Towards an Energy-Efficient Production Process – Measuring and Evaluating Cost Savings and Environmental Benefits
Improving energy efficiency is crucial for reducing energy consumption and emissions in the production process while achieving cost savings. Comprehensive maintenance and energy efficiency go hand in hand, although reliably measuring these benefits can be challenging.
The environmental and economic pressures to manufacture products in the most sustainable, energy-efficient and resource-efficient way are constantly increasing. Enhancing energy efficiency in manufacturing is a key strategy for meeting sustainability goals. It reduces both energy consumption, cost and harmful environmental impacts. Regular maintenance of machinery and equipment helps extend their lifetime and reduces the need for repairs, further supporting sustainability objectives. Moreover, investments in energy efficiency optimise energy consumption and generate long-term cost savings.
The role of life cycle thinking
Life cycle thinking allows companies to assess the environmental, cost, and resource impacts of their production processes and equipment throughout their life cycle. Tools like Life Cycle Assessment (LCA), Life Cycle Costing (LCC) and Social Life Cycle Assessment (SLCA) provide frameworks for evaluating sustainability.
LCC focuses on minimising the life cycle cost of machinery and equipment in the production process throughout their lifetime.
Life Cycle Costing (LCC)
Life Cycle Costing (LCC) focuses on minimising the life cycle costs of production processes, machinery and equipment at different life cycle stages, following the principles of IEC 60300-3-3 and ISO 15663. LCC can be used to plan and improve the efficiency of production processes and maintenance, compare different processes, select the most suitable alternatives, and reduce adverse environmental impacts. LCC assesses cost across all life cycle phases - design, procurement, installation, operation, maintenance, and end-of-life – optimising the total cost of ownership, including energy efficiency considerations.
Figure 1: Life cycle cost structure to assess the economic benefits of energy efficiency.
Life Cycle Assessment (LCA)
Life Cycle Assessment (LCA) evaluates the environmental impacts of a product or process throughout its life cycle. LCA is standardised by ISO, with ISO 14040 outlining the main principles and framework, and ISO 14044 specifying the requirements and guidelines for conducting the assessment. Like LCC, LCA helps identify and energy-related challenges, offering insights to improve energy efficiency and reduce harmful environmental impacts. It also enables systematic comparison of alternatives, supporting more sustainable decision-making.
The new digital platform will enable the integration of smart energy solutions into production systems and business processes.
Challenges in assessing benefits
Real-time measurement of energy consumption, alongside the evaluation of associated economic and environmental benefits, is a central challenge in industrial energy efficiency projects. Verifying energy savings remains a challenge for the growth of the energy services sector.
Figure 2. Life cycle costs by production resource.
Both LCA and LCC require detailed data on energy consumption, waste, and maintenance measures to assess the environmental and cost savings from energy efficiency improvements accurately. Insufficient or poor quality economic and technical process data can affect the reliability of the analysis results, leading to misleading conclusions.
Integrating and harmonising data for both environmental and economic impact assessment can be complex. Additionally, life cycle cost assessments often focus only on direct costs, often ignoring indirect cost impacts. There is also limited empirical evidence on the links between energy efficiency investments, long-term savings, and sustainability. Standardised methodologies are needed to address these challenges effectively.
Environmental impact assessment
Environmental impact assessment and the integration of LCA and LCC analyses, conducted as part of the DENiM project, were performed in collaboration with the University of Applied Sciences and Arts of Southern Switzerland (SUPSI). The environmental impact indicators applied align with the Global Reporting Initiative (GRI) standards, covering key dimensions such as materials, energy, water, emissions, and waste. The environmental impact assessment focuses on the use of production resources and production emissions.
Seven impact categories from the Product Environmental Footprint (PEF) and the Organisation Environmental Footprint (OEF) were selected as the most relevant for assessing the energy efficiency of production processes. These are:
‑ Climate change
- Photochemical ozone formation (impact on human health)
- Acidification
- Eutrophication (freshwater)
- Water use
- Resource use (minerals and metals)
- Resource use (fossil fuels).
The project also developed tools for the integrated assessment of life cycle costs and environmental impacts, including the LCC tool developed by VTT, described below.
A new tool for assessing life cycle cost and visualising results
The web-based DENiM LCC tool enables users to identify and evaluate the life cycle cost and cost savings associated with energy efficiency improvements in production processes and equipment. The tool supports companies in optimising energy efficiency from an economic perspective. The analysis includes several steps, integrated into the tool, such as the cost structure presented in Figure 1. The tool comprises the following modules:
‑ Management: Start a new LCC analysis or update an existing one.
‑ Estimation basics: Define the production process, production assets and equipment, and LCC calculation parameters.
- Costs and cost functions: Enter data for CAPEX, direct OPEX, productivity and material loss cost.
- Outputs: View performance indicators and graphs, including life cycle cost, energy cost, annual cost and cost per machine hour.
- Sensitivity analysis: Monte Carlo-based simulation to assess the impact of uncertainty on costs and cost savings.
Figure 2 presents an example of a graph comparing the life cycle costs of different production assets across three cost categories: CAPEX, OPEX, and productivity and material loss costs.
For more information on the DENiM project, visit denim.fof.eu . The project has received funding from the European Union's H2020 research and innovation programme under contract No 958339.
VTT Technical Research Centre of Finland Ltd is a Finnish, fully state-owned limited liability company. The special duty of VTT as an independent and impartial research centre is to promote the wide-ranging utilisation and commercialisation of research and technology in commerce and society.
VTT Headquarters in Espoo, Finland.
TExt: VTT Ltd, Minna Räikkönen, Saara Hänninen, and Teuvo Uusitalo Images: shutterstock, VTT
Minna Räikkönen, Senior Scientist, VTT
Teuvo Uusitalo, Senior Scientist, VTT
Saara Hänninen, Senior Scientist, VTT
