Manufacturers, stuck in old purchasing habits and worried about the systems integration challenges, are slow to adopt potential energy cost-saving technologies.
What's a European manufacturer to do? Already impaired by a strong euro and rising raw material prices, there's no letup in sight for perhaps the greatest ongoing productivity challenge: oppressive energy prices. The year started with oil hitting $100 a barrel for the first time ever, and the price continues to dance around that staggering level while natural gas prices rise as well.
For makers of everything from cars, to cement, to steel, price increases are hitting hard. London-based Consensus Economics forecasts a tepid rise in Eurozone GDP of 1.6%, down from 2.6% last year, and continually warns of rising energy prices in its monthly reports. So does the Royal Bank of Scotland (RBS) in its joint monthly outlook with London research firm NTC Economics. In early March, they noted that manufacturing indicators in the Eurozone were registering their weakest growth in two-and-a-half years.
While energy providers may be raking it in – British Gas in February reported a whopping 500% rise in annual profits, to £571 million – for most manufacturing companies, high energy prices are bad news.
"Oil is so high. This is hampering the profitability of European companies," says Pierfrancesco Manenti, EMEA research director for IDC's Manufacturing Insights in Milan. On the positive side, Manenti says that energy's unrelenting price rise is altering manufacturers' mind-sets. While companies have traditionally regarded energy-saving expenses as a "cost" exercise aimed largely at complying with EU green directives, they are starting to think more progressively. "Now with the cost of energy, reducing energy consumption is bringing value to the business," he says.
But what, exactly, are manufacturers doing? Of course, there are the big, visible moves to alternative and green fuels and technologies. Volvo, for instance, now generates half of the electricity for its truck manufacturing plant in Gent, Belgium, using wind turbines.
But there's plenty stirring in information technology's behind-the-scenes software, hardware, and services that also can help.
What better place to start cutting energy costs than among the companies generating Europe's electricity in the first place – the power utilities and the many operations generating a considerable amount of their own juice?
That's what London-based Invensys offers with its InFusion software, which can range in price between €20,000 and €1.5 million, depending on the size of the implementation. InFusion sits on top of Invensys' machine control technologies, such as Triconex and I/A Series, and helps companies efficiently schedule their power production so that they are generating electricity only when they need it and at the lowest cost.
For instance, a power utility such as Scottish Power might need to spike production for 15 minutes to feed a customer that bought power on Europe's open, deregulated electricity market. InFusion helps to do that. The technology knows the obligation is coming up and it also knows which of Scottish Power's generating plants is available at the cheapest cost, so it orders that plant to produce and feed the grid. InFusion detects when, say, a coal-fired facility is down for maintenance – coal plants require more maintenance than gas – and intelligently routes the job to an available facility in a timely manner. In Europe, where coal dominates as the fuel source for generating plants, that's a key advantage.
Invensys is also marketing InFusion to oil and petrochemical refineries, which tend to generate about 30% of their own electricity needs.
