Here’s an uncomfortable truth for small manufacturers: you’re probably wasting 15-20% of your electricity, and you don’t even know it. Not because you’re doing anything wrong, but because you can’t manage what you can’t measure.

Most small manufacturing operations get a monthly power bill, wince at the number, and move on. The bill tells you how much energy you used in total, but it tells you nothing about where that energy went. Was it the compressors? The CNC machines? The lights in the warehouse that nobody turns off on weekends? The aging dust extraction system that runs 24/7 even though production only operates eight hours a day?

Without energy monitoring, you’re guessing. And guessing is expensive.

What Energy Monitoring Actually Involves

At its simplest, energy monitoring means installing sensors on your electrical circuits to measure how much power each area or piece of equipment draws, and when.

Modern monitoring systems use current transformers (CTs) — small clamp-on sensors that go around electrical cables — connected to a data logger that sends readings to a cloud dashboard. You don’t need to modify your existing wiring, and installation typically takes a day for a small facility.

The data you get back is revealing. Instead of one monthly number, you see power consumption by circuit, by time of day, by day of week. You can see exactly what happens when you start up the compressor, when the CNC machine is cutting versus idling, and how much energy your facility draws overnight when nobody’s there.

That overnight number, by the way, is usually the first shock. Most small manufacturers discover that their facility draws 30-40% of its peak load even when completely idle. That’s equipment sitting in standby, compressors cycling to maintain pressure in leaking systems, HVAC running on default schedules, and lights left on.

The Low-Cost Starting Point

You don’t need to spend a fortune to start monitoring. Here’s a practical approach for a facility with a $50,000-$100,000 annual power bill.

Step 1: Main meter monitoring ($500-$1,500). A single monitoring device on your main switchboard gives you total facility consumption data at 15-minute intervals. This alone tells you your baseline, your peak demand, your overnight load, and your consumption patterns. Fronius and Schneider Electric both make affordable options suitable for industrial environments.

Step 2: Circuit-level monitoring ($2,000-$5,000). CTs on your major circuits — compressors, production equipment, HVAC, lighting — break down consumption by area. This tells you which equipment is driving your costs and when.

Step 3: Equipment-level monitoring ($5,000-$15,000). Individual monitoring on high-consumption equipment gives you the granular data needed to optimise operating schedules, identify degrading equipment, and calculate the ROI of upgrades.

Most small manufacturers should start at step 1 and move to step 2 within a few months. Step 3 is valuable but only necessary for the biggest energy consumers.

Where the Savings Come From

Based on what I’ve seen across dozens of small manufacturing facilities, here’s where the savings typically hide:

Compressed air leaks (3-5% of total bill). Compressed air systems are one of the most expensive forms of energy in a factory, and leaks are endemic. A monitoring system shows you when compressors are cycling excessively, which usually indicates leaks. One manufacturer found their compressor was running 80% of the time during production hours, when modelling suggested it should run 55%. The difference was leaks — some audible, some not. Fixing them cut their compressed air energy cost by nearly 40%.

Equipment idling (4-8% of total bill). CNC machines, welders, and other production equipment often draw significant power when sitting idle between jobs. Monitoring shows you exactly how much time equipment spends idling versus productive, and the energy cost of that idle time. Simple solutions — automated standby modes, operator training, better job scheduling — can reduce idle energy waste substantially.

HVAC scheduling (3-5% of total bill). Many small factories run HVAC systems on simple timer schedules that don’t match actual occupancy or production patterns. Monitoring reveals when you’re heating or cooling an empty building. Adjusting schedules and adding occupancy-based controls is straightforward and pays for itself quickly.

Overnight and weekend base load (2-4% of total bill). The “phantom load” — equipment drawing power when nobody’s working — is almost always higher than expected. Monitoring identifies every piece of equipment that stays on unnecessarily. The Australian government’s energy.gov.au site has practical guides on reducing standby power in commercial settings.

Peak demand charges (2-5% of total bill). Most commercial electricity contracts include demand charges based on your peak consumption. If you can reduce peak demand by staggering equipment start-ups or shifting non-critical loads to off-peak periods, the savings on demand charges alone can be significant.

The Real-World Numbers

Let me walk through a real example. A sheet metal fabrication shop in outer Melbourne was paying around $85,000 per year for electricity. They installed circuit-level monitoring for about $3,500.

Within the first month, the data showed:

• The dust extraction system was running 24/7 despite only being needed during production hours — $6,800 per year in wasted energy
• Two CNC lasers were drawing 2.1 kW each in standby mode every night and weekend — $3,200 per year
• The compressed air system had a leak rate that cost approximately $4,500 per year in excess compressor cycling
• The office HVAC was cooling an empty building from 4pm Friday to 7am Monday — $2,100 per year

Total identified waste: roughly $16,600 per year, or about 19.5% of their total electricity bill. They fixed the dust extraction timer and the HVAC schedule on day one (cost: nothing). They’re addressing the air leaks progressively. The CNC standby power is being tackled with smart power strips.

First-year savings after deducting the monitoring system cost: approximately $13,000. That’s a payback period of about three months.

Getting Started

If you’re a small manufacturer spending more than $30,000 per year on electricity, energy monitoring is almost certainly worth it. The ROI is fast, the installation is non-disruptive, and the data often reveals waste you genuinely didn’t know existed.

Start with a main-meter monitor, establish your baseline, and look at your overnight load. That single number — how much power your facility draws when nobody’s there — will tell you immediately whether there’s low-hanging fruit worth chasing.

You don’t need to hire an energy consultant or buy an expensive industrial monitoring platform. A basic system, some curiosity, and a willingness to act on the data is enough to make a real dent in your power bills.