The Midwest has a substantial industrial and manufacturing base, with the industrial sector alone accounting for almost 35% of the region's total energy consumption. Nationwide, the industrial sector is the largest consumer of energy among utility customer sectors, responsible for over 30% of national energy consumption. 

The industrial sector accounts for an impressive 40% of the Midwest's energy efficiency potential, making it the most significant opportunity for highly cost-effective energy savings. 

Benefits of Industrial Energy Efficiency

Investing in energy efficiency is crucial for business and industry, leading to enhanced competitiveness, job creation and significant cost savings. Furthermore, industrial energy efficiency investments have a vital impact on overall regional efficiency efforts and contribute significantly to achieving energy efficiency policy objectives. By investing in industrial energy efficiency, manufacturers can free up capital for facility and process improvements, reducing equipment maintenance costs, bolstering their company's image, ensuring enhanced safety for workers and promoting environmental justice. 

The U.S. Department of Energy’s Industrial Efficiency & Decarbonization Office (IEDO) and Advanced Materials and Manufacturing Technologies Office (AMMTO) have numerous programs and resources to assist industrial companies in implementing energy efficiency measures.  

Barriers to Industrial Energy Efficiency

Industrial energy efficiency faces several barriers that hinder widespread adoption. One significant challenge is the lack of in-house technical energy expertise within many industrial facilities. Without the necessary knowledge and skills, implementing energy-efficient practices becomes a daunting task. There is also often a lack of awareness among industrial stakeholders regarding the various federal, state and utility incentives that can help offset the costs of making energy efficiency improvements. Increasing industrial customer understanding is necessary to enhance progress in this crucial area. 

Another obstacle is the risk of production disruptions. Industries may fear that implementing energy-saving measures could interrupt their operations, leading to reduced productivity or even downtime. Additionally, competing priorities for capital investment often take precedence over energy efficiency projects. Industrial facilities might allocate their resources to other ventures perceived as more urgent or financially beneficial in the short term. 

Industrial energy efficiency policies, such as opt-outs and self-direct options, discourage industries from embracing energy efficiency initiatives. These policies restrict the funding available for utility-administered industrial sector energy efficiency programs, limiting the scope and scale of what the programs can achieve. They also dissuade or even completely prevent large energy users from participating in energy-saving programs that are offered. 

To overcome these barriers, collaborative efforts are required among government bodies, energy organizations and industrial stakeholders to raise awareness, provide necessary training and implement effective policies that incentivize and facilitate industrial energy efficiency practices. By addressing these challenges collectively, industries can move toward a more sustainable and energy-efficient future. 

Industrial Opt-Out and Self-Direct

There has been a growing trend among industrial customers to seek exemption from efficiency requirements by either opting out of utility programs or self-directing their efforts within these initiatives. Nevertheless, it remains essential for all ratepayers to collectively shoulder the responsibility of energy efficiency investment. This ensures a comprehensive and cost-effective utility portfolio, promoting fairness among all rate classes. Commercial and industrial sectors typically offer the most cost-effective segment of a utility's energy efficiency portfolio, delivering substantial benefits for every dollar spent. 

Despite these advantages, certain Midwestern states have implemented policies allowing industrial and other large energy users to opt-out of contributing to utility efficiency programs, presuming they will independently pursue energy efficiency improvements. Unfortunately, this rarely happens in practice, resulting in lost opportunities to capture significant energy savings from the industrial sector. 

Industrial EE Policies

Low Cost-No Cost Industrial Energy Efficiency Opportunities

Strategic Energy Management (SEM) is a holistic approach to reducing energy consumption through the implementation of business best practices. SEM involves creating an energy team, identifying energy savings opportunities, setting performance goals, tracking progress and reporting results.

SEM Resources

The U.S. Department of Energy’s ISO 50001 Ready program is a self-guided approach for facilities to establish an energy management system and self-attest to the structure of ISO 50001, a voluntary global standard for energy management systems in industrial, commercial and institutional facilities. The Department of Energy provides an online guide, the 50001 Ready Navigator, with 25 straightforward tasks to guide facilities through the process.

50001 Ready Program Resources

Industrial Assessment Centers (IACs) are university-based programs funded by the U.S. Department of Energy. Through the IAC program, teams of engineering students and faculty are sent to assess energy usage in small to medium-sized industrial facilities at no cost. These assessments identify opportunities for energy efficiency improvements, cost savings and enhanced competitiveness. After on-site evaluations, IACs provide facilities with detailed reports containing recommendations for equipment upgrades, process optimizations and energy management strategies. If you are interested in applying for an assessment or learning more about the IACs, please visit the IAC website.

MEEA’s Industrial Energy Efficiency Work

In 2022, MEEA was awarded $500,000 by the Department of Energy to establish the Midwest Industrial Energy Training Network.  With an initial pilot focusing on manufacturing facilities in Illinois, Indiana, Kentucky and Michigan, this transformative clean energy manufacturing model will expand regional energy management systems, operationalize smart manufacturing and prepare a diverse workforce to revitalize the nation’s manufacturing center.

MEEA has partnered with the Department of Energy's Industrial Assessment Centers in the pilot states, as well as APTIM, to collaborate on multiple initiatives. The primary goal is to develop comprehensive training programs and offer technical assistance to industrial facilities. Additionally, the team aims to establish a network website that will host valuable training resources and organize informative webinars.

The pilot program will train over 150 individuals across at least 50 facilities within the four states, with particular attention given to historically underserved communities. To achieve this, we will foster partnerships with diverse stakeholders, including MEEA members, government agencies, utilities, energy service providers, community-based organizations and manufacturing associations.

For those interested in becoming a part of this valuable network as stakeholders, MEEA encourages you to connect with technical manager, Joe Ricchiuto.