Are you keen for your small, medium or large business to manage your energy use and cut costs? We’ve got the top 10 tips from the simple to the more sophisticated will help you out.
10 tips for businesses to cut energy costs
Who manages energy in your business?
Choose someone to be your energy champion. This person will track energy use, review bills and put energy-saving measures in place. They can do this in consultation with management and independent experts.
Check out the trends and technology driving the energy transformation and how you and other business leaders can use them to reduce energy costs. The trends come from Navigating a dynamic energy landscape from the Energy Efficiency Council, supported by the Victorian Government.
Keep on top of the energy market
Regularly review your contract and invoices to make sure you’re getting the best deal for your business. Consider using a broker.
Get your energy data
Get your energy data for the last 12 months from your bills or by asking your energy retailer. This will show you how much power you use and if it varies throughout the year. Use this data to create a before-and-after snapshot of your power costs after you implement savings.
Compare energy offers
Victorian Energy Compare can help you find the best energy deal. You will need to be on an energy retail offer and have been at your premises for more than 12 months.
If your business spends less than $20,000 per annum you can use arrangements similar to households to get an energy contract. Each energy retailer will offer a range of contracts, each with set terms.
Want to find out more? Visit Accessing and understanding energy data
Use an energy broker
If your business spends more than $50,000 a year on power, it may pay you to call in an energy broker.
They are independent, understand commercial energy, business and market trends and can help you get the best deal. Odds are they’ll save your business more money than you can. Getting the cheapest price may be your top priority, but terms and conditions can be equally important. They should be carefully reviewed and negotiated, especially in the current volatile gas and electricity market.
Find an energy broker through word of mouth or through the Energy Efficiency Council.
Immediate steps to reduce energy use and cut costs
Obviously this depends on how you use energy and the type of equipment in your business, but these tips apply to most businesses.
Clock off and switch off
- Overnight and holiday shutdown means just that: shut down electrical appliances, lights and other equipment. If you haven’t got a system in place, develop one – and stick to it. It can be as simple as having the last person to leave turn off the lights and other equipment.
- Set computers and other equipment to automatically turn off at the end of the day. Appliances such as printers and photocopiers can often be set to ‘energy-saving’ modes.
- Install simple timers on equipment such as boiling water taps to ensure they’re off overnight and still ready to use when you arrive at work. You can even automate these processes with a building management system or equipment timers.
- Larger businesses can shut down procedures for data centres and computers, and minimise or shut down after-hours energy use of larger equipment such as boilers, chillers and air compressors.
- Remind after-hours cleaners to turn off the lights when they leave.
Service your equipment
- Regularly cleaned and serviced equipment operates better. For example, if you don’t regularly clean refrigerated display cabinets, they can use up to 10 per cent more energy.
- Make sure sensors and timers are working well.
- Set up a process to check for leaks in compressed air and steam systems.
- Conduct your own energy assessment regularly to understand where energy can be saved. Simple steps to reduce energy consumption can provide immediate cost savings.
It’s important to understand and track your energy use and costs over time
Victorian Energy Saver has information on accessing and understanding your energy data
Audit your energy use
An energy audit will identify where your business uses energy and what you can do to reduce this. An audit will recommend specific improvements including reviewing tariffs, investing in energy efficiency upgrades, and suitable renewable energy options.
Call in an energy assessor
Energy assessors will help you reduce your energy bills.
Choose an assessor that can:
- demonstrate energy auditing experience within your specific sector or industry
- provide details of their relevant expertise with appropriate qualifications and/or industry accreditation
- produce references, testimonials, and relevant case studies
- deliver energy audits to industry best practice standards (AS3598:2014)
Check out Sustainability Victoria’s list of Victoria-wide independent assessors
The custom upgrades program has a list of accredited providers who can assess whether you are eligible for energy incentives.
Word of mouth
Have you asked your friends or business colleagues about their energy use? They may know the right experts to help you. Also – check with your local council, business or industry association about specialist energy assessors who can help with your specific needs.
Sustainability Victoria has also developed a range of best practice guidelines, tools, apps and training support
You can help manage energy demand through financial incentives and by changing behaviour
On top of paying for each unit of energy used, your business may be among the many paying additional charges based on when energy is used. This can show up on your energy bills in several different ways:
- Demand charges – charges for the largest amount of power you used at any one moment in the billing period or season. These are charged per kW rather than per kWh
- Peak or Time of Use charges – charges for energy used at set times (e.g. 3 pm to 9 pm on weekdays)
- Businesses that use a large amount of energy may face higher charges during heat waves and other high demand days.
Demand management can either be using less power during peak times or switching to using your own on-site generation and battery storage energy, instead of sourcing it from the grid.
If your business is a large energy user, you could be paid for reducing your demand through the Reliability and Emergency Reserve Trader (RERT).
It is important to understand your energy usage so you can choose the best plan for your business. All businesses can develop strategies for reducing or managing energy consumption during your peak demand times.
How do I get started?
An energy assessor can check out opportunities for your business to manage demand, alongside onsite generation and retail options.
If your business is a large energy user (spending more than $50,000 a year), you can be billed for demand charges. A broker can help you understand how to reduce these charges. Check out the Energy Efficiency Council’s database of independent energy assessors
Sustainability Victoria also has a list of Victoria-wide independent assessors
Energy efficiency is one of the best ways for your businesses to reduce costs
Many Victorian businesses are saving energy by updating old appliances and equipment with new. This can be simply upgrading to more efficient lights or replacing existing equipment with energy-efficient options. In 2018, more than 17,000 businesses took part in the Victorian Energy Upgrades program and each are expected to save around $3,700 on their annual energy bills. The larger the energy user, the larger the saving.
Why you should upgrade
The Victorian Energy Upgrades program is available to every Victorian business and organisation.
It provides discounts on a wide range of energy-saving products, including lighting, heating and cooling, hot water systems, refrigerated display units, motors, and water-efficient pre-rinse spray nozzles.
These discounts are available through accredited providers across Victoria. Choose one that suits your needs, and then track your bills to see your savings.
Discounts only apply to products approved under the program that meet minimum efficiency, quality, and safety benchmarks.
Incentives are also available for businesses and organisations to invest in large, complex energy-saving projects.
Custom upgrades can be tailored for a particular site. Measure the difference in your energy use before and after the upgrade to work out the level of incentive. This can be measured in 2 ways:
- the M&V method, which determines incentives based on analysis of energy use data before and after the upgrade
- the benchmark rating method, which is based on improvements in commercial buildings' NABERS rating.
Find an accredited provider in your area.
Case studies of businesses that have undertaken upgrades through the Victorian Energy Upgrades program:
- Metcash Trading and Violet Town Bush Nursing Centre
- Best practice energy efficiency guidelines, tools, apps and training support
- If you rely on gas as a source of energy, read this case study
- Improve your business' refrigeration efficiency – video series
- Business energy efficiency fact sheets, case studies and product suppliers
- Guides and case studies for a range of business equipment and technologies
- Case studies and guides for the food and farming sector
Many businesses are implementing ‘behind the meter’ energy solutions, to produce their own energy on-site to meet some of their needs. Government incentives are available for investments in energy efficiency upgrades and for onsite renewable energy installations. The best combination is likely to be bespoke - optimising different actions depending on site and business specifics.
Your first option to generate your own energy is a rooftop or ground-mounted solar panel system.
Solar panels may work for you depending on when you use electricity and the structure of your electricity tariff. To understand if solar panels are right for your business, you'll first need to understand your energy use
Check out these useful sites
- The Clean Energy Council (CEC) has published a useful guide to installing solar panels for business
- The CEC has a list of approved solar panel retailers that use CEC-accredited designers and installers
- The CEC also has a list of accredited installers
Solar with battery storage
If your business uses more power during the day, installing solar panels could help cut power costs. If your business uses more power at night, you could install solar panels, and store the excess power in batteries. These can provide power on demand when the sun isn’t shining.
A CEC-accredited solar designer can size a solar panel and battery storage system to cover both your day-time and night-time electricity needs.
Other technology options
Generating energy onsite can also involve other technologies, including solar thermal (concentrated solar power), co-generation (combined heat and power), waste to energy and biomass (organic matter used as fuel).
The best combination of these technologies will depend on your site and energy profile, including when you use energy and what combinations of heat, gas and electricity are required.
Solutions to manage energy costs in this way are therefore often bespoke and you may need expert advice.
the Beyond Zero Emissions Electrifying Industry Report describing how businesses can make the switch to electricity from other (often more expensive and carbon intensive) fuel sources.
Distributed energy in the property sector – today’s opportunities provides useful and up to date information on clean energy technology options for different building types, locations and loads.
What options are available to help finance your energy projects?
Government incentives are available for investments in energy efficiency upgrades (through the Victorian Energy Upgrades program) and for onsite renewable energy installations (through the Clean Energy Regulator).
Different financing options are available to fund energy efficiency or renewable energy investments.
Sustainability Victoria offers a free finance facilitation service to all businesses, property owners, councils and community groups looking to invest in energy efficiency and renewable energy.
Environmental Upgrade Finance (EUF)
Owners of existing, non-residential buildings can get help financing environmental upgrades through Environmental Upgrade Finance (EUF). Under a EUF agreement, a lender provides finance to a building owner and the local council collects repayments through the rates system. The council then passes the property charge onto the lender.
Find out whether you can access EUF through your local council.
Solar leasing offers some benefits over ownership of a solar panel system, including:
- low or no up-front costs for the installation of solar panels
- no requirement for system maintenance
- immediate savings on energy bills
An alternative to solar leasing is where a provider installs and owns a renewable energy source (e.g. rooftop solar) on the site of the business. Electricity generated is supplied solely to the business at an agreed rate.
This may be sometimes referred to as a Power Purchase Agreement (PPA). Talk to your existing energy retailer and if they offer this type of product compare their offering with other retailers. You may also want to look at the Clean Energy Council’s list of approved solar retailers. You may wish to look at Power Purchase Agreements
Solar for small business
The Victorian Government is also offering rebates for small businesses to install rooftop solar panels. To find out more about the program, visit Solar Victoria.
Power purchase agreements (PPA)
Larger businesses may consider contracting their energy supply through a Power Purchase Agreement (PPA).
A PPA is a contract between two parties – one who generates electricity (the seller) and one who buys electricity (the buyer). The PPA defines the commercial terms for the sale of electricity between the two parties, including when the project will begin commercial operation, the schedule for delivery of electricity, penalties for under delivery, payment terms, and termination.
There are many forms of PPA in use today and they vary according to the needs of the buyer, seller, and intermediary (e.g. financing counterparty). Before exploring a power purchasing agreement, it is important to consider:
- interest in securing a long-term stable electricity price
- expiration date of your current energy contract
- commitment to procuring renewable energy
- size of your energy load (MWh per year)
- when you use your energy (load profile) e.g. 9am to 5pm weekdays only, evenings, weekends
- requirements at one or more sites
- ability to enter into a contract for power for a minimum of 7 or more years (noting the longer the contract, the lower the power price) or ideally from 10 to 15 years duration
The Business Renewables Centre Australia (BRC-A) is an initiative supported by the Victorian government to facilitate the aggregation of power purchasing agreements and to provide a line of sight between energy sellers and buyers. The BRC-A will also have tools and guidance for those businesses considering this.
In 2018, the City of Melbourne concluded an aggregated PPA involving 14 off-takers. Read more about the project.
Aggregated energy procurement
This is a centralised purchasing model where two or more organisations (or a third party on behalf of those organisations) join to combine their needs and leverage negotiating strength. Participating businesses share the costs of legal, accounting and procurement advisors.
Progressive energy procurement
This involves forming a framework agreement under which electricity is bought in ‘blocks’ at different times, rather than buying all electricity requirements at once at a single price. By buying blocks of electricity, a business can secure low prices as they arise in the market and avoid renewing a contract at ‘the high’ and locking in high prices. It is a variation of the standard purchasing model that spreads the timing risk, allowing the electricity buyer to benefit from ‘averaging in’ or what is also known as ‘portfolio insurance’.
Speak with a professional energy consultant to identify the best options for your business.
These steps may not be relevant to all businesses, so you should consider your own individual situation.
If you need more help phone the Department of Environment, Land, Water and Planning customer service line on 136 186.
None of the information constitutes or is meant to constitute, advice of any kind. If you require advice in relation to any matter, you should seek appropriate professional advice tailored to your circumstances.
The State of Victoria will not be liable for any loss to you in relation to the contents of, or use of, or otherwise in connection with the information provided herein.
Page last updated: 07/12/20