24 Apr,2024
Moving the manufacturing sector to 100% renewable electricity use is a significant challenge. But it is possible. Epson has set out a path to renewable manufacturing for others to follow.
Manufacturing and other industrial users account for around a third of the world’s energy consumption, according to the International Energy Agency. Electricity is a central element of that. If all the power consumed by factories and industrial plants came from renewable sources, it would make a sizeable contribution to tackling climate change.
It is a tough target, but one that companies are increasingly signing up to. The RE100 initiative, for example, has seen more than 400 corporations commit to 100% renewable electricity use across their operations. How they reach that goal will depend on many factors, including what they are making and where.
“Organisations with lighter electricity needs and stable finances will be best positioned to transition to renewables. Companies with high electricity demand, like furnaces for glass, smelting or other large-scale heating applications and companies with very large footprints – such as expansive warehouses and assembly operations – may have more difficulty,” says Paul Holdredge, Director for Industrials and Transport at consultancy Business for Social Responsibility (BSR).
The prospect of switching to renewable electricity has become far easier due to recent dramatic cost reductions. According to the International Renewable Energy Agency (IRENA), the price of solar photovoltaic power in 2010 was typically 710% higher than the cheapest fossil fuel, but by 2022 it was 29% cheaper. Currently electricity accounts for around 20% of final energy use in manufacturing, according to the International Renewable Energy Agency, and this is only expected to increase.
But it is not just the price of renewable energy, low as it is, that dictates a manufacturer’s ability to move to 100% renewable energy. Both the required initial capital investment and first-mover disadvantage—where it costs pioneers more than those that follow them to deploy new technologies—can significantly slow down a fully renewable transition. Not to mention the lack of availability of certain renewables in certain geographies and the fact that the appropriate infrastructure must be in place for this energy to be delivered—something no one company can do on its own.
Manufacturing requires an enormous amount of electricity in comparison to powering offices. In some countries or regions where the supply of renewable electricity is limited, like Japan, Taiwan, and Singapore, it is much more expensive than electricity produced by traditional means, placing a significant future cost burden on companies that purchase renewable electricity.
Wherever they are in the world, with whatever types of renewable energy available to them, companies need to adapt to local, national, and global circumstances. Seiko Epson, based in Japan, has done just that. Having switched to 100% renewable electricity for all its sites in Japan in 2021, it completed the transition to renewable electricity globally by the end of 2023.
Epson uses local geothermal and hydroelectric sources.
Epson uses biomass power as its renewable source of energy.
Among the practical methods companies should consider are:
When it comes to solar power generation systems, Epson’s sites also decide whether to adopt self-investment or power purchase agreement (PPA) based on the individual circumstances of each country or region.
There are big gains for humanity if climate change can be addressed, but for manufacturing companies and their shareholders the best approach could also deliver commercial gains. Consumers and investors are increasingly likely to reward companies with greener credentials, making it an essential part of long-term market positioning.
“Reaching 100% renewable is tough but pushing to get as close as possible, as soon as possible should be every company’s focus right now,” says Christy Slay.
