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Keeping costs low for a small business owner is crucial for survival. Your electric bill is likely one of the top 3 expenses for your business, so it’s important to be aware of ways to reduce your energy costs. Here are some obvious and some not-so-obvious ways to keep costs low and become an Energy Star.
Supply charges are billed by an energy provider, also known as Supplier. Suppliers buy electricity from the wholesale commodity market and resell it to end-users. Power markets are extremely volatile and market prices change every day, multiple times per day. The best way to secure a good electricity rate is to not wait until your current supply agreement expires. Partner with a an energy advisor, like 5 Digital Energy, to be informed of opportunities in the market.
The price of electricity in the futures market is determined by supply and demand and can fluctuate based on a variety of factors, including weather conditions, fuel prices and government regulations. Buying a future contract means that you lock in prices today, but you will not actually receive the electricity until a date in the future. As energy advisors, we reach out to our clients months, sometimes years, in advance of their contract expiration date to put a renewal contract into place when we see a favorable market opportunity.
Supply agreements between an energy provider and an end-user secure a negotiated rate that is charged on a per kilowatt-hour (kWh) basis. Energy usage is measured as the number kilowatt (kW) of power used for every hour. Each month, the utility company reads your meter and reports the current kWh value and compares it to kWh value from the previous months meter-read. The difference between the two values is your electric usage for the month. Multiply electric usage with your contracted electricity rate to give you the supply cost for that month’s energy bill. Think of this like the odometer on your car and this month’s energy usage as a trip. Your kilowatt-hour energy usage is how many miles you travel in one month.
The highest impact you can make in lowering your energy cost is to reduce the amount of energy usage. Here are some ways to slow down your meter:
By programming your thermostat to lower the heat or air conditioning when the building is unoccupied and turn it back up before employees arrive, you can avoid wasting energy on over heating or cooling an empty space. This can help you reduce your energy bills and decrease your business’s carbon footprint. Additionally, using a programmable thermostat allows you to schedule different temperature settings for different times of the day, which can help you optimize your energy usage. This means that you can set the temperature to be lower when the building is unoccupied and higher when it’s occupied, which can help you save energy without sacrificing comfort. With a programmable thermostat, you can easily set and adjust your heating and cooling schedule, so you can ensure your HVAC system is only running when it’s needed, saving energy and money.
Air conditioning is a huge source of energy use. By knocking the thermostat up a few degrees in the summer and down a few degrees in the winter, you allow the air handling units to take a breather. Each degree change in your temperature setting is worth about 3% in cost savings. For warmer days, consider using the ceiling fan before kicking on the air conditioner. Ceiling fans use less energy which means you can run them for longer periods of time without increasing your electricity bill.
For cooler days, opt for jackets over space heaters. Personal electric space heaters are hardly energy-efficient and will quickly erode any savings you gain from not running the system heating. Bonus tip: ceiling fans have a switch on them that allows you to reverse the rotation of the blades! In the winter, switch the rotation so that the fan sucks the cool air up so that the space feels warmer.
Treat your ceiling fan schedule like your air conditioner schedule. There is no need to circulate air in a space if it is unoccupied, so make sure you turn off your fans when you leave!
Similar to turning off your larger equipment like air conditioning, make sure that you’re using lighting efficiently. Energy efficiency in the lighting space means using smart equipment when you need light and using zero equipment when you don’t.
Low hanging fruit for almost every energy audit is replacing incandescent light bulbs with LED lights. LEDs convert more of the energy they consume into light and less into heat. Also consider adding dimmer switches or utilizing natural light when the weather cooperates.
What’s better than using more efficient lighting? Not using any lighting! We’re not insinuating you require employees to work in complete darkness, but training your team to turn off the lights when they leave a conference room is an easy way to reduce energy costs. Much like programming your thermostat, consider putting your lights onto a schedule that makes sense for your building.
Newer, more energy efficient models of water heaters use less energy. For example, a tankless water heater only heats water when it is needed as opposed to traditional water heaters which continuously heat a tank of water. This vastly reduces the gallons of water that are kept warm but not immediately used. Additionally, newer models may have better insulation which can reduce standby heat loss, leading to less energy consumption. When looking to upgrade your equipment, look for the Energy Star logo to make wise investments.
Technology in detergent has improved significantly in the last several years. Using the cold water setting on your washer is just as effective as hot water for most normal loads. Managing water heating costs may seem small, but those savings will add up over time on your utility bill.
Many brokers will tell you there is nothing you can do about Utility charges because they are regulated tariffs. While that is true, there are many strategies you can employ to reduce your demand, measured in kilowatts (kW), and therefore reduce your energy bill. Peak demand is the highest amount of electricity that is needed at a specific point in time. The utility companies use this information to estimate the maximum amount of electricity they will need to be able to provide for your meter. For larger commercial customers, the utility will charge you a percentage of the peak demand for the 11 months after the peak has been set. In other words, if your meter set it’s peak at 100 kW for the month of August, the utility will charge you a percentage of that peak (usually 80%) until the following July. In this example, if your demand in September is only 50kW, the utility would charge you for 80kW. If your demand in October reached 150kW, the peak demand would then be reset for the next 11 months and the minimum bill from the utility would be for 120kW.
To avoid setting large peak demands, set a schedule for turning on large equipment like HVAC systems or industrial machinery. When you turn on large motors, there is an instantaneous draw of power from the grid. Instead of turning on all of your equipment at one time and causing that instantaneous demand to spike, turn on one and then wait 30 minutes to turn on the next.
Adding digital controls to a building can help lower energy costs by allowing for more precise and efficient management of the building’s energy systems. Digital controls can be used to monitor and adjust lighting, heating, and cooling systems, as well as other building systems. Variable frequency drives are types of controls that slowly ramp a motor up to speed which helps avoid setting peak demands. Advanced digital controls can be programmed to automatically adjust the building’s systems based on occupancy and weather conditions, further reducing energy consumption and costs.
When the outside temperature is 200 degrees and everyone has their air conditioning on full blast, utility companies begin to worry about the reliability of the power grid. For large commercial clients, a separate demand charge is assessed for the amount of power their meter required at the time the power grid reached its peak demand. This snapshot of your demand during one 15 minute interval during the summer can cost some commercial and industrial businesses a pretty penny. These peak demand pricing mechanisms from the Utilities are intended to recover the costs of providing the necessary generation, transmission, and distribution infrastructure to meet the highest electricity demand during peak periods. These demand charges are typically set high to encourage customers to reduce their electricity usage during peak periods and reduce the strain on the power grid and keep energy costs low.
Shifting energy-intensive activities to off-peak periods, turning off unnecessary lights and equipment, or installing energy-efficient technologies are great ways to avoid large peak demand costs. Consider adding solar panels or back-up generation during these high times of strain on the power grid. Separate financial “Demand Response” incentives are provided for large commercial and industrial users to shed electricity usage during peak times in order to help balance the supply and demand for electricity.
These meters communicate with utility companies to measure and report electricity usage in real-time, eliminating the need for manual meter readings. Smart meters offer several benefits including improved accuracy, cost savings, and convenience for consumers.
With a smart meter, you can track your electricity usage and costs more effectively, helping you make informed decisions about how to reduce energy consumption and save money. Additionally, smart meters can also provide real-time data to utility companies, enabling them to respond more quickly to outages, improve grid management, and prevent theft.
Implementing these tips can help lower your business’s electricity bills and reduce your overall costs. By being mindful of your energy usage, you can help your business be more sustainable and save money in the long run.