14 simple ways businesses can cut energy costs
Most businesses are still paying too much in power costs to keep their offices, retail premises, factories and warehouses running, energy experts say. But with a few simple changes, they should be able to cut their bills dramatically.
“The cheapest form of energy is the energy you don’t use,” said Holly Taylor, head of projects at the Energy Efficiency Council, a not-for-profit aimed at building a market for energy management products and services. “It’s a simple strategy but very effective.”
At Energy Action, a technology company that highlights energy usage inefficiencies for their customers and encourages competition between providers for them, head of business services Tim Smith agrees. “At a very basic level, it’s more than just the energy that you use,” he said. “It’s also about understanding what your service provider is charging you.”
Steelmaker BlueScope, for instance, has focused on energy efficiency together with productivity improvements and, as well as reducing bills, has reduced its emissions in Australia by around 40 per cent since 2005.
“We’ve been very proactive with energy issues,” says Bridgette Carter, energy sourcing and utilisation manager for BlueScope Steel and deputy chair of the Energy Users Association of Australia. The cost of electricity rocketed back in 2016-2017 and became important for us as a business.”
Now they’ve all revealed the secret to cutting costs – without cutting corners.
1. Measure and reduce
Do more with less. “Measure your energy usage, look for patterns and make sure you’re using your equipment, lighting, and anything else that’s plugged in and whirring only when you need to,” says Bruce Macfarlane, non-executive director of Energy Action.
2. Be smart about when you contract
Buy your energy during quiet contracting times. Retailers are busy during peak contracting times – financial year end and late calendar year – so they might not give you the best price.
3. Don’t leave contracting until the last minute
Last-minute pricing is never cheap. The same applies to your energy contract. Get your contracts under control early and arrange your buying well before your existing contracts end.
4. Upgrade your equipment
It can be a false economy to keep going with the same old equipment that can suck up so much more energy than the newer versions, says Holly Taylor of the Energy Efficiency Council. Change old lights to LEDs or upgrade manufacturing plant so machinery works more efficiently. “Doing this can cut costs by up to 50 per cent,” she says.
5. Push as many changes as you can through the board or management
You might start with a few solar panels on the roof, but when you can demonstrate savings, it’s likely that everyone will be much happier about taking more dramatic action.
6. Look for opportunities to recycle
BlueScope produced gas through one of their processes, so came up with a project to recondition a steam alternator to soak up some of the gas that could be used as a waste process gas and generate electricity. Speak to workers on the coalface, advises BlueScope’s Bridgette Carter, as they may have very good ideas.
7. Ask for advice from your peers
Don’t be afraid to reach out to others in your industry to see what they’ve done and how it’s helped them, recommends Taylor. “Businesses are generally happy to talk about climate leadership.”
8. Get auction competition
Energy Action, for example, runs Australia’s biggest business energy-buying service. Using their reverse auction, which makes it easy for retailers to price the demand, customers, on average, pay 20 per cent less for their energy than the first bid offered, says Bruce Macfarlane.
9. Understand your model
Often, people compare the deals from different providers but don’t realise they can be comparing apples with oranges, says Tim Ellis. “Some may be charging upfront costs, or billing ongoing energy use. So, understand how the companies are getting paid.”
10. Take a good, hard look at your bill
Energy retailers have had 25 years to make your bill easy to pay but hard to understand. The total amount due is on the front page in a really big font. “Charges are hidden in the back pages using industry codes, which are often confusing,” says Macfarlane. “Energy Action can check every element of your energy bill, so you don’t have to, and will contact a retailer if there’s any over-charging to have the excess refunded.”
11. Check your network tariff
This makes up 50 per cent of the most bills. “But you’ll often have to know the da Vinci Code to understand all the charges,” says Tim Ellis.
12. Get a handle on your data
It’s only if you gather data that you’ll know where you can save energy, and money. Carter says BlueScope invested in tools to log energy use in all their processes, and imposed targets on every part of the system.
13. Invest in renewables
You might not be able to generate all your power with renewables, but it will certainly help. “We looked at the opportunities in the renewable space,” says Carter. “We wanted to do something meaningful and help with costs.”
14. Find out about government incentives
Various levels of government offer a number of tax incentives or subsidies for companies upgrading their business equipment to reduce energy use or cut emissions.
