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Businesses working to manage their spending on energy were dealt a blow in late February following military action by the U.S. and Israel against Iran. A predictable consequence of the conflict was a dramatic increase in the price of crude oil, the primary benchmark for global energy costs. The price of a barrel of crude oil shot up from $67 in early March to $112 in early April; by early June, it had come down to $80, still a roughly 25% year-over-year price increase.
Geopolitical conflict can bring exceptional volatility to energy costs, but steadily rising expenditures have been the underlying trend for companies since 2022, putting pressure on their profit margins. Energy is a central input in energy-intensive industries such as cement, chemicals, and metals, which account for roughly three-quarters of industrial energy demand. Companies that rely on global supply chains, and even companies that consume relatively less energy in their operations, like food processors, are feeling the effects of rising fuel and power costs.
The pressure to reduce costs is likely to drive more corporate efforts to improve energy efficiency. While that’s good for sustainability, our research suggests that energy efficiency can also deliver measurable cost savings, enhance resilience, and fuel growth. Attention to energy efficiency can lower per-unit manufacturing costs, reduce exposure to energy-price volatility, and sustain margins during energy shocks. The companies we studied have cut their energy use at some facilities by up to 50% and reported efficiency gains of 10% to 20% in their core industrial processes.
Upgrades to digital systems, manufacturing equipment, and facilities all played a role in those outcomes. The key to success, however, came not from any upgrade made in isolation but from having a comprehensive strategy that linked improvements together. Company executives made energy efficiency a clear priority, with defined accountability and performance targets.
From our surveys of Swiss manufacturing companies and interviews with executives across the globe, we identified three ways in which the most energy efficient among them manage their energy costs and take advantage of digital capabilities in that work.
First, they invest in collecting and analyzing data about energy use from everywhere in the company and its ecosystem and making that data visible to managers. Using sensors, dashboards, and centralized data platforms, they enable real-time energy management and cross-site benchmarking. Second, they redesign their operations and systems to optimize energy use, eliminate waste, and reduce dependence on energy-intensive inputs. By embedding advanced analytics and AI into daily workflows, they can improve continuously. And third, they are more likely to create products and services that support their customers’ energy efficiency goals.
Here, we’ll explore energy efficiency practices among the companies we studied and provide insight into how managers can adopt similar approaches.
Make Energy Data Visible Everywhere
Enterprise-level energy efficiency becomes feasible when the energy that business operations consume is visible in near real time. In our survey of Swiss companies, those in the top quartile on energy efficiency rated themselves more highly, on average, than those in the bottom quartile on integrating data collection, analytics, and reporting technologies across their operations. Executives we interviewed at those and other companies reported that they use those capabilities to systematically and continually track and analyze information on energy usage and share it with internal and external stakeholders. Specific practices included translating data into actionable insights for operations teams, frequently sharing energy metrics with senior leadership, and communicating successes to customers, investors, and regulators.
At Swiss specialty chemicals manufacturer Clariant, digital technologies are central to measuring and sharing energy usage data. One of its early initiatives was to install sensors to capture data on energy used by plant machinery. It also invested in operational dashboards for its sites to consolidate their data and uncover opportunities for efficiency improvements. The sustainable operations team now tracks high-frequency data from 80 manufacturing sites and stores it in a central data repository.
Increased visibility has helped to improve energy efficiency on several levels. Plant managers and site operations teams use dashboards to monitor energy consumption, emissions, and operational efficiency across Clariant’s production facilities so that they can identify potential improvements. Business and regional operations leaders use dashboards for cross-site benchmarking, revealing where they may be lagging behind comparable operations. The sustainable operations team monitors energy usage across plants and works with managers at each site to determine how to reduce their energy costs.
Clariant’s savings have been significant. At one plant in China, the energy used to produce finished goods was cut by about half from 2019 to 2021, and even further in subsequent years.
The company’s generative AI-based Clarita platform, introduced in 2023, is used across production sites to monitor energy consumption, identify inefficiencies, and recommend actions to optimize processes while continuously learning from operational data. At a production plant in Germany, local operations and energy efficiency teams used Clarita to identify abnormal steam consumption in a heating system by comparing real-time usage with historical baselines. The results led them to adjust operating parameters, which significantly reduced steam demand. Additionally, a mining site in Indonesia used the system to save energy by improving routines for scheduling and maintaining its equipment. (See “Can AI Save Energy?”)
