Energy efficiency measures can improve how firms use labour, equipment and materials, leading to gains that go beyond reduced energy use. These improvements are often driven by more efficient, precise and optimised processes. By reducing losses – such as excess heat, inefficient combustion or friction – equipment operates more smoothly and reliably. Electrified processes can further enhance efficiency by reducing the number of moving parts and points of failure.

This improved performance leads directly to higher productivity. More efficient production lines enable better capacity utilisation, greater process control and less labour-intensive operations. For example, a more efficient knitting machine, as introduced by a textile manufacturer in Scotland, can replace about 14 conventional looms, cutting energy costs by about 90% and enabling higher output with lower space requirements. Similarly, at a food and consumer goods manufacturing facility in Brazil, energy efficiency improvements – such as reducing waste and better aligning production processes – have increased capacity by 20% while lowering energy use.

Evidence from a study of more than 1 000 energy efficiency measures in SMEs in the United States confirms these findings. On average, each dollar in energy savings is associated with an additional 13 cents in productivity gains, with some categories reaching up to 30 cents per dollar saved.

More precise and efficient processes designed to reduce energy loss often also limit wear and tear on equipment. As a result, energy efficiency measures can extend equipment lifetimes and reduce maintenance needs.

In practice, the effect can be significant. More efficient and electrified technologies typically have fewer moving parts and operate under more stable conditions, leading to lower failure rates and reduced servicing requirements. As a result, maintenance costs can fall by 25% to 80%, depending on the technology. For example, LEDs have longer lifetimes and require less frequent replacement, which can be particularly valuable in industrial settings where access is more complex and costly.

Further gains can be seen in industrial processes. In food processing, for example, a high-efficiency centrifugal compressor has been shown to reduce energy consumption by more than 40% while cutting maintenance costs by 85%. Similarly, the use of variable speed drive (VSD) motors in heating, ventilation and air conditioning (HVAC) systems under high-temperature conditions in a plant in Saudi Arabia reduced energy consumption by 30% and maintenance costs by 20%.

Cross-sector analysis shows these patterns are consistent across a wide range of technologies, from heat pumps and industrial motors to electric vehicles.

Energy efficiency improvements in industrial processes often include improved precision and optimisation that enable a more efficient use of resources. Energy savings are therefore often accompanied by reductions in material and water use, and a decreased production of waste, which significantly increases their overall economic value, particularly where measures reshape production processes.

In manufacturing, for example, greater precision in cutting or shaping can reduce margins and minimise offcuts, lowering energy use and material inputs. A wood panel producer in Türkiye illustrates this: by introducing an advanced measuring and material distribution system, the company reduced energy use in cutting and grinding while decreasing material inputs, saving around USD 6 million in a single year.

The link between energy and water efficiency is similarly strong. Processes operating at lower temperatures, or reusing waste heat, reduce both energy demand and process as well as cooling water needs. In the United Kingdom, a beverage producer implemented a closed-loop heat recovery system across brewing and distilling, enabling around 90% of surplus steam heat to be reused, reducing energy costs while saving approximately 2 million litres of water annually.

Evidence from an assessment of more than a thousand energy efficiency measures in SMEs confirms these benefits at scale. Reductions in water and material use as well as waste added, on average, 90 cents for every dollar of energy savings, with some sectors, such as wood products and paper, seeing total savings double.