Industrial Energy Efficiency

The industrial sector accounts for one-third of the total U.S. energy consumption[1], and as such represents a substantial opportunity for cost-effective energy savings. Effectively managing and reducing industrial energy use has increasingly become a key policy priority.

Industrial energy efficiency often represents a large and cost-effective resource for policymakers and utilities to pursue, yielding many benefits including improved competitiveness in the US manufacturing sector through lower production costs.

Photo of a gas welding torch

Key Focus Areas

The potential cost-effective energy savings in U.S industry is large—amounting to approximately 6,420 trillion British thermal units of primary energy[2] – or enough energy to power Florida, the third ranking state for overall consumption, for a year and a half.[3] Experience has shown that the industrial sector historically saves more energy per program dollar than other customer classes: at the national level, industrial energy efficiency programs had an average cost of saved energy of $0.030 per kilowatt hour (kWh) in 2012— nearly one cent lower than the aggregate average energy efficiency program cost of $0.038/kWh.[4]

Many of the well-established programs in North America continue to realize reliable energy savings from industry at or below the average costs they face for their programs overall. To realize these low-cost savings, however, requires long-term, focused efforts addressing specific industrial needs and circumstances.

SEE Action has identified four key focus areas in industrial energy efficiency and CHP:

  • Reduce barriers to industrial energy efficiency implementation: Identify and promote the development of policies and programs that facilitate the implementation of industrial energy efficiency.  Work with stakeholders to catalog and replicate these policies.
  • Build the workforce: Identify and call attention to the needs within the industrial sector for education, training, and workforce programs.
  • Promote efficient operations and investment: Improve availability of information for industry and encourage the use of industrial energy management programs that include continuous energy improvement.
  • Move the market toward IEE/CHP technologies adoption: Identify and promote programs and policies that demonstrate emerging technologies and practices.

Key Initiatives

SEE Action is currently working to equip state and local decision makers, utilities and other program administrators with the tools and information they need to yield energy and cost savings in the industrial sector. These include:

  • Identifying replicable, successful industrial energy efficiency program design features – based on practical, proven approaches in use across the country – that respond to industrial customer needs. This analysis and compilation of successful practices also includes information on designing effective self-direct programs as well as next generation programs such as strategic energy management and facility-level initiatives. 

[1] U.S. Energy Information Administration. (2013). Annual Energy Outlook 2013. http://www.eia.gov/forecasts/AEO/

[2] McKinsey & Company

[3] U.S. Energy Information Administration. State Energy Data System: Florida. Consumption (2012 data). http://www.eia.gov/state/data.cfm?sid=FL#ConsumptionExpenditures.  

[4] Source: Aden et al. 2013 based on EIA 2012 demand-side management, energy efficiency, and load management programs data for more than 1,000 utilities. Note: To ensure consistency and comparability, these values only include the 182 organizations that reported residential, commercial, and industrial savings and expenditure data; transport sector energy efficiency program data are not included except as a component of the aggregate average.  

Connect with Us about Industrial Energy Efficiency

Contact our Experts
  • Betsy Dutrow, U.S. Environmental Protection Agency,
    Industrial Energy Efficiency and Combined Heat and Power Working Group, Staff Lead
  • Sandy Glatt, U.S. Department of Energy,
    Industrial Energy Efficiency and Combined Heat and Power Working Group, Staff Lead

Work Products

Industrial Energy Efficiency: Designing Effective State Programs for the Industrial Sector

Industrial Energy Efficiency: Designing Effective State Programs for the Industrial Sector provides state regulators, utilities, and other program administrators with an overview of U.S. industrial energy efficiency programs and assesses some of the key features of programs that have generated increased energy savings.

Sustained Energy Savings Achieved through Successful Industrial Customer Interaction with Ratepayer Programs: Case Studies

This paper provides four detailed case studies of companies that benefited from participation in their utility’s energy efficiency program offerings and highlights the business value brought to them by participation in these programs.

State Approaches to Demand Reduction Induced Price Effects: Examining How Energy Efficiency Can Lower Prices for All

This paper reviews the existing knowledge and experience from select U.S. states regarding Demand Reduction Induced Price Effects (DRIPE), including New York and Ohio, and the potential for expanded application of the concept of DRIPE by regulators. Policymakers and public utility commissions have a critical role to play in setting the methodology for determining DRIPE, encouraging its capture by utilities, and allocating DRIPE benefits among utilities, various groups of customers, and/or society at large.

Guide for States: Energy Efficiency as a Least-Cost Strategy to Reduce Greenhouse Gases and Air Pollution, and Meet Energy Needs in the Power Sector

A practical document that presents established policy and program “pathways” to advance demand-side energy efficiency, including:

  • Ratepayer-funded energy efficiency
  • Building energy codes
  • Local government-led efforts, such as building performance policies
  • State-led efforts, such as energy savings performance contracting
  • Commercial and industrial private sector approaches, such as strategic energy management and combined heat and power.

The guide presents case studies of successful regional, state, and local approaches to energy efficiency with sources for more information, resources to understand the range of expected savings from energy efficiency, and common protocols for documenting savings.

Saving Energy in Industrial Companies: Case Studies of Energy Efficiency Programs in Large U.S. Industrial Corporations and the Role of Ratepayer-Funded Support

This paper is designed for companies looking to cut costs through energy savings, ratepayer-funded program administrators interested in increasing large industrial company participation in energy efficiency program offerings, and state utility commissions.