Publication: How to save money and reduce business electricity costs
This paper on how to reduce electricity costs is intended to help corporate and facility building managers understand the steps involved in saving money on energy bills. This paper deals with options to optimise and minimise charges and does not relate to reducing energy usage.
How to reduce business electricity costs
1. Conduct an energy audit
An energy audit is the ultimate tool to reduce energy costs:
- Identify cost effective opportunities to reduce energy usage.
- Conduct a network tariff analysis to identify options to reduce network charges.
- Asses retail, environmental, metering and other electricity charges.
- Identify options to reduce peak demand and reduce network capacity costs.
- Identify options to improve energy management practises
2. Conduct a network tariff analysis
- Your site may wish to conduct a network tariff analysis without conducting a full energy audit.
- A network tariff analysis determines if your site is on the most appropriate and cost-effective network tariff.
- Did you know in some areas such as regional NSW sites may have a choice of a range of network tariffs, the most cost-effective tariff is dependent on peak, shoulder and off peak usage, peak demand and seasonal factors.
- A network tariff analysis will identify the time of use of network consumption charges and may identify options to reduce costs by improved equipment or process scheduling.
- Network demand and capacity charges can account for 10% to 25% of total electricity costs. A network tariff analysis will assess options to reduce these costs. Your site may be charged based on your peak demand in a monthly period, your peak capacity over a 12-month period, you may be charged based on all-time or peak period demand, you may be charged on either your kW or kVA demand and in some areas there are cost-incentives to improve power factor.
3. Find the lowest retail rates
- Seek independent advice from an energy consultant when renewing or moving onto a new electricity contract.
- Don’t use an energy broker with hidden metering or data service charges.
- We offer energy procurement services to help your site tender for the best electricity rates.
- Remember, as discussed in our paper on understanding your electricity bill, that retail charges may only account for 20% to 40% of total electricity costs. Therefore minimising retail charges through competitive tendering is only a small piece of the puzzle towards minimising energy costs.
4. Don’t forget about other electricity charges
- Metering charges, environmental charges and the carbon tax can all account for a significant portion of electricity costs. While most sites asses energy retailers based on the retail (c/kWh) rates they often forget about the other charges. Minimising and optimising these additional charges can present a quick and easy cost savings.
5. Conduct regular energy reporting
Ongoing energy reporting is a critical part of any energy management program and vital to achieving and maintaining long-term energy cost savings. Energy reports should:
- Check you are being billed correctly. We often identify billing errors from energy retailers.
- Identify any variances in energy usage and peak demand through an interval data analysis.
- Assess retail, environmental and network charges vary annually, and determine what impact this has on energy costs and whether it presents an opportunity for savings.
6. For small business there are even more options
- If you have a small site, or a second electricity account at a larger site, that is categorised as ‘small business customers’ there are even more issues to consider to reduce electricity costs (in NSW IPART defines a small business customer as one consuming < 100 MWh pa).
- Should your site be on a time of use or an all-time tariff? If you site has a steady 24/7 load, or uses more electricity over night than a time of use tariff can achieve savings >20%.
- It is important to check the account is assigned the correct default regulated tariff. This alone can present a good opportunity for easy cost savings.
- Shop around for the best small market contract. Don’t buy into the ‘fixed rate’, or ‘rate lock’ contracts. Experts agree that electricity prices in NSW should remain relatively stable over the next few years. Look for a contract that offers a high % discount off the default rate.
Reducing electricity costs and saving money on your energy bills can be complicated, however through careful consideration significant cost savings can be achieved. If you would like more information or help to reduce your business electricity costs please contact us.
Contact us now to reduce electricity costs
We can show you how to reduce and manage electricity costs.