Powering More with Less

Episode Summary 

Energy efficiency is more than a sustainability initiative, it’s a strategic business opportunity. In this episode of the Optimistic Outlook, host Erika Gupta talks with Anna Celsing of Alfa Laval about why manufacturers should make energy efficiency the first step toward electrification and decarbonization. They explore how companies can uncover wasted energy, turn efficiency gains into productivity and growth, and overcome barriers to investment by rethinking how projects are financed. Anna also shares practical steps manufacturers can take today, even without a new budget, to start building a more efficient, resilient operation. 

Full Transcript

Lauren Espin

Hi, I’m Lauren Espin, and this is the Optimistic Outlook podcast.

America needs more energy. AI, data centers, advanced manufacturing and electrification are all driving demand. And meeting that demand will require us to build more energy infrastructure.

But there’s another part of the solution: getting more out of the energy and infrastructure we already have.

That’s where energy efficiency and electrification come together. Making a factory or building more efficiently can reduce the amount of energy it needs in the first place. Electrifying those systems can then make them cleaner and more flexible. Done together, they can lower costs, reduce emissions and even reduce the amount of new capacity that needs to be built.

Earlier this year, at the IEA Energy Efficiency Conference in Montreal, the private sector came together behind a shared framework treating efficiency not as a sustainability initiative but as a strategic resource, one that underpins competitiveness, energy security and growth.

The opportunity is significant. But even efficiency projects with strong returns can struggle to get funded. So, what does it take to move these solutions from opportunity to implementation?

In this conversation, Erika Gupta, Global Head of Sustainability at Siemens Financial Services, is joined by Anna Celsing, Chief Sustainability Officer at Alfa Laval.

They talk about why efficiency and electrification are more powerful together, what prevents proven solutions from being deployed at scale, and the financing, technology and business approaches that can help companies move forward.

Take a listen.

Erika Gupta

Anna, it's so great to have you on this episode. I'm really excited to host you because Alfa Lavelle really stands on both sides of this issue. Your equipment provides industrial energy efficiency, but you also run your own operations. So when you walk into a facility that's made sustainability commitments, what's the first thing you notice that they haven't done?

Anna Celsing

Exactly. Because we are experts on many things, but also heat transfer and taking care of otherwise wasted heat and recovering that. So it's almost impossible for me to walk into a facility and not see just steam being released. Am I taking care of or water hot water being cooled down and then you heat it somewhere else. It's like walking down the streets of New York and you see the steam coming out.

It's it's really just throwing away energy. So that's the first that I would notice. So you're saying they haven't done efficiency? There are so many places where we can capture efficiency here in this plant. Yeah. We also talk a lot about electrification too. So efficiency plus electrification. What does electrification look like in practice in a facility. There's so many bigger things and smaller.

You can do the LED lights of course. But he also we have boilers. We have ovens that you electrify. Were natural gas before. There's so many things that you do first like energy efficiency and then you're like doing switching to the ovens of electric that are run on electricity. Yeah, I want to pick up on that because that's where things can go really wrong.

Why energy efficiency should come before electrification

Erika Gupta

Yeah, I want to pick up on that because that's where things can go really wrong. Right? If somebody does electrification before efficiency. So can you walk me through kind of what what does that look like when you see that happen?

Anna Celsing

Yeah. You just have to start with energy mapping. I should say that you have to understand your energy system, and then you have to see where are these opportunities that I talked about before.

Recovering heat, for example, like we have as you also said, we have our sites where and offices. We can find excessive heat that we use from our operations to heat our offices. And so that really reduces the need of electrification. And then you if you go further, if you want to electrify, you will have an oversize grid connection that will cost you a lot of money.

If you also have oversight equipment that will both cost more investment, it will be less product productivity and it will. You will not reduce your energy consumption as much. Of course, electrification often means more efficiency. Like we have switched from natural gas to electrified ovens, for example. That has increased sometimes the efficiency by 40% because there's less conversion losses when you do electrification, just like EVs or other things that are more efficient.

Erika Gupta

That makes me think of another question. Just I just came out of a conversation where I was hearing the other CSOs talking about how when they bring these projects to the shop floor, the manufacturing floor, they often hear pushback of like, oh, I don't need one more initiative. I just need to get my product and my quality out. What do you say when you hear kind of those types of comments on this?

Turning energy efficiency into business value

Anna Celsing

I recognize them. First of all, I've been also except for seasonal operation director for kind of the many years. So but but I think that you need to tell the full story about energy efficiency to everybody that is and needs to be part of the continuous improvements on the shop floor.

How that actually frees up space for more investments. For example, I know we've then used the energy efficiency savings or improvements, also improving productivity, which meant that you release capacity, which then means that salespeople can go in and sell more products. And that's such a better story than just like, you have to find these improvements every day and go, go, go.

So I think that's the way you communicate about it to everybody and feeling part of something bigger. And that really makes sense. You can even draw it all the way to resilience and that you create energy security. We don't need as much energy and that makes it the entire company more and bring up more capacity for growth. So it's so much about how do you tell the story.

Erika Gupta

At the IEA Global Conference for Energy Efficiency we heard industry agreed to treat efficiency as a strategic resource rather than a sustainability initiative. And I think that's a bit of what you're getting at there. But how do you see that change in categorization really affecting the way it's implemented?

Anna Celsing

I think it has a huge effect, because if you just look at energy efficiency as a cost saving, you will always lose when you are compared to the revenue growth projects.

Because we have so much to do in all our organizations and we drown in priorities. So we have to talk about the net value created, and that is the strategic part of it, that it's resilience. And that comes from all the things that we talked about that you actually decarbonize your operations. That means if there's a cost of carbon, there's less cost and there's less cost of acting than not acting.

There's of course, lower bills and all the grid connection, everything. So it makes it much better business case. And that kind of boils it down to where you need to be. You cannot if you talk to top management or board, talk about single things that will save you something. But you need to also have a business case that is much bigger and creates much more value.

Erika Gupta

Picking up on that where I spend my time is a lot on how these projects get paid for and how they're financed. Can you talk me through a little bit? Like we know they have a positive payback. The technology works, but we're still not really seeing them. Yeah. Undertaking at the speed that that we'd like. Talk me through that a little bit. How are these getting. How are these getting financed?

Overcoming barriers to energy efficiency investment

Ann Celsing

Because that's the kind of a frustration, right, that there's so many things we can do on energy efficiency across industry everywhere. But it's not happening fast enough. And I think it is really because strangely enough, there are many times smaller investments. They're fragmented. So you get really a high transactional cost.

Like if you need to do diligence, you need to fill out all the paperwork. You have to do a lot to get that smaller investment in place. And then if you're in an organization, a bigger limitation, there's the allocation of capital that is difficult also. So what I think we need to do is both if you can bundle or create portfolios, we've done that.

We combine our net zero target journey. Decarbonizing our facilities would also energy efficiency prevent how many KPI or 4% each year set by board. So then we could bring all the different projects to the board as one big portfolio and get approval. And I think that's kind of a mechanism or the way you can make things happen more easily.

Erika Gupta

I've heard others talk about that strategy to to kind of aggregate this into like a sustainability package or a efficiency package to, to make that business case stronger when you're really going to those CEOs and CFOs, kind of what role do they play when it's more of an internal funded conversation?

Anna Celsing

I think that, I mean, both have really, really important roles, like the CEO, I think really needs to understand the importance and the strategic assets of energy efficiency and be able to talk about that to the board to make it a top priority, to make it a KPI that we measure.

For example, we have it as a KPI, as I said, but it's also in our quarter report next to finance results. And that's very much. Thanks to that CEOs. Oh, Rocco speaks the language of energy efficiency and thesis as important and translated into resilience. And then CFO also the collaboration between those making it possible to if you want to go for a portfolio or if you want to see energy efficiency as more of a service, like energy as a service, or doing more of the structuring to make it possible, I think so it's really an important collaboration and key stakeholders.

Erika Gupta

Agreed. And are there any real kind of structuring of these deals besides, you know, maybe this packaging and putting together, but other ways that you see changing a no into a yes, like really the mechanisms to get them done?

Rethinking how energy efficiency projects are financed

Anna Celsing

Yeah. I think like on the bigger picture really going from since there is small and fragmented going from CapEx to more of a OpEx thinking, because this is a lot of really small or you, you get money back over a really long time and it's low risk also.

And you really have also the data, you can show that you have this money coming back all the time. So going from CapEx, to OpEx I think is a key. And having like I said, more energy as a service or yeah, thinking more creatively and thinking differently than we have before.

Erika Gupta

Yeah, that's really one of the ways that we on the financial services side, see the ability to kind of unlock some of these projects is providing energy efficiency as a service or infrastructure upgrades as a service. Can think of it as a package deal in that case where they eliminate, we're eliminating that upfront cost and allowing them to take advantage of the savings right away.

Anna Celsing

And that's really what we need. Yeah. So we really need to work towards getting that more with the way we work with energy efficiency, I think just like you say.

Erika Gupta

So let's talk a little bit about kind of what's the sequence if somebody is going to take on one of these projects where they do first, second, third, walk me through, you know, what's the approach if you are looking at a new facility. What do you do first?

Anna Celsing

First of all, think of energy efficiency, first of all as the key enabler before you go for electrification. But I think I mentioned it before, like do your homework, do the energy mapping and do the digitalization if you can like start measuring. Otherwise you won't find these really low hanging fruits. The the possibilities to use waste, heat and other things and think through the energy flows that you do have and then start picking again or continue with the continuous improvement.

There are things that are about insulation. That's where we started this waste heat coming out of processes, maybe, and those things that are easy to do without an investment, often compressed air. If you go around, you'll hear a always leaking compressed air. And that costs actually a lot of energy and money. And then you go and if you've done your homework, then on the energy efficiency, looked at the heat recovery. Then you go to what can we electrify? And I think parallel also making sure that you have the infrastructure for electrification, because that also takes a long time to get in place. But electrifying ovens, forklifts, all the things that you can like, because that also brings energy efficiency. But you have to do the homework first. Yeah. So that brings me to my next question.

Practical ways to improve energy efficiency now

Erika Gupta

Yeah. So that brings me to my next question and I think it ties in really nicely, which is sometimes these capital planning cycles can be a year at a time. So maybe you just went through yours and you have another 11 months before it's going to happen again. But you want to get started. And you mentioned a few things like measuring or listening for the compressed air. What could somebody do next month without any budget yet?

Anna Celsing

I like that because there are so many things you can do. I think again, go out where we saw the conversation, go out and have a look. What are the things we're wasting? Maybe there are equipment running without any production. We had ventilation on during weekends when nobody was there.

There were easy things like LED lights that we could switch to, and just thinking that you stopped going, that makes you also get into a positive feeling of this. And then I think, talk to your people at the shop floor where so many, they have so much competence and knowledge about what are things that are not working. Optimize your processes, making your processes more efficient. I mean, there's so many also benefits in other aspects to doing that.

And then have a look at your energy data that you have from last year. You get kind of a fingerprint of your energy consumption. And maybe then you can start thinking about what should be investments, what are these heat recovery opportunities and other things that I talked about before.

And then you have a much better business case that you can present, knowing what value creation you will get from investments.

Erika Gupta

Data doesn't cost a lot of money. You know, it's your time. It's your effort. Invest it. Right?

Anna Celsing

Yeah, yeah. And I think energy is kind of the easy thing that you can actually measure. It's not costing a lot with some IoT solutions or measures meters out there.

Final thoughts

Erika Gupta

So our last question for the optimistic outlook is always what is your optimistic outlook? With everything that's happening, what do you see changing that gives you confidence that we're really headed in the right direction?

Anna Celsing

I think actually the uncertainty in the world now makes the energy transition so much more urgent. And having heard co-presidents here during the Climate Week talk about the 35 by 35 target for electrification, making it very clear that this is where we need to go and that we need energy efficiency to make it happen, and that we have this Montreal Framework on energy efficiency from July, where we actually got together, the industry leaders, the financial institution the policymakers, everybody that is needed and having a frameworks to really accelerates, that's something we can work actually together on and with the energy efficiency movers together, we're actually doing so much already. That brings a lot of hope. And from the conversations during this week, I know we will go home and do a lot more together. And I think partnership is the key to really make this happen.

Erika Gupta

I love that and I couldn't agree more. What a great note to end on. Thank you, Anna.

Anna Celsing

Thank you so much Erika. Thank you.

Lauren Espin

Thank you for joining us on this episode of The Optimistic Outlook. Be sure to tune in for more conversations with leaders shaping technology for a better tomorrow. Please subscribe to the Optimistic Outlook wherever you listen to your podcasts and be sure to share the podcast with a friend or colleague.