How businesses can take the edge off their energy bills
The dramatic increase in energy prices in recent months has brought sharp focus to the need for businesses to cut their usage – fast.
The biggest changes generally require a significant up-front outlay – something that may take years to see a return on. Against a backdrop of rising costs across-the-board, and growing uncertainty about the direction of the global economy, that kind of spend may be particularly hard to justify at the moment.
However there are many ways that firms can put a dent in their energy bills today – with little or no upfront expense. It may not be enough to completely undo the effect of rising energy costs, but at the very least it will help to significantly soften their impact.
“Our key message to business is that you can use less energy without compromising on their outputs,” said Julie Farrelly, programme executive on the SME team of the Sustainable Energy Authority of Ireland.
“We’re not asking businesses to not produce as much, or not deliver on their service – we have things we can do to really reduce energy costs – that cost little to no money.”
Perhaps the most significant change a business can make also happens to be the one that requires the least effort.
Much like households, changing provider – or even tariff – can make a significant dent in the amount a business is paying for its energy needs.
But unlike households, making a comparison can be tricky – because the meter type a business uses can influence the amount they pay.
“If you look for a business price online, you’d think you’d be on Bonkers or one of the comparison sites,” said Aaron McKittrick, founder of energy consultancy firm Green Energy Partners.
“None of them show prices – it’s very much down to the specific meter type that the business is using.”
Other factors, including extra charges, can further muddy the water – for example fees relating to the integrated single energy market that can appear on a bill.
Employing the services of an energy broker can be an easy way to cut through the confusion, as they will be able to see if your current rate could be improved upon.
“We can turn around to a customer and say, at no cost to them, we’ll compare the market for them and come back with a rate that suits their meter but also suits their consumption through the year,” he said.
A change to a greener provider could also reduce costs beyond the basic tariff that’s charged.
That’s because renewable energy is entitled to relief from Electricity Tax, which is otherwise charged at €1 per megawatt hour.
“It could be a couple of hundred euro a year for most businesses,” said Aaron.
“There are a lot of suppliers out there that are saying they’re carbon zero but they’re just offsetting – so they’re still charged that.”
Overall, the key is to keep your tariff and provider under regular review, as the end of an introductory offer, new charges or a change in the way you do business can quickly leave you paying more than you need to.
A closer look
Getting the most out of any provider change may require a slightly deeper look at the business, however.
That’s because the way a company works will dictate the most beneficial tariff.
For example some tariffs offer a reduced rate overnight, but in return charge a higher rate during the day. That might be of benefit to a business that relies on 24-hour refrigeration – but it would be counter -productive for a regular office.
“Or it could be a case that the business is seasonal, and they’d be better taking a slightly higher unit rate to get a much reduced standing charge,” said Aaron. “That could have an impact on a business of up to 40% of their yearly cost.”
Taking a deeper look at the way a businesses expends energy could have broader dividends in the hunt to cut costs, though.
“An energy audit is going to look at what your business is currently using and identify the best measures to take,” said Julie. “Every business is completely different – it really needs to be bespoke for them.”
An audit usually takes half a day, up to two days, with the resulting report setting out clear details of how a business uses energy and where the biggest savings can be made.
That will help inform any bigger changes a business wants to make – especially ones that require significant investment.
“We get a lot of businesses coming in looking to install [solar] PV, and that’s great but it’s not the first step they need to be taking,” said Julie. “It’s so important we reduce the amount of energy we’re using first before we start looking into renewables.”
She said that in some cases a business fixated on solar panels may discover that most of their energy budget goes towards fueling its fleet of cars – and so an investment in electrification would instead be the smarter move.
The SEAI currently offers SMEs a €2,000 grant towards an energy audit – which should go most or all of the way towards covering its cost.
Measure before you cut
Paying closer attention to the way you use energy can also unearth some hidden gains.
Checking to see if you’re over (or under) doing it on your settings can be a good place to start.
“If you reduce the temperature set points on your heating and increase the temperatures on your cooling and refrigeration demands,” said Julie. “Every time you turn the heating up by 1 degree, you increase your heating bill by 8% – so it costs a lot to get that little bit of cosiness.”
Keeping a closer eye on other appliances is relatively easy too – with cheap energy monitors available to those looking to hone in on some of the big energy drains within a premises.
“If they think they have everything turned off at night and they stick the monitor on and realise they’ve burned 5kW, then they can go and see what’s still on,” said Aaron. “That could be as much as €700 a year, just by identifying that something has been left on overnight.”
Of course it may not simply be a case of choosing between a machine being on or off.
Monitors can also help to identify if a piece of equipment is shorting – and drawing more energy as a result. In those cases the cost of a repair may quickly be recouped through the energy saved.
So too could finding out if an offending device has an eco-mode or, if it’s reaching the end of its life, whether a newer model will be more efficient.
“If you look at something like a photocopier, you could save 90% of its typical use just by putting it into an eco setting mode,” said Julie. “And if you’re purchasing new equipment – buy the one with the most energy efficient label.
“You might be looking at one that’s A-rated but is €150 more than a C-rated one, but actually that C-rated one is going to cost you so much more money in the long-run.”
It’s not just equipment that may be in need for an upgrade – the mindset of staff may need a refresh too.
Some of that involves a back-to-basics approach – like encouraging the switching off devices and lighting when not in use.
“46% of the electricity used in business is used outside of work hours, which is a total waste of energy and money,” said Julie. “Why pay for something that you’re not using?”
Changing the mindset around heating, light and ventilation can also have a big impact on bills.
“Open windows instead of turning on the air conditioning and open blinds to let the daylight in instead of turning on the lights,” said Julie. “We’re doing a lot of Zoom calls at our desk and in the afternoon the sunlight could be coming in on top of you and blinding you – but instead of closing the blinds and turning the light on, consider just moving desk or moving your angle.”
These are relatively simple changes – but may be hard to ingrain into staff behaviour. Julie says one way to encourage a shift is to put an individual in charge of energy saving efforts – akin to a health and safety officer – who can take a lead on embedding a more efficient culture.
But there are some less obvious changes in behaviour that may also result in savings, depending on the business.
Shifting energy-heavy tasks to the small hours could allow firms to save through aforementioned night rates. Meanwhile, finding other ways to flatten out your energy draw can also have a surprising impact on costs.
“I was out with a bakery recently… he has three ovens and would go in in the morning and turn them all on at once,” said Aaron. “Because that’s such a big draw on his electricity all at one go, his maximum input capacity is much higher than it should be.
“But he could save himself €1,000 a year just by slightly changing his work practice and turning on the ovens one at a time.”
Save before you pay
Significant savings can be found through these simple changes – but ultimately those seeking a dramatic cut in energy usage will end up facing big investment decisions.
But that doesn’t always have to go hand-in-hand with a significant up-front cost.
That’s because many firms now offer to install what would otherwise be expensive energy upgrades for “free” – with the cost being repaid through the savings they create.
One example of that is ‘Free to Roof’ solar. With this, a solar system is installed at no cost, leading to savings on an energy bill. Some of the amount saved then goes towards the cost of the system, but it should still result in an overall saving for the business.
This means firms can see the immediate benefits of a solar system even if they don’t have thousands of euro to hand.
“It might be a €50,000 system, which could generate 40,000 kWh over the course of a year,” said Aaron.
Similar arrangements are also available in areas like lighting, where efficient systems are installed with some of the savings used to cover the cost.
These types of systems often operate under a service model, which essentially means you are paying to lease the equipment and have it maintained.
An alternative would be to finance the installation of a system directly, and structure the repayments to ensure the cost is less than the amount you’re saving as a result.
“We’ll work it out for them where, if they’re paying €1,000 on their electricity bills at the moment and we can save them €400 of that, that’s essentially what they’ll pay back for their solar system,” said Aaron.
“You might be talking 3% finance but they own the system – and every single kilowatt hour that that generates after roughly the fifth year is theirs.”
New legislation also means that businesses could sell some of the energy generated back to the grid if they didn’t have need for it themselves.