American firms pay more for energy and worry more about it vs. their global counterparts: ABB survey



Jul 13, 2023

  A global Energy Insights survey of 2,500 respondents across ten countries and a wide range of sectors (download the report) sponsored by ABB sponsored, focused on energy cost and supply issues and how companies around the world are coping. In a sample that included developing nations (e.g., Chile) to top industrial players (e.g., Germany), the US results stood out in unexpected ways.

  First, while all respondents saw high energy costs as a threat to their business, US companies appeared to see it as a greater challenge. US firms indicated it was a “major” threat 43% of the time, second only to Italy at 44% and compared to a global average of 31%. When compared to the impact of COVID-19, American firms were much more likely to say that energy costs presented a greater threat than the pandemic. US respondents said so 70% of the time compared to a global average of 52%.

  These findings may be due in part to the fact that US companies spend more on energy than any other country surveyed. When asked what percentage of their organization’s total operating costs will be spent on energy in the current fiscal year, US firms averaged 39.8%. That’s almost 30% higher than the global average.

  American firms also saw energy supply issues as a greater threat than their global counterparts. US respondents indicated they were “very concerned” about the reliability and security of the energy supply 66% of the time vs. a global average of 40%.

  So, if US managers think energy presents such a threat— both in terms of cost and reliability or security—what are they doing to address the situation?

  “Reduced spending in some areas of the business” topped the list with 53% of US respondents indicating their firms would pursue spending cuts. “Reduced profits” (38%) and “passing costs on to customers” (34%) were a distant second and third, respectively.

  As to where spending cuts would be made, US firms listed “technology” 53% of the time with employee salaries next at 43%. Interestingly, R&D spending seems to be protected—only 16% of US respondents said their R&D budgets had gone down in the last year while at least double that many say they’ve seen reductions in other areas of the business. Given that 55% of US firms indicated they were increasing investments in energy efficiency, perhaps some of the R&D spending pertains to those efficiency improvements.

  That would create a more durable solution than simply cutting costs in the near term.

  Industrial facilities have a wide range of ways to boost efficiency that go far beyond LED lighting and motion detectors. Modern building automation systems can be installed in a matter of hours and then “learn” the building, it’s supporting systems and how they’re used. In a matter of weeks, the system can make recommendations—and even implement them automatically—based on identified opportunities to save more.

  There are also many proven approaches like using variable frequency drives (VFDs) to control motors. These devices are especially effective in applications where the motor ramps up and down frequently. Typical savings are in the 20% range, but ABB has observed cases where a combination of high-efficiency motors controlled by VFDs has yielded more than a 50% reduction in energy use.

  Ultimately, the efficiency of a building, process or manufacturing line is cumulative, the result of large and small improvements across all aspects of the operation. A few percentage points better in UPS efficiency, reduced losses in cabling, strategic use of energy storage, advanced building controls—it all adds up, but so do the costs, which brings us to a final irony: While 58% of US survey respondents cited cost as the #1 reason to invest in efficiency, 38% also identified cost as the #1 barrier to investing. This perhaps more than any other finding in the survey illustrates the challenge of investing in energy efficiency in the US today.

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