ISA Interchange

Welcome to the official blog of the International Society of Automation (ISA).

This blog covers numerous topics on industrial automation such as operations & management, continuous & batch processing, connectivity, manufacturing & machine control, and Industry 4.0.

The material and information contained on this website is for general information purposes only. ISA blog posts may be authored by ISA staff and guest authors from the automation community. Views and opinions expressed by a guest author are solely their own, and do not necessarily represent those of ISA. Posts made by guest authors have been subject to peer review.

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Why Does Industry 4.0 ROI Rely on Energy Efficiency?

Industry 4.0 energy efficiency is an invaluable metric for predicting and understanding the ROI of new technologies. Industry energy consumption and usage is a vital indicator of factors like performance, maintenance issues, sustainability, and more. All these factors can contribute positively and negatively to the ROI of Industry 4.0 investments. By monitoring energy efficiency, businesses can maximize the value of their new technology integrations.

Achieving Industry Energy Consumption Savings

Industry 4.0 energy efficiency is crucial for ensuring the financial success of a digital transformation. There are numerous valuable benefits to adopting Industry 4.0 technology, but it can be a significant investment. Energy efficiency can result in cost savings that are a major contributor to the ROI of digital transformation strategies.

On one hand, Industry 4.0 typically results in more technology operating in a given environment, increasing the need for electricity. So, if all this new technology is using electricity inefficiently, it can result in higher utility costs that reduce the ROI.

Research from 2018 shows the average commercial building spends about $23,900 per year on energy, 84% of which is electricity. Eliminating unnecessary or inefficient electricity use can majorly impact energy costs, potentially saving thousands of dollars per year. That money can be a valuable addition to Industry 4.0 budgets and help pay off prior investments.

Industry 4.0 Energy Efficiency as an Indicator of Success

Industry 4.0 energy efficiency isn’t just about funding new technologies — it can also be a vital indicator of a successful Industry 4.0 strategy. This reflects the typical goals of many I4.0 technologies, such as optimization, operational efficiency and automation. These objectives are well-aligned with energy efficiency and a general reduction in waste. As a result, a successful Industry 4.0 strategy will often lead to improved energy efficiency.

Monitoring energy efficiency and electricity consumption can help businesses track the performance of their new technologies. For example, if a new robot on an automated assembly line is well-optimized, it will likely use energy efficiently. As a result, energy consumption and usage can be helpful metrics for tracking the success of the robot and the overall automation strategy.

Any business can apply this approach in their Industry 4.0 innovations. Energy efficiency can act as an indicator of success, which can indicate a new technology's potential ROI. So, an energy efficient Industry 4.0 strategy will likely result in a high ROI because the system is well-optimized and performing as intended.

Energy Efficiency as a Maintenance Indicator

While energy efficiency can indicate success, it can also hint at the likelihood of costly repairs and mechanical issues, which detract from ROI. Poor efficiency is one of the most common signs of a potential problem in any technology.

If a new technology shows sub-par energy efficiency, that doesn’t automatically make it a failure. It simply indicates the new integration requires more fine-tuning, which can lead to a higher ROI. Look at energy efficiency as a symptom — one that is helpful all the time — although what it indicates can vary.

Paying attention to poor energy efficiency is important because failing to respond to mechanical issues can lead to a significant ROI reduction. Efficiency issues aren’t always directly related to new technology, either.

For example, a new robot might be working great but showing poor energy efficiency due to an issue with the transformer it’s getting power from. With a straightforward series of electrical tests and visual inspection, an electrician may easily identify the problem with the transformer and repair it. Without monitoring energy efficiency, the business might not otherwise notice an issue like this until the transformer fails.

In this scenario, monitoring energy efficiency improves business maintenance practices and supports the new robot's success. By using poor energy efficiency to identify maintenance issues, businesses can prevent a loss in ROI due to preventable performance issues in Industry 4.0 technologies.

Energy Efficiency and Industry 4.0 Sustainability

Sustainability is a popular goal for many businesses pursuing new technologies. Industry 4.0 energy efficiency can be a valuable metric for meeting sustainability goals. It indicates an overall reduction in energy consumption and, specifically, a drop in unnecessary or wasted electricity. As a result, energy efficiency can contribute to a reduction in emissions.

EPA research shows industry energy consumption accounts for 30% of U.S. emissions. The industrial sector is one of the most energy-intensive in the nation. So, reducing electricity demand through Industry 4.0 innovations can have a large-scale impact.

Energy efficiency can be a key metric in sustainability and ESG data, tracking the success of I4.0 tech and monitoring its impact. Many Industry 4.0 technologies help reduce electricity consumption and improve efficiency, contributing to improvements in sustainability. However, this isn’t always the case. Some technologies can lead to higher emissions if poorly implemented.

AI and blockchain are great examples. The intense computing requirements of these technologies lead to high electricity consumption and heat production. Depending on the source of the electricity, AI and blockchain can cause large amounts of GHG emissions. Good energy efficiency can minimize the harmful impact of these technologies.

The environmental ROI of any Industry 4.0 strategy depends heavily on energy efficiency. I4.0 technologies can either reduce energy consumption, or augment it and increase emissions. Energy efficiency is often the differentiating factor between the two scenarios, so achieving high energy efficiency results in a high financial ROI and a high sustainability ROI.

Tips for Improving Industry 4.0 Energy Efficiency

Monitoring and improving energy efficiency is vital for minimizing industry energy consumption and ensuring a high ROI on new technologies. How can businesses go about improving their energy efficiency, though? A few key technologies can be helpful, including digital twins and AI.

AI digital twins are great for simulating different optimization strategies before, during and after a new technology integration. Studies in 2018 have shown a 2.7 times reduction in energy consumption through an IoT-powered digital twin. IoT devices are used to collect energy-consumption data, which is fed into the digital twin for modeling.

Digital twins allow businesses to test various configurations and solutions without disrupting anything in the real world. They can fine-tune an Industry 4.0 strategy for high energy efficiency using the digital twin, then implement that pre-optimized strategy to maximize their ROI.

The Value of Industry 4.0 Energy Efficiency

Industry 4.0 energy efficiency can indicate success, cost savings, maintenance issues and sustainability, all of which impact the ROI of new technologies. Monitoring energy efficiency can provide invaluable insights that help businesses maximize the value of Industry 4.0 strategies. Highly efficient systems reduce industry energy consumption, minimize emissions and operate more reliably, delivering the maximum return on investment.

Emily Newton
Emily Newton
Emily Newton is the Editor-in-Chief of Revolutionized, an online magazine celebrating advances in science and technology.

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