Financed variable speed drives could change competitiveness 14 January 2013

Up to £2,512 million of energy cost savings could be made in the UK within five years, if industry fully implemented variable speed drives (VSDs) on electric motors, according to a new report from Siemens Financial Services.

Darren Riva, head of energy efficiency financing at Siemens Financial Services in the UK, insists that correctly designed VSD systems typically reduce energy consumption between 20% and 70%.

He states that between 50% and 70% of industrial processes would benefit from VSDs, but adds that current uptake as a proportion of installed motors is still low.

"In light of the steady upward trajectory of electricity prices, greater energy efficiency is becoming an urgent concern for industrial organisations," comments Riva.

"The magnitude of the estimated savings enabled by VSDs presents an extremely compelling business case for industrial companies to invest in this power-saving technology," he continues.

Nodding to the problems with traditional funding in the uncertain economic situation in Europe, he advises that companies need to use alternative methods to fund energy-efficient equipment upgrades.

"Asset financing techniques, such as leasing and renting, aim to offset the monthly cost of the new equipment against the energy savings it delivers across the financing term, effectively making the investment zero net cost or even cash positive," states Riva.

"Even when a project cannot completely offset the equipment upgrade with energy-efficiency cost savings, the financing arrangement can subsidise the larger part of the upgrade cost.

"As up-to-date equipment may not only reduce energy costs but also boost productivity and extend manufacturing capability, leading to improved revenues and margin, manufacturers should leverage such alternative financing to capture the cost savings hidden in the industrial processes."

Brian Tinham

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