Simple Ways SME’s Can Manage and Reduce Energy Consumption

simple ways sme’s can manage and reduce energy consumption gas stove

The duality of energy and climate change is undeniable. On one hand, energy consumption in Australia is responsible for 51.2% of the national greenhouse gas (GHG) Inventory[1]. On the other hand, energy is a crucial commodity, which is expected to increase with a rise in temperatures due to climate change. In simple terms, our energy demand significantly contributes to climate change, which in turn boosts our energy demand. This loop has been a focus in the race against climate change, bringing up conversations from the electricity generation fuel mix down to the role of both business and household consumers.

The past decades have seen an important transformation in penetration of renewable energy in Australia’s electricity mix from 0.5% of the national generation coming from renewables (excluding hydro) in 1990-2000 to 13.7% in 2018-19. The shift in energy generation fuel sources needs to go together with energy management practices to improve energy efficiency and conservation.

Such practices make sense for businesses not only to reduce their carbon footprint but also to understand and reduce their energy use and costs through the implementation of energy efficiency opportunities tailored to their needs. However, two of the main constraints when introducing energy management in small and medium scale enterprises (SMEs) are the limited understanding of their energy use and the relevance of measurement and verification processes.  

Understanding energy usage for SMEs

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 to reduce it are. We have helped businesses gain a granular understanding of their energy usage through detailed data analysis, allowing them to identify their 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.

After assessing only one years’ worth of data, many of our clients have seen that 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 use by critical equipment.

There are multiple programs available for businesses to access energy management training, support, and capital funding for upgrades. Visit your state and federal government grant website for up to date information.

Energy measurement and verification for SMEs

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. 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[2].

The underlying principles of energy management allows businesses to take control of the entire energy cycle across their operations, from where it is sourced from to how much and when it is used, ultimately improving network stability by helping balance electricity supply and demand.[3] Considering network charges make up 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.

[1] Percentage includes electricity and stationary energy only. Source: Quarterly update of Australia’s National Greenhouse Gas Inventory (March 2020).

[2] Walsh, L. (2020). Saving energy to help those who can’t. Gill Owen Essay Prize.

[3] Energy Efficiency Council. (2020). Navigating a dynamic energy landscape. A Briefing for Australian businesses. Third edition.