A practical energy strategy for UK manufacturers
Buy better, use less or generate more? A practical energy strategy for UK manufacturers
For many UK manufacturers, electricity is no longer simply a utility cost. It has become a strategic business risk.
Over the last decade, energy-intensive industries have faced rising electricity costs, periods of significant market volatility and increasing pressure to improve sustainability performance. For businesses operating manufacturing plants, engineering facilities, cold storage sites and processing operations, the challenge is no longer whether energy matters, but how best to manage it.
So what is the right strategy?
Should you focus on buying electricity more effectively? Should you look for opportunities to reduce consumption? Or should you take greater control of your energy supply altogether?
For most manufacturers, the answer is not one or the other. It is a combination of all three.
The best energy strategy for manufacturers
For most energy-intensive businesses, the strongest long-term energy strategy combines:
- Buying electricity more effectively
- Reducing avoidable energy consumption
- Generating a proportion of electricity onsite
Together, these approaches reduce overall electricity costs while lowering exposure to future market volatility and factors that remain outside a business's control.
At Mypower, we summarise this principle with a simple phrase:
Reduce before you produce.
Understanding how energy is consumed across a site enables better investment decisions. Whilst the word "before" may suggest these activities should be undertaken in sequence, our experience is that energy efficiency opportunities and onsite generation are often best evaluated in parallel. Businesses are under increasing pressure to deliver immediate cost reductions and long-term resilience. In many cases, solar PV provides the most material and lasting reduction in electricity costs, whilst efficiency measures continue to improve overall site performance over time.
The two strategies are complementary. As electricity consumption reduces, solar generation can satisfy a greater proportion of site demand, further reducing reliance on the grid and increasing protection against future energy-price volatility.
Why energy costs have become a strategic risk
Manufacturers have little control over wholesale energy markets, network charges, government policy, international events or future grid investment programmes.
Whilst businesses can work with energy brokers and consultants to secure competitive contracts and manage risk exposure, they remain largely dependent on market conditions.
The challenge is that electricity demand is expected to continue increasing as transport, heating and industrial processes become increasingly electrified. At the same time, substantial investment is required across generation and grid infrastructure to support that transition.
The practical question for manufacturers is therefore:
What can you control today?
Strategy 1: buy better
The first option is to improve the way electricity is procured.
Many businesses already work with energy consultants or brokers to:
- Negotiate energy contracts
- Manage exposure to market volatility
- Develop purchasing strategies
- Balance price certainty against risk
These measures can undoubtedly improve energy outcomes.
However, even the most effective procurement strategy still operates within a market that remains largely outside the business's control.
Buying better is important, but it rarely changes the fundamental dependence on the grid.
Strategy 2: understand your energy use
The second option is to understand how electricity is being used across your site and identify opportunities to improve performance.
For many manufacturers, there are opportunities to reduce consumption without affecting output. For others, analysis confirms that operations are already relatively efficient and highlights where investment should be prioritised.
The starting point is understanding two important areas:
Process Load: electricity used directly in manufacturing and production processes.
Base Load: electricity consumed continuously, even when production has stopped.
A higher-than-expected base load can sometimes indicate avoidable consumption, equipment faults or systems operating unnecessarily outside production hours.
Examples can include:
Manufacturing Facilities
- Compressed air leaks
- Poorly insulated process equipment
- Inefficient motors and drives
- Legacy plant operating beyond its optimum efficiency
Cold Storage Facilities
- Damaged door seals
- Poor-quality strip curtains
- Deteriorated insulation
- Refrigeration systems working harder than necessary
Across All Industrial Sites
Common efficiency measures often include:
- LED lighting upgrades
- Variable Speed Drives (VSDs)
- Improved controls and automation
- Energy monitoring and sub-metering
- Equipment upgrades
Importantly, monitoring electricity consumption at circuit level often provides insights that are not visible from utility bills alone. Better visibility enables better investment decisions.
Strategy 3: generate more and take control
Whilst buying electricity more effectively can reduce costs and energy efficiency measures can improve performance, onsite generation is often the only strategy capable of delivering an immediate and lasting reduction in the amount of electricity purchased from the grid.
For many manufacturers, rooftop solar PV represents the most practical and cost-effective means of achieving this.
Unlike grid electricity, solar generation allows a business to supply a proportion of its energy requirements from an asset it owns and controls.
For many industrial facilities, a well-designed solar PV system can generate 30-40% of annual electricity demand, significantly reducing exposure to future electricity-price volatility whilst lowering operating costs.
This is where many organisations move beyond simply managing energy costs and begin actively controlling them.
The benefit is not just lower electricity bills today.
It is greater certainty over future operating costs.
Importantly, future efficiency improvements do not necessarily reduce the value of a solar PV investment.
If a business subsequently reduces electricity consumption by 10%, the solar system will typically provide a greater proportion of annual electricity demand. In many cases, this simply means the payback period extends slightly, whilst the business continues to benefit from lower-cost solar electricity throughout that period.
In some instances, a system originally expected to provide 30-40% of annual demand may ultimately supply closer to 50%, even without the addition of battery storage.
Rather than reducing the value of the solar investment, lower electricity consumption can increase the proportion of energy generated onsite, further reducing reliance on grid electricity and providing greater protection against future energy-price volatility.
Looking ahead, many manufacturers are also expecting electricity demand to increase rather than decrease. The electrification of heating systems, growing cooling requirements, and the transition towards electric vehicle fleets, including commercial vehicles, are all likely to increase electricity consumption over time.
As a result, whilst efficiency measures remain important, many organisations are simultaneously looking at how a greater proportion of that future demand can be supplied from assets they own and control.
How much of our future electricity spend could we take out of the hands of the energy market?
There is no single action that eliminates energy-cost risk.
However, businesses are far from powerless.
Manufacturers have three fundamental levers available to them:
- Buy electricity more effectively
- Reduce unnecessary consumption
- Generate a proportion of electricity onsite
The strongest long-term energy strategies typically combine all three.
Whilst buying better and using less both have important roles to play, onsite generation is often the only measure capable of immediately reducing the amount of electricity purchased from the grid.
For many manufacturers, solar PV is no longer simply a sustainability investment. It is a commercial tool that can reduce costs, improve resilience and provide greater control over a significant proportion of future electricity expenditure.
When reviewing energy strategy, the most important question may not be what size solar system to install, or which efficiency measures to prioritise.
It may simply be:
"How much of our future electricity spend could we take out of the hands of the energy market?"
At Mypower, we help manufacturers answer that question by understanding how energy is used across the site, identifying opportunities to improve performance, and assessing the potential for onsite generation as part of a wider commercial energy strategy.
If you're reviewing electricity costs, considering solar PV, or exploring ways to improve long-term energy resilience, we'd be happy to help.
Arrange an initial consultation with our team and discover how much of your future electricity spend could be brought under your control.
