Industrial energy audits are missing big savings, McKinsey warns

Expertise-led transformations can improve energy productivity up to 40% and lift margins by 12 points.

Industrial companies could save more energy by moving beyond traditional audits that often result in small improvements, according to a March 2026 report by McKinsey & Company.

From ineffective audits to energy excellence, authored by Ken Somers and Przemyslaw Leszczynski, says that these audits leave substantial opportunities untapped.

Energy accounts for a significant share of input costs in manufacturing with up to 40% for cement, 30% for many chemicals, and 10% to 20% for paper, steel, and food production.

Rising prices are intensifying cost pressure with electricity costs for large industrial consumers in the European Union, for example, increasing 86% from 2020 to 2025, according to the report.

Traditional audits typically identify savings in the single-digit percentage range.

McKinsey found that deeper, expertise-led energy transformations can improve energy productivity by 20% to 40%, which could translate into four to eight percentage points of margin improvement for businesses where energy makes up 20% of costs.

For cement and chemical companies, the impact on operating margins can reach up to 12 percentage points.

The report points out that limited audit results are often caused by reliance on standard lever lists, which have mostly been exhausted, a focus on individual equipment rather than system-level drivers, and underinvestment in people and management systems.

Companies that invest in employee capabilities, normalised KPIs, and structured management attention can achieve up to 5% improvement in the first year, with ongoing gains of around 1% annually.

McKinsey highlights that assessing energy use at the system and site level, applying advanced tools such as heat integration optimization, shutdown/start-up analysis, and digital twins, and engaging employees to embed energy management into daily routines can deliver substantial savings.

For instance, a European pulp and paper company implementing these approaches saved $6.89 (€6m) in annual energy costs, the report found.

The report concludes that industrial companies adopting a more comprehensive approach to energy management can capture two to three times the savings identified by traditional audits whilst supporting both profitability and emissions reduction.