Things to know about managing energy costs

By Danny Thai, Clean Energy Entrepreneur and Founder of Solar-e & Angela Haynes, President of the Cumberland Business Chamber

Like taxes, energy can be complicated and elicit feelings of disempowerment.  Energy prices are a significant area of concern for Western Sydney industrial businesses.  Here we unlock information that is not readily known by those managing energy costs. 

There is ‘noise’ in the energy industry: energy bills are complicated and difficult to understand, there are a myriad of solutions and providers, together with skepticism as to whether innovative solutions such as solar photovoltaic cells (Solar PV) deliver the intended savings.

1. Price comparison services may be free but are they independent?

Energy bills are designed in a way that makes it very hard for businesses to compare energy options, especially for large energy users or if under commercial & industrial contracts. We frequently hear from businesses that they do not have the expertise, time or resources to explore and compare options. Enter the energy brokers who can do the ‘heavy lifting’ required to canvas the market, source a better deal and handle the paperwork of changing providers or renegotiating contracts.  The services are predominantly online, and the norm is for them to be free for business. 

“There are useful free services that enhance competition in the sector and in principle this is good for business. CBC recommends businesses do some homework to understand how the service is funded and then form a view on whether the advice will be suitably independent.  Information about sources of revenue can usually be found on the energy broker’s website.”  – Angela Haynes, President of the Cumberland Business Chamber

For instance, Canstar Blue generates its revenue in three ways: license fees from providers marketing their ‘Canstar Awards’; advertising on its website; and sponsorship and referral fees from product providers.  Australian Business Energy (ABE) performs a comparison and switching service and is backed by the not for profit, NSW Business Chamber.  ABE engages a subcontractor to deliver services on its behalf and the subcontractor receives introductory fees from energy retailers and then shares a portion of these with Australian Business Energy.   So no, free does not necessarily mean independent.

2. Take the guess work out of reducing energy usage

The low hanging fruit of reducing usage and improving energy efficiency can be impactful and yield tangible returns.  This may begin with behavioral change such as switching things off when not in use, upgrading to more efficient equipment (lights, fans, machinery etc) and using automation such as sensors and timers. Innovation has improved accessibility and affordability of a range of solutions and energy companies have invested in efficiencies with numerous proofs of concept starting to be seen around effective use of emerging technologies.

Sources of advice:

The Business Energy Advice Program (BEAP) is funded by the Department of Environment and Energy and aims to help small businesses (between 6 to 20 employees or fewer if adversely affected by drought) to understand their energy saving opportunities, choose the best plan for their business and receive tailored advice on energy efficiency opportunities best suited to their industry.  Step one is to receive a personalized energy consultation which in NSW is delivered by the NSW Business Chamber

Larger businesses can look to engage an Energy Consultant who can work closely with the business to assess options for technology, energy strategy and operational improvement. There are a variety of consultants available as according to Energy Magazine, Energy is the largest consulting sub-market in Australia’s energy and resources sector and was valued at $US465.3m in 2017.

3. Get to know the NSW Energy Savings Scheme (ESS) that financially incentivises business and households to invest in energy saving projects.

The ESS seeks to reduce energy consumption by creating ‘tradeable’ financial incentives called Energy Saving Certificates (ESC’s) earned by installing, improving or replacing energy savings equipment.   

The ESC Lifecycle:

  1. Households and businesses invest in better technology to reduce their energy use
  2. Energy savings certificates are generated through the reduction in energy use
  3. Liable parties such as electricity retailers buy energy savings certificates
  4. The value of energy savings certificates is returned to the businesses who generate them.

When businesses invest in reducing energy use, an Accredited Certificate Provider may be able to create energy savings certificates from each notional MWh of energy the investment saves. Electricity retailers, who are mandatory scheme participants, then buy the energy savings certificates to meet their own legislated targets, as required by law.  ESC’s are the ‘currency’ of the scheme, rather than it being a rebate scheme

4. Consider one of the Energy Saver Training courses – many are free!

The program and some courses are funded by the NSW Department of Environment and Heritage. Here’s the course catalogue:

  • Business Case: Improve the success-rate of your business case proposals for energy efficiency projects
  • Energy Management: Fundamentals and advanced energy management
  • Lighting: Learn how to upgrade your business’s lighting
  • Refrigeration – Identify opportunities to optimise the energy efficiency of commercial refrigeration systems (Free 15-minute online module)
  • Cogeneration – Assess the feasibility of a cogeneration system for your business
  • Voltage optimisation – Learn the basics of voltage optimisation and decide it it’s right for your site (Free 20-minute online module)
  • Energy Saving Scheme – Save money by learning if your project is eligible for funding under the ESS and how to access it (Free 20-minute online module)
  • Heating, ventilation and air conditioning – Maintaining and optimising your HVAC system
  • Battery storage: Learn about battery storage technology and whether it is right for your business
  • Energy management for facility managers – Innovation in energy management and activities to implement in your organisation
  • Basics of energy management for SME’s
  • Energy efficiency training for registered clubs and aged care facilities

5. Read this before you jump into a Solar PV system  

Do they work, will they save money? Yes, if they are designed and installed correctly. Businesses typically operate when the sun is shining, making them a good natural fit for solar.

However, the tremendous growth in the solar industry has led to many installers working on projects in which they have limited relevant experience, particularly with respect to commercial solar systems. This can result in a system, which may have cost tens or hundreds of thousands of dollars, not performing to expectations or in some cases not working at all.

The capability and reputation of the installer is critical.  Important considerations are to ensure the installer is certified with the Clean Energy Council and that they have delivered to a high standard on similar commercial projects.  Evidence of good customer feedback (google their business name) should also be sought.  Alternatively, you can save time and engage an expert to help you with the process.