The cost of electricity rose significantly in 2010 and it is predicted to increase by up to 64% in NSW over three years from July this year, and with the possibility of a carbon price looming that increase could end up being far greater.
The main reason for that is the need for investment in infrastructure to cope with increases in demand, which means money for generation, substations, poles and wires.
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The primary means of gathering that money is via price increases. Australia still has relatively low electricity prices compared to the rest of the world due in part to government subsidies, but mainly due to cheap, good quality coal being available close to our main population centres.
As a small business starting out what can you do to minimise your electricity costs and exposure to the risk of price increases?
There are basically three contributing factors governing how much electricity you will use:
1. How power-hungry your energy-using devices are (efficiency of equipment, lighting, appliances, etc).
2. The way you and your staff use those devices.
3. The design of your work space (ventilation, insulation, natural lighting, external shading, etc).
The first point often involves capital expenditure to get the most efficient devices. You may be limited by the design of work premises and existing devices such as air conditioning.
If you are purchasing new equipment do a cost analysis to work out running costs, look at the expected lifetime and compare purchase prices with all that in mind.
Generally the more efficient a device is the less it will cost you in the long run. You can go here to compare running costs for various appliances. Make sure you adjust variables to accurately represent your business use, because default values are for residential.
For example, at an electricity price of 20c per kWh, a 1.5 star rated fridge of 500L equates to $150 per year to run. A 3.5 star rated fridge of the same volume = $80 per year. Over an expected 10-year life there will be a saving of $700 but the purchase price difference may be as little as $100-$200.
Every power-using device in your workplace is subject to those considerations, with the biggest users of power generally being hot water and air conditioning.
Another important aspect in this category is maintenance and suitability, particularly with air conditioning. A well-maintained unit will operate more efficiently and a well-insulated building will require less air conditioning to keep cool.
Point two is often overlooked and will cost you very little or nothing to change. The way devices are used can have a big impact on costs.
Adjusting the thermostat on the air conditioning and turning appliances off when not in use can significantly reduce power costs. Encouraging and rewarding staff for devising ways to use less energy is a good way to make those changes.
Regarding point three, the design of the work space will greatly affect how much power you use for lighting and air conditioning.
Since November 2010 federal legislation requires any commercial space over 2000 square metres to have a standardised energy rating, which must be included in any advertisement for the sale or lease of the property. Go to http://www.cbd.gov.au/ for more details.
The last thing I want to mention is minimising risk from rising electricity prices. A good way to do that is by purchasing a rooftop solar PV system, although it is often not possible due to work space location, lease conditions or other factors.
With the NSW Gross Feed In Tariff (GFIT) and the federal government Small Scale Renewable Energy Scheme businesses can get a solar system for a good price and can effectively purchase electricity up front for a low fixed price.
For an existing workplace the most important thing is to measure your energy usage and greenhouse gas output, so you have a benchmark from which to reduce.
A small business energy assessment by Building Green Business will provide all the information you need to minimise energy costs or to select an efficient workplace.