For many organizations, especially in the manufacturing sector, electricity supply and rising electricity prices have become increasingly important. Energy supply has become a critical factor when organizations consider relocating production, expanding operations or establishing themselves in new locations; it has also become an integral part of their decarbonization strategies.
Several municipalities in Sweden, for example, report that they have limitations in the electricity grid that can influence or deter the establishment of companies in their region. At the same time, many industrial organizations are focused on introducing smarter production, with a high degree of digitalization, automation and use of new technologies. Added to this are increasing sustainability requirements, where electricity consumption and emissions are important parameters. Taken together, these developments make stable low carbon electricity supply and consumption management strategies increasingly crucial for manufacturing companies.
For many organizations, it is natural to contact their energy company to discuss these issues. This can be relevant and constructive. However, ensuring electricity supply, sustainability and security for manufacturing companies requires a broader approach that goes far beyond the competence of energy companies.
There are various areas in which manufacturing organizations can benefit greatly from addressing their electricity supply:
1. Energy efficiency
The fluctuating, often high electricity prices can have a major impact on manufacturing organizations globally, driving many countries to adapt. The Swedish electricity market, for instance, introduced 15-minute reporting in November 2023. This allows individuals and businesses to see their electricity consumption by the quarter instead of the hour, creating further opportunities for businesses to evaluate their electricity consumption, control production and potentially reduce electricity costs. This requires a system that can monitor, analyze and control the electricity supply and the implementation of many metering points in the business.
Analyzing electricity consumption is an important step to identify and evaluate which interventions and activities can have the greatest impact on the business. It is not uncommon for production environments to also emit large amounts of heat. This often results in additional energy consumption, as the facility needs to be cooled. However, there are many ways in which surplus heat can be resold, for example to district heating plants. This can be an effective way to finance smarter, more sustainable energy efficiency systems.
2. Flexibility with security
Many large manufacturing companies in Europe spend a lot of time and effort booking and buying electricity in a manner similar to stock exchange and share trading. This can reduce electricity costs for the business. This approach can have significant benefits for many types of manufacturing businesses. The electricity market is complex, but with a little foresight and good planning, it is possible to buy electricity at a fixed price. This avoids price peaks and allows organizations to buy electricity at a variable price when it is most favorable. Even for smaller businesses, this approach can pay off.
An additional advantage is that if the business does not use the booked or purchased electricity, the surplus can be sold when both the demand and the price are high. This system is known in the electricity market as “flex.” If implemented correctly, it can significantly reduce electricity costs. There is also much to be gained from reviewing electricity consumption in relation to seasonal variations, both in climate, electricity price and consumption of other energy.
3. Sustainability and ESG
For many manufacturing and energy and utilities organizations, sustainability and ESG are important, both from an internal and regulatory perspective. In fact, for both manufacturing and energy and utilities, the energy transition is the most impactful industry trend in 2024, according to CGI Voice of Our Clients research. The established way of reporting greenhouse gas emissions (GHG) is based on the three scopes of the business. Scope 1 includes direct emissions from the company's own production or transportation. Scope 2 includes emissions linked to the energy purchased, while scope 3 concerns emissions from services or goods that a company purchases and uses, such as travel and consumables.
75% of manufacturing and 77% of energy and utilities executives see sustainability as core to creating future value,
a direct impact of regulatory pressures and decarbonization goals, according to CGI’s 2024 Voice of Our Clients global research.
Increasingly, manufacturers are looking to prioritize data governance and quality, given the success of GenAI. This will allow them to use advanced models to generate and integrate company-wide ESG data to review energy use, meet new regulatory changes and advance sustainability goals while improving their environmental impact. Additionally, some organizations are using data governance and quality as a differentiator in the market.
OT safety and its impact on energy supply
Manufacturing organizations today use OT systems to manage and control their production processes efficiently. This often includes electricity consumption. There are increasing reports of OT environments being exposed to cyber-attacks and intrusions. A compromised OT environment can have a significant impact on production, data security and electricity consumption. Cybercriminals have strong leverage if they can control the electricity supply: they can disrupt, shut down or make electricity use more inefficient. Cutting off the electricity supply can shut down the entire production. It is therefore important to review how electricity supply can be met both in the event of cybersecurity incidents and from a generation perspective. Additionally, new EU legislation, known as the NIS2 Directive, will take effect this year. This directive enforces more stringent requirements on the capacity of critical manufacturing entities to endure and respond to cyber threats, thereby enhancing the cybersecurity framework within the manufacturing sector.
Ultimately, the security and efficiency of the energy supply for manufacturers greatly impacts the sustainability and performance of their operations. At CGI, we have extensive experience working with manufacturing and energy and utilities organizations to develop smart and digital solutions that streamline and improve both production and operations. We not only provide effective system support, but also assist with sustainability analysis, calculate how much electricity the business needs or assist with comprehensive security strategies that protect both data, production and electricity supply. Our goal is to assist these organization in achieving these important business and energy transition outcomes, at both pace and scale.
