Electricity is one of the largest operating costs for many UK manufacturers. Heavy machinery, motor systems, compressed air, process heating, cooling, ventilation and long production hours can all increase a manufacturing facility’s energy consumption.
Reducing energy consumption is important, but it is only one part of controlling factory energy costs. A manufacturing business can improve energy efficiency and still pay more than necessary if its business electricity contract no longer reflects its usage, meter type or operating pattern.
The most effective approach combines practical energy saving measures with proactive energy procurement. This means understanding how your manufacturing plant uses electricity, reducing energy waste and reviewing business energy contracts at the right time.
In this guide, the business energy specialists at Business Utility Hub explain how to reduce factory energy costs through better energy management, energy efficiency improvements and supplier comparison.
Why factories use more electricity than most businesses
Factories often use more electricity than many other commercial premises because energy is tied directly to production.
A manufacturing facility may use electricity for:
- Heavy machinery and production lines.
- Electric motors and pumps.
- Compressed air systems.
- Process heating.
- Cooling systems.
- HVAC systems.
- Lighting systems.
- Conveyors and material handling.
- Robotics and automation.
- Refrigeration.
- Warehousing and loading areas.
Some parts of the manufacturing industry have particularly high energy consumption. Steel and iron production, cement, chemicals, glass and food manufacturing all rely on energy-intensive equipment and processes.
A steel manufacturer may use large electric motors, furnaces and rolling equipment. A food production site may need refrigeration, process heating, ventilation and hot water throughout the day. These differences mean there is no single energy saving plan that suits every industrial site.
Understanding your own company’s energy consumption is the first step towards improving efficiency and finding a business electricity contract that reflects how the site operates.
Carry out an energy audit before making changes
An energy audit establishes a baseline for electricity use and helps identify inefficiencies across the manufacturing plant.
It can also support better procurement. If production levels, machinery or working hours have changed since the current energy contract was agreed, the tariff may no longer be suitable.
An industrial energy audit should include:
- Reviewing electricity bills and annual energy usage.
- Checking smart meter or half-hourly meter data.
- Identifying equipment using the most energy.
- Comparing daytime and overnight consumption.
- Reviewing baseload demand when production is low.
- Checking shift patterns and production schedules.
- Identifying wasted energy.
- Reviewing changes since the existing energy contract was agreed.
- Comparing current unit rates and standing charges.
Regular energy audits can highlight opportunities to reduce energy consumption and provide more accurate information when comparing suppliers.
They can also help you separate high costs caused by operational demand from those caused by an unsuitable business energy tariff.
Reduce electricity consumption across your manufacturing facility
The most useful energy saving tips are those that reflect how the site actually works. Changes should reduce unnecessary energy use without affecting production, quality or safety.
Optimise machinery and production equipment
Machinery is often responsible for a significant amount of electricity use across industrial plants.
Practical actions include:
- Carry out regular maintenance.
- Replace obsolete equipment where financially practical.
- Install variable speed drives.
- Upgrade inefficient motor systems.
- Eliminate unnecessary idle running.
- Match equipment use to production demand.
- Introduce clear shutdown procedures.
- Schedule maintenance to maintain peak efficiency.
- Monitor energy use per production line.
- Train employees to report faults quickly.
Variable speed drives allow motors to adjust their speed to match demand rather than running continuously at full power. This can significantly reduce electricity consumption where equipment does not need to operate at maximum output all the time.
Preventative maintenance also supports energy conservation. Poorly maintained equipment often uses more power to achieve the same output, increasing both energy bills and operational costs.
Improve compressed air efficiency
Compressed air systems are among the least energy-efficient systems used in manufacturing.
Leaks, unsuitable pressure settings and poorly maintained compressors can create substantial energy waste.
Useful actions include:
- Repair leaks promptly.
- Carry out regular leak detection.
- Reduce unnecessary system pressure.
- Maintain compressors regularly.
- Install variable speed drives where suitable.
- Monitor compressed air demand.
- Use correctly sized compressors.
- Switch compressors off when they are not required.
- Check pipework and connections.
- Review whether compressed air is necessary for each task.
A small leak can waste energy continuously throughout the working day. Repairing leaks and lowering system pressure can reduce consumption without disrupting manufacturing operations.
Improve HVAC and cooling systems
Heating, ventilation and air conditioning can increase electricity use, particularly in large manufacturing facilities or sites with specialist temperature controls.
Checklist actions include:
- Service HVAC systems regularly.
- Clean and replace filters.
- Review air conditioning temperature settings.
- Introduce zoned heating and cooling.
- Install smart building controls.
- Improve the building envelope.
- Insulate HVAC and process pipes.
- Reduce heat loss around doors and loading areas.
- Avoid heating and cooling the same area at the same time.
- Adjust settings for seasonal conditions.
- Use variable frequency drives on suitable fans and pumps.
Energy management systems can automate HVAC schedules and adjust ventilation based on actual demand. This helps reduce unnecessary energy use while maintaining appropriate conditions for staff and production.
Recover waste heat
Industrial processes often release heat that could be reused elsewhere on the site.
Waste heat recovery can capture thermal energy from furnaces, compressors, ovens or other equipment and use it to support heating, hot water or production processes.
Actions to consider include:
- Capture waste heat from furnaces.
- Recover heat from air compressors.
- Reuse excess heat for space heating.
- Pre-heat water or materials.
- Review heat recovery opportunities across production lines.
- Improve insulation around process heating equipment.
- Maintain heat exchangers regularly.
Heat recovery can reduce fuel and electricity demand while delivering wider operational benefits.
Upgrade lighting systems
Lighting may represent a smaller share of total energy use than machinery, but it is often one of the easiest areas to improve.
Energy saving actions include:
- Replace incandescent bulbs with LED lighting.
- Upgrade old high-bay lighting.
- Install lighting controls.
- Use occupancy sensors in low-use areas.
- Zone lighting by production area.
- Make use of natural light where practical.
- Turn lights off in unused spaces.
- Review external lighting schedules.
- Clean and maintain light fittings.
LED lighting uses considerably less electricity than traditional lighting and lasts longer. It also produces less excess heat, which can reduce pressure on air conditioning and cooling systems.
Use energy monitoring systems to identify waste
Energy management systems help manufacturers track where and when electricity is being used.
Useful monitoring measures include:
- Install sub-metering on production lines.
- Track energy use by process.
- Monitor overnight demand.
- Compare electricity consumption by shift.
- Set alerts for unusual usage.
- Review energy per unit produced.
- Identify equipment drawing more power than expected.
- Compare peak and off-peak hours.
Sub-metering can help identify which parts of the manufacturing facility are responsible for the highest consumption. This makes it easier to prioritise efficiency improvements and assess whether they are delivering significant energy savings.
Better data also improves energy procurement. Suppliers can assess the site more accurately when annual usage and demand patterns are clear.
Reduce electricity costs through better energy procurement
Cutting energy consumption does not always lead to the lowest possible electricity bills. The structure of the business energy contract also affects what a manufacturer pays.
Key areas to review include:
- Electricity unit rates.
- Daily standing charges.
- Contract length.
- Fixed or flexible pricing.
- Pass-through costs.
- Meter type.
- Annual energy usage.
- Peak demand.
- Supplier service.
- Renewal terms.
A manufacturing site may reduce its electricity use after installing energy-efficient equipment, but remain on a contract priced around its previous demand. In that situation, the business should review whether another energy tariff is more appropriate.
Business energy prices change regularly. Comparing suppliers allows manufacturers to assess whether the current contract still offers value.
Review contracts before renewal
Factories should avoid leaving energy procurement until the final weeks of a contract.
A timely contract review should include:
- Check the contract end date.
- Review the notice period.
- Compare suppliers several months before expiry.
- Review current annual usage.
- Assess recent efficiency improvements.
- Consider planned production changes.
- Compare fixed and flexible energy contracts.
- Review unit rates and standing charges.
- Check supplier service levels.
- Avoid accepting the first renewal offer without comparison.
Timing matters because wholesale electricity prices can move quickly. Starting early gives the business more time to compare options and choose a contract based on current operations.
It also reduces the risk of moving onto costly out-of-contract rates.
Avoid deemed and out-of-contract rates
Deemed and out-of-contract rates are commonly more expensive than negotiated business electricity contracts.
A manufacturing business may be placed on deemed rates after moving into new premises without arranging an energy contract. Out-of-contract rates can apply when an existing agreement ends and no replacement contract is in place.
To avoid wasting energy spend:
- Do not allow the existing contract to expire without review.
- Contact the supplier after moving premises.
- Check energy arrangements after taking over a manufacturing site.
- Record opening meter readings.
- Review inherited supplier arrangements.
- Switch suppliers where a better contract is available.
- Confirm the new contract in writing.
Businesses already paying deemed or out-of-contract rates may still be able to cut costs by arranging a suitable business electricity contract.
Consider renewable energy alongside procurement
Renewable energy can form part of a wider energy management strategy.
Options may include:
- Installing solar panels.
- Comparing renewable energy tariffs.
- Using renewable energy sources where operationally suitable.
- Reviewing battery storage.
- Considering a power purchase agreement.
- Reducing reliance on carbon-intensive energy.
Solar panels can generate electricity without direct carbon emissions and may reduce the amount purchased from the grid. However, renewable energy should support, not replace, effective procurement.
Manufacturers should still compare suppliers, contract terms, standing charges and total annual costs.
How Business Utility Hub helps manufacturers reduce electricity costs
Business Utility Hub helps manufacturing businesses of all sizes manage electricity procurement alongside operational energy efficiency. Whether you run a small manufacturing site, a large factory or several locations, we’ll review how your business uses electricity and identify suitable contract options.
We compare supplier offers, explain which business energy contracts may suit your site and provide clear energy saving advice based on your usage and operating requirements. This helps you save energy, reduce unnecessary costs and avoid paying more than needed for the electricity your operations still require.
Our service includes:
- Daily monitoring of business electricity prices.
- Reviewing annual electricity usage before comparing quotes.
- Comparing trusted UK business energy suppliers.
- Reviewing contracts before renewal.
- Support after contract expiry.
- Help for businesses on deemed or out-of-contract rates.
- Clear explanations of unit rates and standing charges.
- Dedicated account management.
- Full switching management.
- No obligation to switch.
- No upfront cost.
- Transparent commission disclosure on request.
We work with manufacturers across steel, iron, cement, engineering, food production, packaging, warehousing and other energy-intensive sectors.
Our aim is to help you reduce factory energy costs by combining a clear procurement strategy with an understanding of how your site uses electricity.
Review your business electricity contract before renewal, after expiry or if your manufacturing facility is paying deemed rates.
Review your energy contract before you sign elsewhere
Review your business electricity contract before renewal, after expiry or if your manufacturing facility is paying deemed rates.
