Moving the manufacturing sector to 100% renewable electricity is a significant challenge. But it is possible. Epson has set out a path for renewable manufacturing for others to follow.
Manufacturing and other industrial users account for around one-third of the world’s energy consumption, according to the International Energy Agency. Electricity is a central element of that. If all the power consumed by factories and industrial plants came from renewable sources, it would make a sizeable contribution to tackling climate change.
It’s a difficult goal that more and more companies are committing to. The RE100 initiative, for example, has seen more than 400 corporations commit to using 100% renewable electricity across their operations. How they reach that goal will depend on many factors, including what they are making and where.
Switching to renewable electricity
“Organisations with lighter electricity needs and stable finances will be best positioned to transition to renewables. Companies with high electricity demand, like furnaces for glass, smelting, or other large-scale heating applications, and companies with large footprints – such as expansive warehouses and assembly operations – may have more difficulty,” says Paul Holdredge, Director for Industrials and Transport at consultancy Business for Social Responsibility (BSR).
The prospect of switching to renewable electricity has become far easier due to recent dramatic cost reductions. According to the International Renewable Energy Agency (IRENA), the price of solar photovoltaic power in 2010 was typically 710% higher than the cheapest fossil fuel, but by 2022 it was 29% cheaper. Currently electricity accounts for around 20% of final energy use in manufacturing, according to the International Renewable Energy Agency, and this is expected to increase.
The manufacturing challenge
It is not just the price of renewable energy, that dictates a manufacturer’s ability to move to 100% renewable energy. Both the required initial capital investment and first-mover disadvantage—where it costs pioneers more than those that follow them to deploy new technologies—can significantly slow down a fully renewable transition. Not to mention the lack of availability of certain renewables in certain geographies and the fact that the appropriate infrastructure must be in place for this energy to be delivered—something no one company can do on its own.
Manufacturing requires an enormous amount of electricity in comparison to powering offices. In some countries or regions where the supply of renewable electricity is limited, like Japan, Taiwan, and Singapore, it is much more expensive than electricity produced by traditional means, placing a significant future cost burden on companies that purchase renewable electricity.
Epson is working to popularise the use of renewable electricity, despite the certainty of short-term cost increases. The company is advancing investment in sustainability to enrich communities and invest in future generations to create social value.
Going local
Wherever they are in the world, with whatever types of renewable energy available to them, companies need to adapt to local, national, and global circumstances. Seiko Epson, based in Japan, has done just that. Having switched to 100% renewable electricity for all its sites in Japan in 2021, it completed the transition to renewable electricity globally by the end of 2023³.
This goal has been made achievable through the steady implementation of decarbonization targets and the use of renewable electricity since 2018. In Nagano Prefecture and Tohoku region, Japan, where water sources are abundant, Seiko Epson relies on hydroelectric power.
The company is taking a similar approach outside Japan. In the Philippines, it taps into local geothermal and hydroelectric sources. While in Indonesia, it uses yet another renewable source—sustainable biomass power.
“We have used locally produced energy wherever possible,” says Junichi Watanabe, Managing Executive Officer / General Administrative Manager, of the Production Planning Division, whose role encompasses the promotion of Epson’s procurement strategies in the supply chain, including the use of renewable electricity. “Rather than using energy generated in faraway countries, using a particular region’s abundant renewable resources brings many benefits, such as improving energy self-sufficiency and creating jobs.”
Among the practical methods companies should consider are:
Generating electricity on-site
Via rooftop solar panels or, if space allows, wind turbines. Even if they do not generate all the power needed, they can still make a useful contribution.
Develop battery storage facilities
A common concern about renewable electricity is the risk of supply being interrupted when the wind isn’t blowing or the sun isn’t shining, but storage technology offers a viable way to address that.
When it comes to solar power generation systems, Epson’s sites also decide whether to adopt a self-investment or power purchase agreement (PPA) based on the individual circumstances of each country or region. The solution will vary from company to company. But most manufacturers are likely to find a combination of these elements will go a long way to reaching their renewable electricity goals.
The future for greener manufacturing
Addressing climate change can improve the livelihood of many people. At the same time, manufacturing companies and their shareholders stand to gain commercially from adopting a proactive approach. Companies with greener credentials are increasingly likely to be rewarded by consumers and investors, making it a crucial aspect of long-term market positioning. Additionally, increased use of renewable energy sources and greater self-generation can enhance a company’s ability to withstand fluctuating electricity prices in the open market