IoT and energy efficiency in the manufacturing industry

iot source: i-scoop - essential IoT business guide

Climate change requires manufacturing companies to change the way they do business, by re-thinking products and services. Resource efficiency will be a key to success, but an increased cooperation among different business functions is fundamental. IoT, i.e. Internet of things, will be an important enabler and will help companies undergo such challenging transformation. The presentation held at Ponti conference organised by IDM Süd Tirol illustrates some key points and the links with energy efficiency and energy management.

Energy efficiency is the main pillar of the action required to save us and our planet. It is not just an issue of policies, but also the need of a different approach towards the use of energy. It requires manufacturing companies to re-think their businesses, incorporating resource efficiency not only for their sites, but also over all the supply chain. More than that, it means products and services should be re-designed and lower their environmental and social footprint.

Such change has to take into account five important transformations:

  • The electric system is rapidly changing (prosumers, storage, demand response, etc.) and it will modify the way companies think about energy supply.
  • The 4th industrial revolution and a new mobility will have deep effects on the manufacturing process and on the supply chain.
  • The rational use of resources will become a driver for process transformation.
  • New low impact products and services will be required by the market.
  • Circular economy will change flows of goods and services, create new business partnerships and new district services, and strengthen the link between all the actors involved in the single supply chains.

Lean manufacturing and energy management systems (ISO 50001) are fundamental tools to transform the way companies operate and favour the adoption of a more holistic way of approaching their core business. Nevertheless, such transformation will be demanding and challenging, mainly because it requires a change in attitudes and mentality.

To achieve it, IoT will be useful, if not necessary, in many ways. It will help involving all the business units in the task, integrating the various links of the supply chain, developing new ways of interactions with clients, improving manufacturing processes and logistic, using more efficiently all the resources, etc. 

Of course, it is not easy to picture what IoT will be in practice, due to its fast developments and to the early adoption stage of existing solutions, but for sure it is fundamental to start understanding and experimenting it in pilot projects. According to various sources, the main suggestions to this regard are:

  • Start using IoT to improve what you do.
  • Results will come after an adequate IoT adoption threshold is reached.
  • It is important to change behaviours and mentality, not just installing IoT equipment.
  • We are just at the beginning of a revolution: new skills are required (not necessarily technical).
  • Be careful: more IoT means more risk of cyber attacks and this has to be handled with care.

An interesting point is that this transformation requires a better integration among business units. That means to start thinking of multiple priorities. From an energy efficiency point of view this is thinking about non-energy benefits and losses, adopting the multiple benefits approach that projects like M-Benefits are supporting. There are at least three reasons to evaluate non energy effects of energy efficiency projects:

  • Economic value: NPV and IRR of projects improve, since cash flows consider both energy savings and other elements.
  • De-risking: Evaluation of negative effects allows to better understand – and thus address – risks related to the energy project. That both reduces the perceived risk associated with energy efficiency (one of the main barrier to investments) and facilitate third party financing.
  • Proposal value: it becomes possible to propose energy efficiency projects by highlighting and exploiting benefits other than energy, thus addressing the core interest of other company’s business functions.

The presentation shows some examples of businesses that embraced part of this revolution.