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Potential for energy cost savings in UK industry

World Cement,

Energy cost savings

A new report from Siemens Financial Services (SFS) has found that UK industry could achieve energy cost savings of up to £2.5 billion over the next five years by implementing variable speed drives (VSDs) on motors.

Darren Riva, Head of Energy Efficiency Financing for Siemens Financial Services in the UK, stated: “In light of the steady upward trajectory of electricity prices, greater energy efficiency is becoming an urgent concern for industrial organisations as escalating energy costs will erode profit margins and damage competitiveness. The magnitude of the estimated potential savings enabled by VSDs presents an extremely compelling business case for industrial companies to invest in this power-saving technology. More importantly, keeping in mind that VSD is just one of the many possible energy efficiency initiatives that industrial companies can adopt, the true potential for energy and costs savings in industry is very large indeed.”

A 2012 report from SFS estimated that there was around £2.17 billion worth of frozen capital in UK Industry in 2011, capital that could instead be freed up by using asset finance. This method could allow for greater investment in energy efficiency when access to capital is restricted, for example, by matching monthly lease payments to savings in energy bills.

“High productivity and engineering efficiency are determinants for the success of the manufacturing sector, but the accomplishment of these goals requires modern technology and equipment. Access to available capital is therefore crucial and industrial organisations cannot afford to have a significant proportion of their annual capital budgets tied up in plant, equipment and technology. Given the slow economic recovery in Europe and persistent tight credit conditions, it is all the more important that manufacturers release much needed liquidity to implement operational efficiencies or fund new product development in order to maintain their competitiveness,” continued Riva. “By making greater use of asset financing techniques to acquire the most up-to-date technology and equipment, industrial management can benefit from higher financial efficiency and lower energy consumption, which is critical to making technological and process developments affordable, and economically sustainable.”

Energy Efficiency Financing scheme

Analysis by the Energy Efficiency Financing (EEF) scheme has shown that inefficient technology, equipment and controls has led to Britain’s industrial sector overpaying on energy bills by a total of more than £2.2 billion a year. The EEF scheme also reveals the difficulties encountered in raising finance for investment in energy efficient technologies and processes.

“In the current credit squeeze, a major problem for firms has been access to affordable finance to enable business to make those green investments.  That is why EEF was created – a joint financing initiative between the Carbon Trust and Siemens – to make finance more accessible and affordable for companies, especially SMEs. The EEF scheme matches monthly payments to real monthly energy cost savings, which means that firms effectively end up paying no extra for their new equipment investment.  These investments improve business competitiveness, cut carbon and boost the green growth,” explained Darren Riva, also Head of Green Financing of the EEF scheme.

The scheme is open to any business with a minimum of 3 years trading history. SFS provides the financial backing and manages the provision of funding while the Carbon Trust offers its expertise in carbon saving from energy efficient technologies to provide a reliable and trusted assessment of the carbon, energy and cost savings of any application for finance.

Adapted from press releases by Louise Fordham.

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