Energy basics for business

It makes sense for businesses of all sizes to understand their energy use and costs, and know the options available to reduce them. This section includes the basic information for getting started, by understanding your energy use at work and how to access assistance to reduce energy use and save. It is designed for small and medium enterprises.

If you are part of the nearly 1 million home-based businesses in Australia, there is a home-based business guide with practical and realistic tips and steps to reduce your energy costs when running a business from home. 

There are a number of key steps to reducing your business energy costs. These include understanding and managing power bills; buying energy-efficient appliances and technology, and running them efficiently; and finding the best energy deals. 

Understand your business energy use

Understand your energy bill

When you start making concerted efforts to save energy, it’s important to understand your energy bill so you can see whether the changes are having an impact on your overall energy use.

What costs make up my bill?

Your bill is made up of the amount of energy you consume, multiplied by the price per unit. The price per unit can vary according to the time of day you use your electricity and what sort of contract you’re on. It can also vary depending on where you live, as each state and territory makes its own decisions about the costs of the various components involved in energy supply.

Your gas and electricity tariff has two parts; a daily supply charge (sometimes called a service charge or fixed charge) and a usage charge (a consumption or variable charge).

This daily supply charge is the cost of getting electricity or gas to your place, even if you don’t use any, and appears on your bill as a total amount or in cents per day.

The usage charge is the cost of the electricity or gas you use and appears on your bills in cents per kilowatt hour (c/kWh) for electricity or cents per megajoule (c/MJ) for gas.

Some bills might show more than one usage charge. For example, a time of use offer might have different usage charges for different blocks of time, which are usually called peak, shoulder, and off-peak.

EnergyMadeEasy.gov.au has interactive electricity and gas bills to step you through your usage and explain what all of the information means.

What if I think my bill is wrong?

If you think your bill is incorrect you should contact your energy retailer immediately. An energy retailer must review a bill if a customer requests this.

If you’re still not happy, you can talk to the energy ombudsman in your state or territory (an ombudsman is a free and independent dispute resolution service). You can also get more information from the Australian Energy Regulator online or by calling 1300 585 165.

Assessments

An energy assessment can help you to better understand a company’s energy consumption and identify areas for potential savings. It can reduce energy use, improve productivity and provide opportunities to innovate.

Energy assessments can be conducted in house, however if skills are not available internally then external experts or energy services companies can be engaged to conduct part or all of the process.

See the page on energy assessments for more information.

Accessing energy data

Electricity monitors show in real time how much energy your business is using and how much this energy costs. Some energy retailers offer free energy monitoring. There are also energy monitoring apps available for both Apple and Android devices. Plug in monitors are also available.

Understanding where and when the business uses energy is crucial to finding the best ways to save money. Energy bills can provide some of this information, but detailed data and assessments will help you gain a better understanding of energy use.

To get a complete picture of electricity and gas use, at least 12 months of data showing energy-use patterns will need to be collected. This information can be obtained directly from the energy supplier or a third party can be authorised to access the data.

For details on energy rights, visit the Australian Energy Regulator (AER) website.

For more information on accessing and understanding energy data, visit the Victorian Energy Saver website.

Review your energy contract

No matter the size of operation, energy costs can take up a large portion of its finances. One way to save is to review the current contract and make sure it’s working for the business. It’s possible to make savings on your energy bill by simply renegotiating the energy contract.

Know your contract

Various energy contract types are available depending on the size and location of the business, including:

Standing offer contracts

These are basic contracts with minimum terms and conditions set by law.

Market retail contracts

Market retail contracts are between the business and energy retailer. They include minimum terms and conditions set by law but are more flexible than standing offer contracts.

Market contract (negotiated)

The contract is usually based on market prices which means greater exposure to price changes. It can save money if usage is actively managed.

Before you make a change

Look at the contract carefully

For smaller businesses on market retail contracts, ask the retailer about terms and conditions. Pay attention to details on pricing and any discounts with an offer, such as pay-on-time discounts. Contracts and clauses vary among energy retailers, so it’s worth doing some research and talking to an energy broker to discuss available options.

Shop around

Search online to compare energy contracts to similar businesses. Consider using an energy broker or third party to get a better deal, but be aware of all fees involved before committing. Energy offers can be compared on EnergyMadeEasy and a range of energy-related publications are available on the Australian Energy Regulator website.

Go to market at the right time

There’s no need to wait until the end of the current contract to get a better deal. Energy prices can change throughout the year, so consider negotiating on a low-priced day or when market prices are going down. If contracts have a fixed term, make sure to consider any cancellation or exit fees in calculations.

Choose the best contract period

Understanding the market can help you choose the right market contract period. In a rising market, where current prices are cheaper than future prices, it may be better to choose a longer contract. In a decreasing market it may be better to select a short period with the aim of buying cheaper in the future.

Plan for the future

When negotiating the contract, factor in any major changes being planned for the business. If the business is planning to expand its operations a shorter contract should be considered until a better understanding of its new energy requirements is available.

Pricing information is available from the following sources:

Shift energy use to cheaper periods

Reducing energy use is not always an option, however, managing how and when energy is used can go a long way towards helping negotiate a better energy contract and reducing energy bills.

It can especially pay to reduce energy use during peak periods by switching off unnecessary equipment, installing automatic timers or using alternative energy. This allows for spreading out energy use to cheaper periods and may help reduce network charges. Shifting energy use may also allow you to negotiate a better contract.

Switch to alternative energy

Whether energy use is large or small, consider other energy options such as:

  • switching to a green energy provider
  • using alternative fuels
  • installing solar systems to generate your own electricity. or heat pumps to reduce your electricity consumption

There are many electricity options. Businesses who install an alternate electricity system may receive money from retailers for the electricity they send into the network (a feed-in tariff). The feed-in tariff works on the type and amount of electricity generated.

If you are planning to sell electricity generated from an alternative electricity system, be sure to follow the Australian Energy Regulator’s guidelines. In particular, a retailer authorisation or a retail exemption is required if planning to sell to other sites within the area.

GreenPower is a government scheme that can provides businesses with support and incentives to replace electricity use with certified renewable energy.

Basics for buildings, equipment and vehicles

Energy efficiency and buildings

Green buildings attract tenants more quickly, have lower tenant turnover, command higher rents and gain reputational benefits.

When building new premises, incorporate energy-efficiency measures at the design stage. Consideration of materials, passive design, orientation and location of a building ensures taking advantage of natural surroundings and relying less on heating and cooling systems.

More expensive measures like double glazing need to be assessed for any energy savings they might bring compared to their initial cost and embodied energy [link]. Double glazing may be an unnecessary expense when energy-efficient reverse-cycle air conditioning is installed.

New buildings should comply with government standards and regulations. The National Construction Code and the Australian Building Codes Board include their handbooks and energy-efficiency requirements to help improve the standard of commercial buildings.

See Your Home and Business Victoria for energy-efficiency design tips and resources.

The National Australian Built Environment Rating System (NABERS) is a voluntary rating system with design standards that measure the energy efficiency of new buildings. Find out how to improve the energy-efficiency of buildings and achieve a higher rating.

Upgrade an existing building

If your business already owns a building or office space, there are a number of upgrades that can reduce its energy use and save money. Energy efficiency improvements can also increase the NABERS star rating, property value and attract higher rental returns if leasing the property.

Here are just a few ways to upgrade a building or office:

• reduce heat escaping by double glazing windows and insulating walls.

• reduce draught by sealing doors and windows and installing automatic doors.

• buy energy-efficient light bulbs and install timers for lighting.

• consider more energy-efficient heating, ventilation and air conditioning (HVAC) systems and use the thermostat to automate temperatures.

• for larger energy users such as offices, hotels and data centres, consider systems that generate heating, cooling and power such as co-generation or tri-generation technology. Co-generation systems generate heat and power, while tri-generation systems generate heat, power and cooling.

Fuel efficiency

Switching to a fuel efficient or an alternate fuel vehicle or truck can save money and reduce greenhouse and air pollution emissions.

Fuel-efficient cars also have a higher threshold for the Luxury Car Tax and some insurers may offer discounts. Although fuel-efficient vehicles may cost more upfront, choosing a cheaper and less efficient model could end up costing more in the long term. Fuel and maintenance costs should be considered when deciding which vehicle is most suitable.

Use the GreenVehicleGuide to see how fuel efficient an existing vehicle is or to help decide on purchasing a more fuel-efficient or electric car.

Appliances, equipment and technology

Selecting the right appliances and technology for the business and using them more efficiently will help reduce energy use and improve the bottom line.

While it can be tempting to hold on to existing equipment longer, you may find that upgrading to more efficient equipment can quickly pay off.

New technologies for heating, ventilation and air conditioning, motor, lighting, pump or boiler systems are good options to consider when you trying to achieve greater energy savings.

Search the Energy Rating website to help choose the best product. The Energy Rating Label includes a star rating allowing to compare different models of common appliance types. The more stars a model has, the higher its energy efficiency.

Energy ratings and labelling requirements

Energy ratings are an important tool for comparing the energy efficiency of appliances. They set out minimum energy performance standards (MEPS) and labelling for common appliances in Australia, to help reduce greenhouse gas emissions.

When buying a new appliance, consider the energy rating listed on the product to help manage energy use. Download the free energy rating app to compare running costs and estimate the real cost of a product over its lifetime. Sometimes high-star rated models cost a little more upfront, but could save more over the lifetime of the product.

Financing options

Asset financing

Businesses and consumers across Australia are capitalising on the benefits of energy-efficient technologies, using tailored finance from the Clean Energy Finance Corp (CEFC) to kickstart their projects.

Businesses looking for ways of financing energy efficient equipment, rooftop solar, electric vehicles and lower emissions vehicles have several CEFC options available to them. By teaming with major Australian banks and specialist finance providers, the CEFC draws on expertise, extensive networks and market reach to make it easier for businesses and consumers to secure finance to transform their energy use.

The CEFC has comprehensive details of funding programs and a range of case studies where funding has been provided. If you want to submit a funding proposal you will need to either email or call the CEFC via the Contact us page. 

There are also state-based financing options in New South Wales, Victoria and South Australia.

The NSW Government has tailored programs, management tools, training services and finance options for businesses working to reduce energy consumption, overheads and costs. The Environmental Upgrade Agreement program is very popular with businesses in New South Wales—it allows for the use of private finance to upgrade non-strata commercial buildings.

Sustainability Victoria has a range of options to assist businesses to cut costs and boost productivity by saving energy and materials, reducing and better managing waste, or improving the energy efficiency of buildings.

The South Australian Energy Productivity Program helps local energy-intensive businesses with audits and implementation of energy efficiency improvements.

Leasing

Leasing reduces the up-front cost of switching to more energy-efficient equipment. A lease can also allow for upgrades as technology improves, or to easily switch to a more suitable option.

On-bill financing

Some energy retailers offer on-bill finance where the retailer provides energy-efficient equipment in return for regular repayments added to the company’s energy bill. Ownership is transferred on the completion of the payment term.

Energy performance contracts

Energy performance contracts are common in the commercial building sector. Energy service companies guarantee to reduce an energy bill by finding potential savings in a building’s operations and commissioning and funding a retrofit of a building.

More information