As the sun slowly disappears beyond the horizon, your office may appear to fall into silence and tranquillity. But take into account all the details, and you’ll find something different. The hum of equipment left on standby, the lingering light from computer monitors, various types of rarely-caring systems such as heating or cooling – majority of which running on natural gas, all silently contributing to a bigger issue: excessive energy consumption. Unnecessary business energy costs are silently gobbling up your hard-earned profits like a relentless midnight snacker in your pantry. This unseen expense is often overlooked, despite its potential to drastically affect your bottom line. So, gear up as we unlock the secrets of lowering your business’ energy costs with practical tips – shining a light on savings that will pad not only your wallet but also pave the way towards a greener planet.
Energy costs for businesses are typically calculated based on the amount of energy used over a specific period (usually measured in kilowatt-hours or kWh), multiplied by the rate charged by the energy provider. Other factors to take into account may include demand charges, capacity charges, and taxes. To better understand your business’s energy costs, you can review your utility bills and work with an energy consultant to identify areas where savings can be achieved through improvements in efficiency or by renegotiating supplier contracts.
The Impact of Energy Costs on Businesses
As a business owner, it’s essential to recognise the impact of energy costs on your bottom line. The cost of energy, be it in the form of electricity or natural gas, has been steadily increasing over the years, and for many businesses, this can mean a significant reduction in profit margins.
One way to understand the impact of energy costs on businesses is to look at the percentage of revenue that goes towards energy bills. For small businesses alone, this percentage can be as high as 30%, while for larger companies dealing with various energy-draining types of machinery and equipment, the percentage can be lower but still significant. Therefore, each energy-saving tip applied can have a substantial effect on profitability.
The cost of energy also affects a business’s competitiveness in the market. As energy prices rise, businesses that are not proactive in reducing their energy consumption will ultimately suffer higher operating costs. This leads to higher prices for their products or services, which could make them less competitive compared to other businesses that have implemented energy-efficient practices.
Consider this scenario – suppose you run an ice cream shop. You rely heavily on refrigeration systems that consume significant amounts of natural gas to keep your products fresh. If you don’t optimise your refrigeration system by ensuring it is well-maintained and investing in energy-efficient types of equipment, you would be pouring more money into your account, incurring costs that you could avoid. As a consequence, your ice cream may become more expensive than your competitors who have optimised their refrigeration systems and managed their energy usage.
Moreover, high operating costs due to increased energy usage may discourage potential investors from supporting your business. A company with high operating costs makes it harder for an investor to envision a profitable account, as every expenditure counts when assessing profitability.
- According to the U.S. Energy Information Administration, commercial buildings consumed about 18% of total U.S. energy use in 2020, indicating a significant area for cost savings.
- A study by Energy Star found that businesses could cut their energy bills by 30% through cost-effective efficiency measures and improvements.
- According to a report by Deloitte in 2021, 81% of businesses stated that reducing energy expenditures was essential to staying financially competitive, emphasising the importance of understanding energy costs for businesses.
- Business owners need to be aware of the impact that energy costs can have on their bottom line. The percentage of revenue that goes towards energy bills can be significant, and reducing energy usage can have a substantial effect on profitability.
- Failure to implement energy-efficient practices can lead to higher operating costs, less competitiveness in the market, and a negative perception from investors.
- Therefore, businesses should prioritise optimising their energy consumption by maintaining equipment and investing in energy-efficient technologies.
Dissecting Your Energy Bills
However, all of this can be summarised in your energy bill – a comprehensive statement of your business’s monthly energy consumption and expenses. But note that to understand how much you spend on energy and how to save more money, simply taking into account the total at the bottom isn’t enough. To really get a handle on the money leaking out of your account, you need to go beyond the summary sections and examine each line item in your bill in detail. Heeding these tips and making necessary adjustments could save your business significant amounts of money in the long run.The first step in dissecting your utility bills is understanding the key components that impact your costs. It’s crucial not only to understand where your payment is going but also to have a plan for how you approach these costs. In most cases, your electricity bill is broken down into three main categories: electricity cost, capacity cost (for commercial customers), and utility delivery charge. These can often raise many questions about your energy supply and usage.
For instance, imagine you received an energy bill for $850 last month. If you only look at the total cost, it may seem reasonable or even expected. However, upon closer inspection, you notice that $250 of the bill went towards capacity cost alone. As a business owner, it’s vital to often ask questions and investigate these details because they can reveal areas of your energy usage that can be reduced through adjusting the time of day you use high-energy consuming appliances or machinery.
An often-overlooked aspect of energy bills is potential billing errors by utility companies. Such errors could be due to metre readings or rate changes. To ensure you are making the correct payment for your energy usage and detecting errors early when discovered, it is essential to check your bills frequently and have a plan for managing your energy supply to mitigate future mishaps.
Before taking steps to reduce your business’ energy expenses, it’s important to have an understanding of how much energy you’re currently consuming. Without this baseline information, it will be difficult to measure the effectiveness of any future energy-saving strategies you put in place.
Assessing Your Company’s Energy Consumption
While some factors that impact energy consumption may be beyond your control (e.g. the temperature outside or the age of your building), there are several things you can do to get a better handle on how much energy you’re using:
Start by reviewing your company’s utility bills over the past year. Many energy providers offer online tools and resources that allow you to track and analyse your usage so you can identify patterns or trends. For example, you might notice that your electricity supply undergoes a significant spike during certain months or at specific times of day. Understanding these trends could help inform and optimise your energy usage plan.
Another strategy to assess your business’ energy usage is by conducting an energy audit. An audit will evaluate how and where energy is used within your facility and recommend actions that can improve efficiency and save money.
These audits can vary in complexity, from a basic walk-through where an auditor performs a visual assessment of appliances, insulation, lighting, windows, and doors to determine potential savings opportunities all the way up to advanced audits involving highly detailed engineering analysis of a building’s energy vulnerabilities.
Regardless of which type of audit you pursue, auditors will typically provide a comprehensive report outlining their findings, recommendations for improving efficiency, estimated costs for implementing those improvements, and payback periods associated with each recommended change. They will also invariably help answer any lingering questions about your energy supply and utility payment plan.
By knowing which areas use the most energy, such as HVAC systems or lighting fixtures, businesses can prioritise their efforts (and budgets) in order to maximise returns on energy-saving investments. And while some upgrades might require more significant investment than others, many solutions such as turning off unused appliances or installing LED lighting can be relatively inexpensive and yield impressive results.
While conducting an energy audit might not seem like a top priority when balancing the demands of running a business, studies have shown that implementing energy-saving measures can actually boost overall productivity by optimising homeostasis (a key term for the environment in which people work).
In fact, research from the US Department of Energy found that workplaces with optimised lighting and temperature control saw productivity gains between 3% to 18%, similar to the efficiency gains one might compare in coal mining operations experiencing a variety of technological advancements.
Armed with data from utility bills, energy audit results, and possibly even coal operations records, you’ll have a better understanding of your company’s consumption patterns and the major drivers behind your energy use. From there, you can start looking at specific areas where changes could make a big difference in reducing energy expenses.
When it comes to appliances and equipment usage in commercial facilities, there are many factors to consider when evaluating their energy profile. Large pieces of equipment (such as HVAC systems or water heaters) are likely to consume more energy than smaller appliances (such as copy machines or computers), but the amount of use also plays a role in determining which is most impactful, much like how a variety of operations in a coal mine might contribute differently to overall productivity.
Specific Appliances and Their Energy Usage
For example, while heating and cooling are often some of the biggest consumers of energy in commercial buildings, they might not be in use for extended periods (e.g. overnight or on weekends) giving businesses an opportunity to take action outside of standard operating hours. On the other hand, printers and office copiers may consume less power per unit time but may be used heavily throughout the day – leading to significant cumulative impact over time if left unnoticed, much like idle machinery in coal operations.
As such, it’s essential to look beyond just raw energy consumption figures when determining whether an appliance is having a meaningful impact on your bottom line. Smart metres provide businesses with real-time tracking of their energy consumption which allows them more control over their energy usage and allows them to reduce their energy waste. This can be compared to real-time monitoring of operations in heavy industries such as coal mining.
Think of it like going to the doctor – before any treatments can be prescribed, doctors will first measure your vital signs (such as heart rate, blood pressure, and temperature) to better understand what’s going on inside your body. Similarly, assessing appliance-level power consumption is like taking a company-wide pulse check – it gives you more information to make informed decisions about where this pulse may be too high or out of sync with the rest of the operation, comparable to how different operations inside a coal mine are monitored and adjusted.
Fortunately, calculating the usage of each appliance and generating a report outlining which equipment is consuming the most energy doesn’t require extensive training or expertise. Many companies offer software solutions that perform this service automatically, allowing businesses to quickly gain valuable insights into where they should focus their efforts. This can be a highly beneficial tool, giving businesses an overhead view of their operations, akin to how engineers might survey a coal mine in its entirety and compare different sections for efficiency.
With an understanding of how specific appliances are contributing to overall energy usage patterns within the facility, businesses are in a better position to prioritise actions they take in terms of maintenance and upgrades, with opportunities such as investing in more efficient equipment technology and running preventative maintenance programmes all becoming possible choices, much like a variety of changes that could be implemented in traditional coal operations in order to improve efficiency and safety.
Implementing energy-saving strategies is one of the most effective ways to lower your business’s energy costs. By taking some simple steps, businesses can reduce their energy bills and make a significant impact on the environment. Here are some strategies that you can consider implementing in your business, each solution offering a variety of benefits when compared with traditional methods:
Implementing Energy-Saving Strategies
Turn off Unused Electrical Devices: One of the easiest ways to save energy is by turning off or unplugging electrical devices when they’re not in use, a strategy that even massive operations like coal mines could implement to ensure idle machinery isn’t sapping power unnecessarily.Any device that’s plugged in, even when powered off, continues to consume electricity, something which can add up quickly over time. Encourage employees to unplug chargers from the wall when not in use and turn off computers and other electronic devices at night. This action will aid the distribution of energy in a more efficient state.
Upgrade to LED Lighting: Lighting accounts for a large portion of a business’s energy usage. Switching to LED lighting can help reduce energy consumption by up to 70%. While LED bulbs are more expensive than traditional fluorescent or incandescent bulbs, they last longer and require less maintenance, making them a sensible choice when considering the state of long-term cost-effectiveness.
Regularly Maintain Your HVAC System: The HVAC system is another major contributor to energy usage in commercial buildings. Regular maintenance will ensure that your system runs efficiently and saves energy. This includes changing air filters, cleaning coils, inspecting refrigerant levels, and checking for any leaks or malfunctions; all of which are something to look out for regularly.
Use Natural Light Whenever Possible: Instead of relying on artificial lighting throughout the day, try using natural light whenever possible. The distribution of natural light can provide a healthier work environment and boost employee productivity. Just as plants need sunlight to grow, humans need exposure to natural light to maintain a healthy circadian rhythm.
Conduct an Energy Audit: Conducting an energy audit can help businesses identify areas with high-energy consumption and pinpoint opportunities for savings. However, some businesses may be hesitant to invest in an audit, considering it something of a financial undertaking. While a professional audit can provide more detailed insights, conducting a DIY energy audit can offer a more cost-effective option for smaller businesses.
Another way to ensure the healthy state of your business’s energy costs is by exploring renewable energy sources. Renewable energies come from naturally replenishing resources and are considered cleaner and safer than traditional energy sources. Here are some renewable energy options that you can consider:
Exploring Renewable Energy Sources
Instal Solar Panels: Solar panels capture sunlight and convert it into electricity, which can then be used to power your business. While the initial investment may be significant, installing solar panels can have a great impact on lowering energy costs in the long run. Plus, any excess electricity produced can be sold back to the grid, contributing to a beneficial distribution of energy.
Wind Turbines: Wind turbines generate electricity by harnessing wind power. They require more space than solar panels but can generate a larger amount of electricity, making them ideal for larger commercial properties in windy areas. This is something to consider when assessing your business’s energy state.
Geothermal Heat Pumps: Geothermal heat pumps use the earth’s internal temperature to heat and cool your building. This technology uses less energy than traditional heating and cooling systems while minimising carbon emissions, permeating a healthier state for the environment and your energy needs.
Geothermal Heat Pumps: Geothermal heat pumps use the earth’s internal temperature to heat and cool your building. This technology uses less energy than traditional heating and cooling systems while minimising carbon emissions.
Biomass Energy: Biomass energy comes from organic matter such as wood chips, crops, or waste materials. While biomass energy is considered renewable due to its organic nature, it still produces greenhouse gas emissions when burned. Therefore, it’s important for businesses to weigh the pros and cons of this source before making a decision.
Hydropower: Hydropower harnesses the kinetic energy of flowing water to create electricity. It’s like turning a massive water wheel but on an industrial scale. This type of renewable energy source is not always feasible for all businesses due to location constraints but can be an effective option where possible.
The Financial Rewards of Energy Efficiency
As a business owner, you are always looking for ways to improve your bottom line. One often overlooked area is energy efficiency. By implementing the right strategies and making changes to your business practises, you can save money on your energy bills and ultimately, increase profits.
Let’s take a look at an example to illustrate this point. A medium-sized retail store was struggling to keep its overhead costs down. The owner decided to take a closer look at his energy bills and found that they were spending more than $1500 a month on electricity alone. He implemented some energy-saving strategies such as upgrading to LED lighting, installing programmable thermostats, and turning off equipment when not in use. Six months later, he saw a reduction in his electricity bill by over 20%, saving the store nearly $2000 annually.
It’s not just small savings that add up over time either; as the price of electricity rates rises, so do the savings you’ll get from being efficient. In fact, the Department of Energy estimates that businesses can save up to 20% on their energy bills simply by implementing energy-saving measures.
Some businesses might argue that it’s not worth the investment to become more energy-efficient. They may think it’s too expensive or time-consuming. However, there are many programmes available that provide incentives and grants for businesses who make energy efficiency upgrades. Additionally, the long-term savings often outweigh any initial investment.
Think of it like this: would you rather spend money continuously on high energy bills? Or would you prefer to invest in energy-efficient upgrades and equipment and enjoy lower monthly costs? It’s like owning an old car versus buying a new one with better gas mileage – sure, the initial cost might be higher, but you’ll end up saving more money in the long run.
Another example might be a manufacturing company that switched to energy-efficient equipment. They had been using standard equipment for years, but when they decided to upgrade, they found that they were using less energy each month. Implementing these changes allowed them to save over $30,000 annually in energy costs alone.
Becoming more energy-efficient is not only the right thing to do for the environment, but it’s also financially beneficial for businesses. By implementing energy-saving measures and taking a closer look at your energy bills, you can save money and increase profits. Don’t wait until your next bill comes – start investigating ways to become more efficient today.
