Comment: Clean energy transition is key to value creation

The clean energy transition is key to decarbonising industry and creating lasting value, but many manufacturers are only now starting to look beyond improving their factory’s energy efficiency to consider their materials and processes too. Those leading the way have recognised that improving operational sustainability is an opportunity to improve resilience and add value for the long term.

Policy-Driven Change: A New Industrial Strategy
The government’s new industrial strategy is focused on decarbonising the UK’s industrial sector and accelerating the transition to low-carbon alternatives such as hydrogen and electrification. For manufacturers, it is clear that isolated sustainability projects are no longer enough. Instead, they must make greening their processes, materials, and end-to-end supply chains, part of their decarbonisation journey.

Tactical Approaches to Decarbonisation
When it comes to decarbonisation, there are a number of approaches manufacturers could take. Evaluating shipping logistics or analysing the carbon footprint of raw materials, for example, could create opportunities to drive sustainability performance. However, many manufacturers could also make a significant impact by reducing their energy consumption and creating clean energy supply chains. Optimising energy supply can deliver a step-change in decarbonisation, as well as building resilience within the supply chain and creating value in fast-growing markets.

Quick Wins in Clean Energy Adoption
Historically, energy has proven to be the easiest and most immediate area of focus for industrial decarbonisation, and there are plenty of changes that manufacturers can implement relatively quickly. For example, they can install solar arrays, linked to onsite battery storage systems, to provide a ready-made source of renewable energy, and reduce their energy bills by switch to green tariffs. In the UK, the transition to clean energy has been progressing so well, that the National Grid has phased out coal generation altogether, with the last plant closing in 2024.

Addressing Complex Energy Challenges
For manufacturers with net zero goals however, the more complex work lies ahead. One of the biggest challenges is identifying how, and where, to apply clean energy solutions across the more complex parts of their operations. High-energy processes, such as those that use steam or intense heat, might be a vital production step for energy-intensive industries, but they can be notoriously difficult to decarbonise. Alternative sources of energy may need to be considered to reduce their carbon footprint, such as hydrogen to replace natural gas.

Partnering for Technological Solutions
Many manufacturers have limited energy expertise in-house, so often rely on technology partners to drive their clean energy transition. One solution is to utilise integrated smart building solutions. This technology is designed to optimise buildings, and it can deliver impressive results by reducing carbon emissions and energy consumption. For example, manufacturers using Siemens' Building X platform have achieved a 30 per cent reduction in energy consumption and carbon emissions, alongside a 10 per cent boost in profitability. Manufacturers can achieve even greater value when pairing decarbonisation strategies with digital tools that provide increased visibility and control.

Decarbonising Energy-Intensive Processes
In more complex use cases, such as whisky distilleries where high heat is required for steam generation, tailored approaches are emerging. Simulations of entire facilities have helped businesses to model how hydrogen could replace natural gas, enabling full decarbonisation of energy-intensive processes. Digital twins, for example, can replicate manufacturing processes or entire factories, highlighting where energy waste and emissions are being generated, and where there is greatest potential for improvement. This visibility can transform decision-making, allowing businesses to identify the right solutions for their specific needs.

Economic Benefits of the Energy Transition
Another benefit of the clean energy transition is the opportunity to create value. As modern technologies improve, battery storage systems that once took decades to pay back can now do so in just five or six years. Whilst the installation of solar panels and on-site battery storage systems will require significant upfront capital investment, the return on investment has improved so much that it is now regarded as a cost saving measure. For manufacturers with variable energy demand, there could also be opportunities to boost revenues by selling any excess energy generated back to the grid.

Transforming Supply Chains for Net Zero
In light of the government’s industrial strategy, manufacturers will need to move from simply understanding supply chain emissions to actively managing them. Strategic decisions such as choosing local suppliers, reducing shipping distances, or even co-locating key supply partners in shared ‘supplier parks’ can deliver advantages in terms of both sustainability and operational efficiency, but the decarbonisation of end-to-end supply chains will be the biggest game-changer. Manufacturers recognise the broader value that can come from becoming more energy-efficient, less reliant on volatile markets, and more aligned with customer expectations for sustainable products.

Towards Long-Term Competitive Advantage
By embedding clean energy and efficiency throughout their operations and supply chains, UK manufacturers can go beyond compliance and realise lasting value. They can gain a competitive edge and find new revenue-generating opportunities.

Kevin Kelly, director and new energy specialist, Vendigital.