Energy Costs – Strategically Manage Energy in the Laundry!

Energy costs are exploding – and the laundry industry is very much affected due to high consumption and long-term contracts with customers.

The laundry industry is very much affected by fluctuating energy prices due to high consumption and long-term contracts with customers.

Over the last years, gas prices fluctuated wildly. Energy taxes are constantly being increased in the course of climate protection.
How should a textile service entrepreneur react?

Key points in energy management in the laundry:

  • Is energy a bottleneck? Are energy costs relevant to the company's success?
  • What energy price fluctuation can the company afford? How should the prices be hedged?
  • What are the benchmarks? Setting the right goals.
  • Focus on quick cost-saving opportunities (ABC analysis)
  • Attention to capital commitment: How quickly do energy investments need to pay off?
  • Implementation measures
  • Control and constant monitoring

In this article, I would like to make a contribution, especially for the textile service industry - but the content can also be applied to other industries that face similar challenges.


What are the topics in Energy Management?

Energy Costs have several challenges:

  1. Current and impending price fluctuations - the market got more volatile! How can and should we protect ourselves?
  2. Energy costs are rising in the medium and long term. The right strategic orientation is important.
  3. Identify and implement cost-saving measures.
  4. Can/should we also produce energy ourselves?
  5. Protection against blackout.

These are all topics that you can spend hours and days on. But you have to be careful not to be remote-controlled by political or public interests.


How important is the topic of Energy in the laundry?

Firstly, it is important to decide whether energy is an A, B or C topic:

  • A-topic: "The management of energy costs is crucial for business success and energy is an absolute bottleneck resource. More important than new revenue, productivity, employees, etc.
  • B-topic: "The management of energy costs is important for the profitability of the company, but other topics such as customers and associates are more important."
  • C-topic: "Energy costs have no significant impact on the company's success. Measures in the area of energy mainly serve to secure the supply or the sustainability policy."

In the great majority of cases, the topic of Energy is either a B or C topic.

First things first ... second things not at all.

Peter Drucker // Pioneer of modern management

With this in mind, it is important to ensure that energy issues do not take up more of the owners' or management's attention than necessary. It is better to delegate this if possible or to schedule it specifically.

Energy Management helps to set the right goals... and to the right extend. Not too much and not too little.

Attention: "Overengineering"

"Overengineering" is one of the 7 types of waste in lean management and it means that you do more work than the customer wants. In German-speaking countries in particular, we are very sensitive to this.

Equally, the same applies to the topic of Energy. Sustainability quickly becomes a hobbyhorse and can keep you busier than you should be.

The critical questions are: "What is my business?" and "What are my customers paying for?"

Of course, there's nothing wrong with investing more - if you can afford it. But then you have to be honest about the fact that this is a kind of personal contribution to charitable purposes.

Hedging against fluctuations in the purchase price

The fact is that fluctuations in the purchase price increased and that these fluctuations are likely to continue.

Some examples of this are:

  • September 2021: extreme price for natural gas across Europe
  • 2020: extreme electricity price peak in Texas
  • Autumn 2021: the price of coal in particular and electricity in general in China

The reasons for this are the increased globalization and the effects of the switch to renewable sources of energy, which at this point are significantly less reliable. In addition, ensuring grid stability lags 10-20 years behind political decisions.

Without doubt, we must therefore expect price fluctuations for ALL energy sources and not be guided by past experience. Times have changed!

IMPORTANT: if the prices for energy are relevant for the budget, they must also be fixed for the next 12-36 months.

There are thousands and thousands of people selling and buying on the Energy Price Market. Everyone believes that they are making a good deal with a transaction. Everyone should therefore be very modest about their own opinion on energy prices and price trends. You can assume that the market has more information than you have.

If you fix the prices for energy for 12-36 months, then one thing is guaranteed: either you are happy to have made a good decision or you are annoyed about the difference to cheaper spot prices that your colleagues are paying. But both are irrational, because you simply can't be certain.

Thus a recommendation:

  • Consultation with an energy provider on this topic.
  • Always secure prices for the next year at a minimum of 70-80%. (100% is usually not necessary and carries the risk that you have purchased too much in the case of a sales decrease).
  • Secure prices for the next 2-3 years at 30-60%.
  • Check whether it makes sense to be able to use both natural gas and heating oil as alternatives. The market for heating oil and natural gas moves independently to some extent.

The best thing is to have an energy consultant who can quickly recognize price movements and then react quickly and fix the remaining quantities for the 2nd and 3rd year. Alternatively, you can put the topic of " Energy Prices" on a quarterly basis and decide whether it is the right time to hedge the 2nd or 3rd year even further.

Here is a link to the current prices for the futures market: Futures Market Data

Under no circumstances is it advisable to buy electricity or natural gas on the spot market. A shortage of electricity, oil or gas cannot be predicted.

The Spot Market appears to be cheaper in normal times. However, only one massive price fluctuation in 5 years cancels out this difference. In the long term, the spot price is probably a few percent cheaper, the difference being the cost of insurance and better budgeting.

IMPORTANT: Briefly describe your own strategy for dealing with energy prices on an A4 page. (10 minutes work). This gives you your own guidelines and then simply implement them. That saves a lot of headaches.


Gas prices and electricity prices continue to rise

Energy prices are expected to rise at least until 2030, and probably beyond.

As soon as electricity or natural gas prices fall, taxes and charges on energy are increased and these increases are practically never reversed when prices rise again. This means that energy costs are likely to rise until the population or the economy is overburdened.

There is therefore a "pain threshold". How high this is and when it will be reached is pure speculation. My personal assumption is that we will reach a peak between 2025 and 2030.

It is therefore important:

  1. Change the value assurance terms in contracts with customers so that they also include energy costs. If possible, with a threshold value of 3%, as in rental contracts, so that an increase during the year can also be implemented.
  2. Do not agree to fixed prices with customers over a timeframe of several years.
  3. Leverage energy-saving potential
  4. Invite tenders for energy supply every 3-5 years

Energy management in the laundry

Energy management is a fancy word for replacing fire department activities with targeted measures that can be delegated more easily.

Essentially, energy management covers the following areas:

  1. Analyzing the current situation and potential in your own company.
  2. Settting long-term goals based on the industry benchmark and potential.
  3. Breaking down the long-term goals into specific annual objectives for the most important levers.
  4. Clarifying the responsibilities.
  5. Communicating the goals.
  6. Identifying concrete measures.
  7. Implementing the measures.
  8. Continuously monitoring consumption.
  9. Checking the results and taking further measures if necessary.
  10. Celebrating successes 😉

This is de facto a PDCA cycle, as in quality management, and can also be easily certified (ISO EN 50.001) - if this makes sense or is necessary.

Every company already implements one or another aspect of energy management. You don't have to be perfect, but it makes sense to constantly improve the management system. One step at a time.

Recommendation: Self-critical assessment of the current state of energy management (= audit), if necessary with an external expert, and continuous improvement. ISO 9 000 certified companies can use the QM for this purpose.

Quick wins for Energy Savings

Some ideas for simple and quick measures:

  1. Optimize machine utilization. Highly productive systems have lower energy costs.
  2. Check the steam system. Very often there is quick potential in the steam supply: Replace broken stevedores, repair defective insulation, avoid steam plumes, and remove unneeded lines.
  3. Maintain the compressed air. Is there a noise when the operation stops? EVERY leakage costs electricity.
  4. Improve water consumption. Every liter counts.
  5. Switch off machines that are not needed completely - turn off the steam supply if necessary.
  6. Monitor water, gas and electricity consumption on a daily basis.
  7. Clean the dryers
  8. Check the remaining moisture - Does the ironer or the dryer overdry?
  9. Check the load profile of electricity consumption - it is often very easy to recognize abnormal loads at night or at the weekend.

Ideas for further quick wins?... simply write them in the comments under this article.


Define energy objectives

The most important parameters in the laundry are:

  • Water usage efficiency,
  • Gas or oil usage efficiency,
  • Electricity usage efficiency

Organizational Measures - Energy Officer

As mentioned at the beginning, it rarely makes sense for the CEO or even the plant manager to be personally responsible for the topic of energy.

However, it is possible to make it an A-task for a technician, a Process Engineer or QM. It is important that facility services, process E

engineering AND the respective team leaders all pull together.

One person should be responsible for:

  • Control the measured values and interpret deviations.
  • Determine the cause of deviations.
  • Ensure the implementation of the action plan.
  • Publish the results.
  • Further train and obtain information on new technologies and processes.

The task of the Management Board is to set the targets, make inquiries on site, provide resources and help solve the problems in the event of deviations.

It is also very motivating if the officer is given a small budget that they can dispose of themselves. Of course, further training also makes sense - e.g. "energy officer"

This ensures that the topic of Energy gets enough attention.

Monitor Energy Consumption in Real Time or Daily

If you start to measure the Energy consumption values on a daily basis, enter them in a chart and start to work diligently with the values, you can save 5-10% with this measure on your own.

And even more if you set up real-time measurements for the most important water, gas and possibly electricity consumers. These systems are becoming increasingly cheaper to install and more economical to implement.

In this way, you can avoid a drain valve hanging and only realizing at the next gas bill that you have wasted a lot of energy in the last 4 weeks! (happens often and in many companies)

Furthermore, employees are constantly being sensitized to the issue. "What gets measured, gets done".

Of course, if you want to do it really well, then it is better to use a quality control chart. Working with statistics or "statistical process control" is not as complicated as it looks at first, and it helps enormously to distinguish between the normal spread of measured values in the process and special information.

In this sense, training the Energy Officer is very important.

Prioritize Energy Saving Measures Correctly

Sort the cost-saving measures in the following order:

1. High savings, low investment
2. Low savings, low investment
3. High savings, high investment (Boss must be asked)

The difference between low and high investment is the amount for which the building technician or process engineer does not have to ask the boss.

Then the Energy Manager keeps the list of measures, evaluates the individual measures and organizes their implementation.

The above classification is in reverse order, as external energy consultants often do. A consultant is often interested in expensive projects and not in measures that cost nothing ...

ATTENTION: Correct Valuation of Investments

In any case, all investments that pay off in 3-5 years or that are made for other reasons (replacement procurement, more capacity, more quality/customer benefits) make sense.

Investments in Energy Saving that do not pay off in 3-5 years must be well thought through before tying up money for them. If you are largely financed with equity, then you can make such investments, otherwise it might be more sustainable to reduce the company's debt in the current situation.

This may be controversial, but the task of a laundry is to offer a good service at competitive prices and not to tie up money in areas that the customer does not pay for.

Particularly critical here is the subsidization of investments by the state. A subsidy is often granted that is just large enough to enable the investment to be financed externally. This means that the state de facto assumes the equity for the loan. However, the repayments still tie up the company's cash flow and this appears as a liability in the bank's credit rating.


  1. The prices for natural gas and electricity will fluctuate more in the coming years. Simply buying from the spot market must be reconsidered and replaced with a structured approach if necessary.
  2. In most cases, energy is a B issue. Market success, associates and textile purchasing are more important in most cases. Therefore, delegate the topic of energy to someone in the company who will make it her/his A topic.
  3. Beware of overinvestment in energy! Question: "What is the customer paying for?"
  4. Critically analyze anything with a payback period of more than 3-5 years.
  5. An analysis of the current situation and the introduction of energy management makes sense and pays off.
  6. Daily or, even better, real-time monitoring is a good measure in itself, as it gives the issue importance.
  7. Arrange a free consultation. An outside perspective in this area is always valuable.


Read More