Reducing industrial electricity bills: Don’t forget the strategy!

In a time when Australia is grappling with energy pricing pressure and uncertainty around the national energy policy, there is a tremendous opportunity for industrial businesses to take action and reduce their electricity bills.

Some work has been done with energy efficiency over the last decade (mainly driven by federal government support) which has made a degree of impact, but nowhere near enough.

The American Council for an Energy-Efficient Economy’s 2018 International Energy Efficiency Scorecard ranked Australia 18th – the worst in the developed world.  This is staggering and should ring alarm bells when improved energy efficiency is so clearly linked with competitive advantage.  Australia’s industrial sector clearly has more work to do – starting with unlocking the hidden or dormant opportunities that exist within businesses’ current operations.

Opportunities like compressed air management, LED lighting, motor upgrades and controls, pumping efficiency, HVAC controls, refrigeration optimisation, burner efficiency, heat recovery, insulation, process control and automation, co-generation and demand management are just a few.

It’s not uncommon for energy savings to be in the order of 5-20 percent, which can be a significant contribution to the bottom-line. The recent ICN Energy Efficiency expo and seminar highlighted many case studies of this.

What challenges do businesses face in implementing energy savings initiatives?

Striving for energy savings and efficiencies needs to be a continuous endeavour – it’s what keeps businesses on-top of costs.  The trouble is keeping momentum in such activities.  If projects are viewed in isolation, there is a danger that full benefits may not be realised.  The problem is less about availability of technologies and options, and more about application.  Businesses need the knowledge of how, when and what opportunities to activate in order to ensure the right investments are made.  This is where strategic energy management comes in.

What is strategic energy management?

Strategic energy management is a holistic approach to establishing priorities, setting clear goals, realistic targets and establishing mechanisms that enable accountability.  It’s so much more than simply targeting low-hanging fruit or the easy to implement lower-cost projects.  It’s about using the seed from that harvested fruit to sprout more returns.

In other words, looking to bundle a group of projects so that the quick-win projects can shorten the longer payback ones.

For example, a LED lighting project with payback of under two years, could help a longer payback refrigeration upgrade project get over the line.

 

 

Saving energy via strategic cultural change

Undertaking energy management initiatives is good business, but you need a good strategy to maximise the savings benefits to your organisation. Tackling the energy issue is a team effort and a strategy helps define roles and responsibilities so that projects succeed.  To really get the boost in competitiveness that energy management offers, it takes more than just one or two ad-hoc projects, it requires cultural change.

Where should you begin?

Many would be familiar with common and well-regarded best-practice management systems such as ISO 9001 (Quality) and ISO140001 (Environmental management), but not so many are familiar with the newer member of the family ISO50001 (Energy Management System). This standard offers a solid framework to build a strategic energy management approach.

The strategic energy management principles encouraged by the standard ensures the long-term view is always in mind and brings previously ad-hoc projects into context to deliver sustained results.

I have summarised the key elements of this best-practice approach into four key phases: Assess, Analyse, Activate and Achieve:

1. Assess

This phase is about understanding the current state-of-play.  Establish a starting point or baseline by determining what energy is used, when and where. Set a policy for the organisation to establish the energy management culture which should include some kind of target/goals that are measurable. Engage key stakeholders and potentially seek external expertise to establish what the improvement opportunities are. Remember, if your energy management system is not paying for itself there is something wrong.

2. Analyse

Develop strong business cases by getting the data right.  Get the savings calculations backed with data where possible and seek firm pricing on solutions.  It’s important to establish how the savings will be verified post-project either by smart metering or some other agreed methodology. Show how this opportunity or group of opportunities will help the organisation meet its target.

3. Activate

Implement the project, but make sure it is managed properly.  It is a common mistake to rush into a savings measure implementation without applying good project management principles. It needs to be delivered on-time and on-budget with demonstrable savings if further investment is to be attracted.

4. Achieve

Take the time to measure and verify the savings.  Celebrate the successes and communicate the outcomes throughout all levels of the organisation. Use the momentum to lay the groundwork for the next project.

Conclusion: approach energy the right way

In essence, when approaching energy, take the time to ‘zoom-out’ and look at all of your opportunities in context. Engage your team in this process so you can all celebrate the positive, lasting and measurable outcomes together.

 

The Tariff Trap

We have recently been advised of situations where commercial PV solar customers have been caught by installing Solar PV systems not realising the impact on tariff structures.  Essentially offending PV Solar companies have neglected to inform the customer that any changes to metering can invoke a tariff change. Basically there are new regulations that require a business electricity meter (NMI) with a demand greater than 75kVA or 100 amps to be on a demand tariff.  We have heard of situations where this tariff change resulted in such an increase on their bill that it meant the Solar system was costing them rather than saving them. Therefore it pays to have an independent review of the Solar PV business case that considers and calculates the cost of any tariff impacts.

 

Further Reading: Consumer PV Guide | Clean Energy Council, 19/12/2012

Gas Prices Set to Triple

Recent conversations with energy retailers and media sources suggest that cost-of-doing-business pressures are not going to ease soon.  While electricity price rises have been the hot topic in recent years, natural gas prices are coming on the agenda with prices forecast to triple in coming years.  Water rates in South Australia have also been subject to price increases this year.
There is an up-side to tougher business conditions in the sense that it tends to drive a focus on optimisation and streamlining costs. We are consistently amazed at the opportunities we help discover in businesses, ask for our newsletter and we’ll give you some tips on what steps you can take in your business.

Further Reading:  ‘East coast gas prices set to triple’ | The Australian, 28/09/2013

Why audit energy?

With the carbon tax looming in Australia I believe energy use is going to be a key issue for most businesses moving forward.  It prompted me to get some more information out there about why we need to audit energy, what an audit involves and the best way to conduct an audit.

What is an energy audit?

According to the Australian Standard for energy audits (AS 3598:2000) the energy audit aims to identify opportunities for cost-effective investments to improve efficiency and effectiveness in the use of energy.

There are 3 levels of audit;

Level 1: Gives an overview and allows the overall energy consumption of the site to be evaluated.

Level 2: Identifies the sources of energy at the site, the amount of energy supplied and what the energy is used for as well as where savings may be made.

Level 3: Provides detailed analysis of energy usage, the savings that can be made and the cost of achieving those savings.

Why do an energy audit?

Effective energy management increases profitability.  In fact it does more than reduce costs; it can drive the whole business to improved performance through its effect on production, operations, maintenance and environmental issues.

How best to conduct an audit?

Energy audits and energy savings opportunities identified in audits are best implemented in the context of an energy management program which operates as an integral part of the ongoing management activities of an organisation.

 

In summary, I can’t stress enough the importance of having an energy management program/system (like ISO50001) to really get the most out of an energy audit and the opportunities that are identified.

Don’t hesitate to contact us via our website efficientsee.com.au to see the unique way we have of delivering better energy performance in your organisation.

 

How will the carbon tax affect my business?

Recent announcements from the Australian Prime Minister have attracted much attention in the media. This has no doubt unnerved many business owners and managers as they assess the potential impact of the proposed Carbon Tax due 1st July 2012.  In many conversations I have had recently I have been asked what is the Carbon Tax and so I thought I would post some basic info in response.

What is a Carbon Tax?

A Carbon tax is a form of pollution tax. It levies a fee on the production, distribution or use of fossil fuels based on how much carbon their combustion emits. The government sets a price per tonne on carbon, then translates it into a tax on electricity, natural gas or oil. Because the tax makes using dirty fuels more­ expensive, it encourages utilities, businesses and individuals to reduce consumption and increase energy efficiency. Carbon tax also makes alternative energy more cost-competitive with cheaper, polluting fuels like coal, natural gas and oil.

The main impact on business will be in the form of electricity price rises.  However prices are already on the increase  due to the massive roll-out of electricity infrastructure upgrades.  So energy efficiency will need to be considered by every business both now and into the future.

Check out the following link for more detailed information on the Pros & Cons of a Carbon Tax:

www.aph.gov.au

Also visit our website efficientsee.com.au to see how we put our energy into saving yours.

Homes forced into energy audits

I read an article recently in the Sunday Mail which captured my attention.  An excerpt is below;

“ALL Australian homes will have to undergo a mandatory energy-efficiency assessment – costing up to $1500 per property – before they can be sold or rented under new laws to tackle carbon emissions. “

At that price tag it is hard to imagine property owners being too excited about this proposed measure.  From my understanding of the proposed measure it will use the ACT House Energy Rating Scheme (ACTHERS) as a model for nationwide legislation.  It’s interesting to note that a house rating under that scheme costs about $150-200.

ACTHERS has been in place since 1999 where residential buildings are given an Energy Efficiency Rating (EER) which uses 0 to 6-star system to indicate the level comfort, emissions and running costs of the home.  The higher that star rating, the more cost & energy efficient the house will be in terms of heating & cooling.  It is important to note that the rating scheme does not cover water heating or any other household appliances.

  1. What is an energy assessment for?  In a residential context it’s a means of assisting in making purchase/lease decisions on a property.  Similar to knowing the fuel efficiency rating of a car.
  2. What can the owner expect from an energy assessment?  A star-rating that will give you an idea of the property’s performance in terms of heating/cooling running costs as well as some recommendations for improvement.  Although like fuel efficiency ratings on cars it depends how you drive it.
  3. What is the difference between and energy audit and an energy assessment?  Energy audits are far more comprehensive than assessments and are covered by standards such as AS/NZS 3598:2000.  Audits are really designed to tell you how your energy is being used and are best used as tools in an Energy Management Program.  Energy management is really what makes the difference in saving costs and the environment.  Using the car analogy; an assessment tells you the fuel efficiency rating but an audit will analyse your fuel usage and recommend improvements to your driving habits that should help you manage your fuel better.

So a star-rating is useful but one needs to be mindful of the fact that it is not the full picture because like fuel efficiency ‘it depends how you drive it’.  It should also be pointed out that many of the recommendations to improve house efficiency are readily available on the internet (see links below or email us at EfficientSee for more info).

Sunday Mail Article Link:

http://www.adelaidenow.com.au/news/south-australia/homes-forced-into-energy-audits/story-e6frea83-1225827464627

Useful Home Energy Efficiency Links:

http://www.energy.sa.gov.au/be_energy_smart

Energy efficiency a cheap way to slash emissions

I read an interesting article at the end of last year that was well researched.  It certainly confirmed my experience to date in the sector.  Take for example this statement about commercial buildings:

“In commercial buildings, energy efficiency retrofits routinely achieve energy savings of 40-50 per cent.”

And the statement about ‘negative cost’ of energy efficiency is really interesting:

“Last year McKinsey & Co ranked carbon abatement strategies from cheapest to dearest, and showed many energy efficiency strategies have a negative cost – that is, they make you money. In the commercial property sector, for example, McKinsey says we can save $130 for each tonne of carbon dioxide pollution avoided.”

You can read the full article on The Age website.

http://www.theage.com.au/business/energy-efficiency-a-cheap-way-to-slash-emissions-20091127-jx5n.html

Prevention vs Cure

I was recently having a conversation with a Travel Agent about the growing requirements of his corporate customers for emissions figures for each flight.  While he was not opposed to the greater accountability of these companies it did place quite a burden on his time to gather all the information without necessarily being compensated.  The reason for requiring the additional info was mainly to ensure the correct offsets were being made/purchased.

This got me thinking about offsets and whether they are really being used correctly.  I know it is an easy way for many companies to become carbon neutral (and I certainly commend their efforts) but I believe it should only be employed once carbon abatement strategies have been significantly deployed within the company’s own operations.

There are so many offsets available internally (particularly in the areas of waste energy) within most businesses.  I believe more credit should be given to companies who generate their own offsets by stream-lining operations particularly in the area of energy efficiency.  If this was done the company may even find the greater efficiencies actually save them money and the need to burden the end-user with expensive external offsets may be reduced or eliminated.

The ‘prevention’ strategy of internal energy efficiency should be employed before the ‘cure’ strategy of external offsets.