If I told you that one of your utility systems was operating at 10-15% efficiency, you’d probably assume I was exaggerating. But that’s the reality for compressed air in many Australian manufacturing facilities. For every dollar of electricity you put into your compressor, only 10-15 cents of useful work comes out at the point of use. The rest is lost to heat, friction, leaks, pressure drops, and artificial demand.

Compressed air is sometimes called the fourth utility after electricity, gas, and water. It’s also, per unit of energy delivered, by far the most expensive. Generating one kilowatt of compressed air energy costs roughly 7-8 times more than delivering one kilowatt of electrical energy directly. Yet most manufacturers treat their compressed air system as an afterthought — something that just needs to keep running.

Here’s where the money is hiding.

Leaks: The Silent Budget Drain

The Department of Climate Change, Energy, the Environment and Water estimates that the average industrial compressed air system loses 20-30% of its generated air to leaks. In poorly maintained systems, it can exceed 40%.

A single 3mm leak in a system running at 700kPa wastes approximately $2,500-3,000 per year in electricity costs at current Australian industrial electricity rates. Most plants have dozens of leaks.

Finding them isn’t hard. An ultrasonic leak detector — equipment you can buy for $1,000-2,000 or hire from most industrial suppliers — lets you systematically survey your distribution system. Leaks are usually at fittings, connections, hoses, valves, and condensate drains. They make no audible noise in a noisy factory, but the ultrasonic detector picks them up clearly.

The fix is usually simple: tighten a fitting, replace a degraded hose, fix a stuck condensate drain. The cost of repair is almost always trivial compared to the ongoing energy cost of the leak.

Practical step: Schedule a leak audit. Tag every leak found, record the estimated size, prioritise by severity, and fix them systematically. Then repeat the audit quarterly. Leaks recur as equipment ages, hoses degrade, and fittings are disturbed during maintenance.

Pressure: More Isn’t Better

There’s a persistent belief in manufacturing that running higher pressure is better — it ensures every tool and actuator gets enough air. This is expensive thinking.

For every 15kPa (roughly 2 PSI) you increase system pressure above what’s actually needed, your compressor uses approximately 1% more energy. If your tools and equipment need 600kPa at the point of use but you’re running your compressor at 800kPa to compensate for pressure drops in the distribution system, you’re spending roughly 13% more on compressed air than necessary.

The right approach is to fix the distribution problems (undersized piping, restrictions, long runs) so you can lower the system pressure to match actual demand. Most plants can safely reduce header pressure by 50-100kPa once the distribution inefficiencies are addressed.

Pressure regulators at point of use are critical here. Each machine or workstation should have its own regulator set to the minimum pressure that equipment actually needs. A blow gun doesn’t need 700kPa. A pneumatic cylinder might only need 400kPa. Regulating at the point of use prevents over-pressurising equipment that doesn’t need it.

Compressor Sizing and Loading

Many plants are running oversized compressors that spend most of their time in unloaded or modulating mode. An unloaded compressor still draws 25-30% of its full-load power while producing zero air. If your compressor cycles between loaded and unloaded every few minutes, you’re paying for that 25-30% power draw during every unloaded period.

Variable Speed Drive (VSD) compressors address this by adjusting motor speed to match demand. A VSD compressor producing 50% of its rated output uses roughly 50% of its full-load power, rather than the 70%+ a fixed-speed compressor uses at the same output (through load/unload cycling).

The payback on replacing an older fixed-speed compressor with a VSD unit is typically 2-3 years at current electricity prices. For a plant running two or three shifts, it can be under 18 months.

But don’t just buy a VSD and call it done. If your system has massive leaks and artificial demand, you’ll be efficiently generating air that’s wasted. Fix the demand side first, then right-size the supply.

Heat Recovery: The Overlooked Opportunity

Roughly 90% of the electrical energy consumed by a compressor is converted to heat. Most plants vent this heat to the atmosphere through the compressor’s aftercooler and cooling system. That’s like throwing away 90 cents of every dollar you spend on compressed air.

Heat recovery systems capture this waste heat and use it for space heating, process heating, or pre-heating boiler feedwater. A 75kW compressor running at 80% load generates roughly 55kW of recoverable heat — enough to heat a substantial warehouse space in winter or provide pre-heated water for cleaning processes.

The payback depends on what you’re currently spending on heating. For plants that use gas or electric heating during winter, capturing compressor waste heat is often the single highest-ROI energy project available. Payback periods of 12-18 months are common.

A Systematic Approach

Here’s the order I’d recommend tackling compressed air efficiency, based on cost-effectiveness.

1. Leak audit and repair. Lowest cost, highest immediate return. Do this first, do it quarterly.
2. Reduce system pressure. Costs almost nothing but saves 5-15% on compressor energy.
3. Install point-of-use regulators. Modest cost, prevents unnecessary air consumption.
4. Evaluate compressor sizing and VSD upgrade. Higher capital cost but substantial ongoing savings.
5. Heat recovery. Depends on your heating needs but can be highly cost-effective.

Each of these steps is independent — you don’t need to do them all at once. But together, they can reduce compressed air energy costs by 30-50% in a typical plant. On a compressed air electricity bill of $80,000-150,000 per year (which is common for a medium-sized manufacturing facility), that’s $24,000-75,000 in annual savings.

Not bad for a system most people ignore.