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Australia’s Energy Crisis: How SMEs Can Manage and Reduce Energy Consumption

The current Australian energy crisis is seeing record-breaking energy prices, placing increasing pressure on energy consumers across the market from individual homes to SMEs and large corporations to manage and reduce energy consumption. The Australian Energy Market Operator (AEMO) alongside the Australian government are urging homes and businesses to try to conserve power and switch off unnecessary lights and appliances to ease the pressure on the market and avoid blackouts.

A combination of factors is driving this energy crisis such as Russia’s war with Ukraine, Australia’s ageing coal infrastructure, Covid restrictions, the onset of an early cold winter snap, plus Australian “gas and coal companies charging very high prices for their products because that’s what they can sell them for into international markets.” Tristan Edis, Renew Economy. The AEMO is so concerned it has taken the unprecedented step of freezing the east coast wholesale energy market to allow them to control supply and prevent generators from withdrawing their availability. To dig deeper into the stats, check out this insightful explainer in Renew Economy.

So how can SMEs manage and reduce energy consumption to help mitigate these cost pressures?

Here we explore options available for businesses to manage and reduce their energy consumption, including how to create energy efficiencies, save costs for themselves and others, plus we identify a range of government programs including grants available to support business with their costs.

Manage and Reduce Energy Consumption: Understanding Energy Usage

Assessing energy usage not only refers to understanding the amount of energy consumed, but also when and how it is being used; what energy is charged and how; and what the available options are to reduce it. Businesses can gain a granular understanding of their energy usage through detailed data analysis, allowing them to identify energy use patterns along with seasonal and daily variances. This enables them to focus their efforts on actions that bring the most cost-effective outcome.

Practical and tangible solutions do not necessarily mean high upfront capital costs. Some of the most common energy management solutions include:

  • Energy management training: Training key personnel within organisations can help overcome the lack of knowledge in the underlying principles of energy management, improve in-house skills, and shift energy-consuming behavior. Training will also provide SMEs with tools to assess their high-level energy needs, and the avenues to seek more specific advice when needed.
  • Load-shifting: When possible, varying the time of energy consumption, i.e., when equipment is operated, can better align with a lower cost tariff or maximise solar self-consumption. For businesses with more complex energy consumption, load-shifting can have a major impact when it reduces peak demand and the associated costs.
  • Equipment maintenance and upgrade: General maintenance of equipment such as pumps, hot water systems, air compressors, chillers, etc. can significantly reduce billing costs. For medium-sized businesses, submetering will provide further insights into energy consumed by critical equipment.

Energy Grants and Funding

Focus AreaGovernment LevelProgram / Initiative
TrainingFederalBusiness Energy Advice Program: This program delivers advice to help small businesses and their representatives to get better energy deals and increase their energy efficiency. Ends September 2022.
Energy Made Easy: Free energy price comparison service for households and small businesses. It has sample electricity and gas bills to explain the usage and the meaning of the billing information.
StateNSW Department of Planning, Industry and Environment (DPIE): Energy Saver – management courses and webinars: Online free training platform with a large range of courses in the topic. Available for all businesses.
VIC Department of Environment, Land, Water and Planning (DELWP): Energy advice for business & Victorian Energy Compare: Online platform run by the Victorian State Government to educate businesses in their energy data.
Support & CoachingFederalBusiness Energy Advice Program: delivers advice to help small businesses and their representatives get better energy deals and reduce their energy usage. Businesses get a free personalised energy consultation and access to a Small Business Energy Check tool. 
StateNSW DPIE: Energy management coaching: Provides financial support for one-on-one coaching to help medium and large businesses identify areas for action and build business cases to support applications for funding
Grants & InitiativesFederalATO’s Temporary Full Expensing Tax Incentive: Provides businesses with an opportunity to immediately deduct the full cost of eligible assets and to make improvements to existing depreciating assets. Businesses can leverage incentives to drive energy productivity improvements.
Grants and Funding Energy.gov.au: A range of government grant programs are available to assist companies with funding energy efficiency projects. Eligibility requirements can differ significantly across programs and jurisdictions so always review funding guidelines.
StateNSW DPIE: Lighting for Small Businesses: Helps eligible small businesses replace old lights with new LED lights. The cost of the LED lights and the fee for installation is subsidised (not available for Metropolitan Sydney).
NSW DPIE: Commercial refrigeration rebates: Helps eligible small businesses access a NSW government rebate (partial reimbursement) for new plug-in commercial fridges and freezers (up to 5 new eligible refrigerators).
NSW Energy Savings Scheme (ESS) incentives: Cuts electricity and gas use by creating financial incentives for businesses to be more energy efficient. The scheme reduces the investment cost of an upgrade project to reduce energy use. The more energy savings the larger the financial incentive. A wide variety of projects may be eligible under the scheme: lighting, heating, HVAC systems, motors, fans and pumps, compressed air.
NSW Building Energy Efficiency Incentive: The ESS can also assist eligible NSW businesses with incentives to reduce energy use in office buildings.
Victorian Energy Upgrades (VEU) incentives: Provides businesses with access to discounts on the installation of a wide range of energy-efficient products such as lighting, water efficiency, hot water, space heating and cooling and commercial appliances as well as project-based activities (energy savings generated from a specific given project within the business).
Victorian Energy Upgrades (VEU) incentives: Provides businesses with access to discounts on the installation of a wide range of energy-efficient products such as lighting, water efficiency, hot water, space heating and cooling and commercial appliances as well as project-based activities (energy savings generated from a specific given project within the business).
Victorian Solar for Business Program: offering rebates covering up to 50%, to a maximum of $3500 of the installation cost of a rooftop solar system and the option of an interest-free loan.
Victorian Small Business Energy Saver Program: supports Victorian small business upgrade to energy efficient equipment. The exact amount your business will need to pay for an approved energy efficiency improvement will depend on the type of energy upgrades undertaken. On average each business could receive a discount of about $2000 for eligible equipment upgrades. 
Victorian Advancing Renewables Program: provides businesses with funding or finance to develop renewable energy technologies. 
Victoria Electric Vehicle Subsidies: up to $3,000 are available for businesses in Victoria to purchase a zero emission vehicle
Victoria EV Charging for Business Fleets: Victoria is supporting business to transition to EVs which will help to reduce their emissions, support local emissions reduction targets and stimulate the second-hand EV market at the end-of-vehicle lease.
ACT Government’s Business Energy and Water Program: The ACT Government’s Business Energy and Water Program provides ACT businesses with rebates to help them with the costs of upgrading to more energy-efficient and water-efficient technologies and equipment.
ACT Next Generation Energy Storage: provides ACT businesses with a rebate when installing battery storage systems.
 

Energy Measurement and Verification

The relevance of measurement and verification processes (M&V) among SMEs is often overlooked. Measuring energy savings goes beyond metering. The ability to track energy saved over time by the implementation of energy efficiency projects relies on both accurate measurement and repeatable methodology. There are many variables that can affect the energy consumption in a business, such as weather, unusual events, number of employees, leakages, production faults, and many others including the abrupt and disruptive external pressures we are currently seeing affecting the local and global markets. Consequently, energy savings can be erroneously calculated when ignoring any of those variables.

M&V protocols provide certainty on the amount of energy saved as results are real and verifiable. M&V help to obtain useful data to share across all stakeholders, prepare business cases for project funding such as grant applications, participate in existing energy efficiency schemes as well as keep a transparent record of the reduced emissions from energy efficiency.

The Overlooked Benefit of Energy Efficiency in Businesses

The positive impacts that building energy efficiency and energy management capability in the business sector have on the residential sector are often overlooked. Beyond individual savings in energy costs, businesses’ ability to improve their energy efficiency is not only a key element in reducing GHG emissions but can also play a role in stabilising energy prices, with significant implications for vulnerable customers such as low-income and remote households.

The underlying principles of energy management allow businesses to take control of the entire energy cycle across their operation. This includes from where energy is sourced, to how much and when it is used, which ultimately improves network stability by helping balance electricity supply and demand. Considering network charges makeup approximately 40-55% of energy bills, reductions in both overall and peak energy demands within the electricity network will reduce the associated costs passed on to consumers, and enable the ongoing delivery of clean, affordable, and reliable energy.

Need Advice to Manage and Reduce Your Energy Consumption?

At Ndevr Environmental, we provide a range of specialised services for business to manage and reduce energy consumption and promote energy efficiency such as assessing energy efficiency and productivity, and conducting energy audits and energy management training. We also provide guidance and advice to access federal and state government grants and funding. Get in touch to learn more, environment@ndevrenvironmental.com.au or call 03 7035 1740.

Also check out our article Five Ways to Reduce Your Carbon Footprint Through Energy Management – Ndevr Environmental Consulting

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