Technologies that could transform how
industries use energy
Energy accounts for a sizable share of
company operating costs. Our new report details 33 technologies to improve
energy efficiency—and your bottom line.
As the world grows, in both wealth and
population, so will the demand for energy: global primary-energy consumption is
on course to increase by 25 percent between now and 2030. At the same time,
concerns over pollution and climate change are forcing businesses and governments
to think hard about how they produce and use energy. Energy efficiency, which
is sometimes called the “fifth fuel” (after coal, gas, nuclear, and
renewables), can play an important role in helping the world meet its demand
for power and mobility.
Since the turn of the 21st century, energy costs have risen
steadily. Even when prices have fallen, as happened most dramatically with oil
from 2014 to 2015, such rapid swings can be difficult for companies to cope
with. Moreover, when costs are low, there is a tendency to question whether
energy-efficiency measures are worth the effort. The answer is yes, many
are—and not just because energy efficiency offers protection against price
volatility.
Energy forms a sizable share of operating costs. Globally, the
chemical, cement, and metals and mining sectors, for example, spend about
one-third of their operating budget on energy. Those figures are typically
higher in developing regions, where the cost of labor is lower.
Our research shows that while operational improvements can
reduce energy consumption by 10 to 20 percent, investment in energy-efficiency
technologies can boost that to 50 percent or more. For example, the cost of
clean-room-environment control could be reduced from 50 percent of energy
consumption to a fifth of that, and there are also sizable gains to be made in
cement, refining, and steel. We have identified real-life examples in multiple
industries where companies have significantly reduced energy costs and recouped
their investment in three years or less.
In short, it is not an impossible dream for manufacturing, which
accounts for half of global energy consumption, to meet energy demand in a way
that is both economically and environmentally efficient. Innovative
technologies could significantly reduce energy consumption and save industry
more than $600 billion a year.
Our report, Greening the future: New technologies that
could transform how industry uses energy, details 33 innovations that could
help industry significantly improve energy use. These innovations span nine
categories: advanced industries, cement, consumer goods, mining, oil refining
and chemicals, power, pulp and paper, steel, and those that can be used
generally. Most of these technologies are already available—the challenge for companies
is to figure out which ones to use, how to put them into practice, and how to
renew them so that they continue to work year in and year out.
We’ve also identified five principles that can help companies
make sense of which technologies to use and how to put them into long-term
practice:
Think lean. Build a resource-productivity strategy
within the organization. Lean thinking and green thinking are based on the same
fundamentals and work together well. For instance, an Indonesian power plant
reduced its cost per megawatt by 7 percent in four months by creating
performance indicators and then tracking them systematically.
Think limits. Use the theoretical-limit
concept—an analysis that identifies the lowest amount of energy required for a
given process—to set ambitious but realistic goals. This fosters the kind of
creative thinking that can deliver substantial resource-productivity
improvements. One Chinese iron-and-steel enterprise reviewed its theoretical
limits and analyzed its key sources of operational loss; on that basis, it
changed its operations to use waste heat to generate additional power,
significantly cutting its production costs.
Think profit per hour. Review the full profit
equation when making changes. Evaluate trade-offs such as throughput, yield,
energy, and the environment as a whole—changes in one will likely affect the
others. Profit should be the main factor in making final decisions. By applying
advanced statistical analysis, a pharmaceutical company was able to increase
its yield by 20 percent while using the same amount of energy.
Think holistic. Making and sustaining change
is not only a matter of technical improvement; it also means changing
mind-sets, behaviors, and the management system throughout the organization.
Think circular. Consider your product as a
future resource that can be used repeatedly, moving from the usual linear
supply chain toward supply circles. A global data-services company applied the
“think circular” principle by using analytics to design a facility that
streamlined energy to its most important function. This resulted in more
capacity and less capital expenditure.
Around the world, and across sectors, getting smart about energy
should be seen as a strategic imperative. The chance to do better is there for
the taking.
This article is an edited extract from Greening
the future: New technologies that could transform how industry uses
energy (PDF–7.50MB).
By Harsh Choudhry, Mads Lauritzen, Ken Somers,
and Joris Van Niel
http://www.mckinsey.com/insights/operations/Technologies_that_could_transform_how_industries_use_energy?cid=other-eml-alt-mip-mck-oth-1511
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