexible Energy Services