How manufacturers can reduce energy costs with the power of the Internet of Things

We look at cost effective ways to leverage IoT technologies to save energy in smart manufacturing applications

Rising energy costs and the risks of a price hike response

With the current global instability, increasing energy costs are driving up the prices of all kinds of products across the globe. Energy inflation is a concern that is set to continue for the foreseeable future.

Some manufacturers are attempting to mitigate rising energy costs through increasing their price of goods. Price is typically the easiest and quickest marketing mix element to change, making it a powerful tool for companies looking to quickly adjust their market share, revenue and profits.

However, the consequences of price changes can be difficult to predict. This is particularly so in the case when you have sales channels comprising of global distributors, resellers and end-users to consider. As with all types of manufacturers and buyers squeezed by current economic conditions, even minor price changes can have a major impact on your sales.

Market responses to recent price hikes vary dramatically. Some manufacturers especially those of commodity goods have been fortunate to experience a marginal impact to their buyer’s purchasing patterns. 

Other manufacturers have experienced reduced purchasing frequency, protracted sales cycles as new prices are negotiated, postponed purchases (especially in higher value goods like plant and machinery). Worst case scenario is established, loyal customers switching brands in favour of cheaper alternatives.

However, as a manufacturer, there are other strategies you can adopt to tackle rising energy costs.

Tackling the root cause of energy consumption

Perhaps the most logical strategy begins with taking steps to tackle energy consumption itself?

You may have switched to more energy-efficient lighting, turned down the AC, and regulated heating regimes in your offices but what energy savings have you achieved through initiatives on the factory floor?

As you’d expect, the manufacturing sector is one of the largest non-domestic energy consumers spanning mineral, metal, plastic production to chemical and food production.

As large consumers of energy, even a marginal reduction in wasted energy from your production processes can deliver huge reductions in energy costs.

In fact, many manufacturers are all too aware that they are wasting energy but struggle to find the headspace and resources to know where to start.

Operational challenges regularly surface at any moment and manufacturers are now juggling many new external factors too. Aside from rising energy costs, there’s the impact of Covid, after-effects of lock-downs, rising raw material costs and import/export problems resulting from Brexit.

Is a Smart Manufacturing investment the answer?

Leveraging IoT technologies can be a relatively quick and low-cost solution to cutting energy consumption and its rising costs. We’ve already seen how IoT has given rise to Smart Buildings to drastically reduce the cost of lighting and HVAC systems. The same digital transformation can be applied by manufacturers.

When you hear terms like ‘digital transformation’ and ‘transition to Industry 4.0’ you may be forgiven for thinking of multi-million-pound investments in new machinery and two years or more to deploy. Then, perhaps a few more years to start generating a return on investment. Simply not true. It doesn’t have to be costly if the IIoT retrofit route to Smart Manufacturing is taken. See: How to connect legacy machines to the IIoT

What’s more, although a holistic evaluation is important prior to committing to any investment decision, you don’t have to take an ‘all or nothing approach’. IoT implementations can be solely focussed on a single production line or machine therein. Not only could you benefit from an ROI in this IoT-enabled area, but you will have a proof of concept and a clearer indication of the return on investment gained from a future factory-wide implementation.

Examples IoT energy saving applications

Here are just a few examples of how IoT can generate huge energy savings:

Smart Energy Monitoring

Measuring energy use is a challenging and time-consuming task for many manufacturers. Handwritten notes taken from the factory floor and days or weeks of transposing the data collected into multiple spreadsheets are still commonplace.

The result is that the data is historic and remedial actions are reactive and often overdue. Additionally, the data may not provide you with the whole picture if that data is siloed at the machine, line or department level.

IoT systems save time and money by automating data collection. Amongst many other metrics, IoT solutions enable power consumption data to be continuously collected in real-time and consolidated into a single, easy-to-access platform. Since the data is live, remedial action can commence the moment energy spikes or excessive, sustained power consumption occurs.

Operational Continuity with IoT

Some industries still employ traditional production monitoring and control methods that have remained relatively unchanged for centuries. For example, in beer production, many microbreweries take periodic samples and various measurements of a brew as it passes through various process stages. The practice is reactive and error-prone resulting in several outcomes that mean that more energy is used than is necessary.

Take one example – over-carbonation of a brew batch in which the flavour of the beer is ‘scrubbed’. The batch is unsaleable and must be disposed of. Depending on tank size and the type of beer, losses from a single tank can be upwards of £20k in retail sales with some microbreweries sustaining losses of £100k over the course of a year.

In each occurrence, the process must be re-started and many microbreweries, are now expressing greater concern for the associated extra energy costs than the extra costs of raw material and detriment to productivity.

Real-time monitoring and alerts provided by an IoT solution mitigate against many types of brewing failures that would otherwise require a process restart. In fact, a recent study conducted by AMRC, concluded that reducing energy bills was the number one benefit sought from UK microbreweries when considering the implementation of IoT technologies.

IoT-enabled Remote Power Control

Nissan UK’s paint shop operation in Sunderland spans an area of 11.5 football pitches. Each week, their TPQC Team were spending almost a whole shift on a Friday and Sunday evening walking around the facility manually powering down and powering up equipment ready for production.

Nissan detected slow ramp-downs of power at the end of production. Whilst some equipment was required to remain in a low-power state, excessive power consumption over weekday evenings and weekends indicated cost saving opportunities.

Deployment of IoT technologies enabled equipment to be switched on and off remotely or set to a low-power energy saving mode. Equipment requiring an early switch on to reach the required operating temperature could be individually scheduled with an earlier switch-on time.

This feature also opens up the opportunity to perform basic diagnostic sequences across all the equipment inventory. A simple and recurrent Power-On Self-Test (POST) can be scheduled at a time that allows maintenance engineers to respond to faults and repair equipment in advance of the shift commencing.

The IoT deployment also supported detailed machinery and equipment audits as described in the following.

The result was minimum energy savings of £4,000 per week.

Machinery and Equipment Energy Audits

IoT technologies comprising smart metering devices and data visualisation enable live monitoring of energy consumption at machine level. The graphs and data tables available from within an IoT dashboard and reporting suite from products like the SanTrack IoT Web Platform unveil at-a-glance inefficiencies arising from issues that may have been hidden from plain sight for months or years.

High consumption electrical equipment can then be readily identified, and their operating practices and ongoing suitability reviewed.

IoT web platforms also provide a tool to set targets and measure outcomes of future energy reduction initiatives.

Compressed air leak detection using IoT systems

Compressed air is often among the top 5 highest utility costs for manufacturers and several studies show that 30% of the cost of compressed air can be saved by eliminating leakages.In addition to deterioration in productivity, compressed air leakages can waste huge amounts of energy. 

“The energy wasted from a compressed air leak the size of a match head is responsible for yearly CO2 emissions equal to the weight of an elephant.”

However, detection can be difficult as leakages may occur within the compressor itself or anywhere between the outlet to the machines and equipment. For some factories, the connecting pipework can span metres or even miles.

Whilst leaks are most likely to be found in hoses, couplings, seals, valves, filters and flanges – detection can be very difficult in longer pipelines and those routed between various machinery, walls and other pipework.

In this instance, a blend of IoT-enabled flow sensors and the use of handheld ultrasonic sensors could be your most effective approach to leak detection.

IoT-enabled flow meters connected in series between compressor, department, machine group or machines can detect flow, consumption, temperature and pressure at sequential parts of the system. Real-time alerts can be set for when consumption and leakage thresholds are exceeded along with exact measurements of pressure differential. Depending on the configuration, the identified leak and leakage rate can be isolated to a particular system or department.

If the source of the leak is not readily apparent, handheld ultrasonic sensors can be employed to pinpoint the problem. These sensors accurately detect the high pitch hissing noise of turbulent compressed air escaping. There is a requirement for the operator to be in close proximity to the leak with the handheld ultrasonic sensor therefore the application of flow sensing can vastly reduce investigation and rectification. Sonic industrial imagers (or ‘acoustic imagers) are an effective alternative enabling larger areas to be detected much faster.

IoT systems for Gas and Fluid leak detection

Depending on the type of gas or fluid leak to be detected there are external-based detection and internal-based detection sensing which distinguish between the use of sensors that are placed inside or outside of pipelines.

The continuous monitoring of pressure, temperate and flow rate offers near real-time or early warning of leakages as well as providing valuable insights into your ‘hidden factory’ operations.

Common methods of detection include identifying a change in flow and pressure, pressure point analysis and mass-volume balance.

Internal systems include pressure point analysis, mass balance method, Real Time Transient Monitoring (RTTM) based systems and Extended RTTM.

External systems include acoustic systems, semi-permeable sensor hoses, video monitoring and fibre optic cable systems to provide Distributed Acoustic Sensing (DAS), Distributed Temperature Sensing (DTS) or Distributed Strain Sensing (DTS).

Like the example of compressed air leakage detection, in practice, IoT-enabled continuous systems are used in conjunction with non-continuous methods. Non-continuous methods can range from handheld devices to simple visual inspections or aerial surveys by drone or helicopter.


IoT solutions have become part of our everyday lives in the home or at the office to form smart home and smart building applications that save considerable energy and cost.

With our help, we can explore cost-effective ways of leveraging IoT technologies to save energy in a variety of smart industry applications to suit all size operations and budgets.

Get in touch

If you have any questions relating to this article or would like to find out how SanCloud can help you with your next IoT project, please contact us and we will be happy to help.