Rising energy costs highlight power struggle for manufacturers

19 June 2022

The majority of manufacturers are facing the perfect energy storm as they admit rising energy bills have significantly impacted their margins and ability to remain competitive in the last two years. This is the headline finding from Aggreko’s latest report – The Power Struggle: Manufacturing. 

While solutions are available to help counter this through distributed solutions, some government support, and EaaS contracts, Aggreko is seeing an increase in manufacturers turning to them for more flexible solutions.

As businesses grapple with increasingly volatile energy prices, Aggreko commissioned the new research to determine how attitudes to decentralised energy solutions have changed since its 2019 report Bridging the Energy Gap (BTG).

The latest survey encompassed 251 manufacturers across the UK, spanning Junior and Senior Managers, Directors and C-suite Executives.

The primary findings from this report draw the energy crisis into sharper focus, with 75% claiming that the rising cost of energy is having a direct impact of their business’ ability to remain competitive. Moreover, 65% admitted that they had experienced a power cut in the last 18 months.

Despite the Department for Business, Energy and Industrial Strategy (BEIS) recently announcing new funding for high energy usage businesses, belief that this will aid the UK manufacturing industry remains lukewarm, with only 28% claiming to be ‘very confident’. Moreover, this scheme does not currently address the dwindling stability of grid connections and increased risk of power outages, meaning that the sector must contend with these challenges alone.

In light of these issues, over 60% over manufacturers are now considering generating their own electricity using distributed solutions – a 12% rise from BTG. Energy as a Service (EaaS) contracts were cited as a popular way of achieving this as it removes the barriers of high upfront capital investment, though there were concerns that getting locked into such contracts could leave businesses exposed to high demand penalties from the provider.

In response to this, Aggreko has evolved the business model of ‘Hired Energy as Service’ (HEaaS), wherein customers can access distributed energy solutions without being locked into long-term contracts and fixed energy pricing. The modular nature of such agreements also allows supply to be scaled up or down at short notice in accordance with site demand.

To view the full report, The Power Struggle: Manufacturing, click here.

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