If you’re keen to manage your small, medium or large business energy use and cut costs, our top 10 tips range from the simple to the more sophisticated.
Top 10 tips to take to save
Keep on top of the energy market
Regularly review your contract and invoices to ensure you're getting the best deal for your business.
Get your energy data
Get your energy data for the last 12 months from your bills or by asking your energy retailer. This will show you how much power you use and if it varies throughout the year. Use this data to create a before-and-after snapshot of your power costs after implementing savings.
Compare energy offers
Victorian Energy Compare can help you find the best energy deal. You will need to be on an energy retail offer and have been at your premises for more than 12 months.
Each energy retailer will offer a range of contracts, each with set terms. If your business spends less than $20,000 per annum, you can use arrangements similar to households to get a new energy contract.
Want to find out more? Visit Your business energy use.
Use an energy broker
If your business spends more than $50,000 annually on power, it may pay you to call in an energy broker.
They are independent, understand commercial energy, business and market trends and can help you get the best deal. Odds are they’ll save your business more money than you can. Getting the cheapest price may be your top priority, but terms and conditions can be equally important. They should be carefully reviewed and negotiated, especially in the volatile gas and electricity market.
Find an energy broker through word of mouth or the Energy Efficiency Council.
Immediate steps to reduce energy use and cut costs
This depends on how you use energy and equipment, but these tips apply to most businesses.
Clock off and switch off
- Overnight and holiday shutdown means just that: shut down electrical appliances, lights and other equipment. If you haven’t got a system, develop one – and stick to it. It can be as simple as having the last person to leave turn off the lights and other equipment.
- Set computers and other equipment to automatically turn off at the end of the day. Appliances such as printers and photocopiers can often be set to energy-saving modes.
- Install simple timers on equipment such as boiling water taps to ensure they're off overnight and ready to use when you arrive at work. You can even automate these processes with a building management system or equipment timers.
- Larger businesses can shut down procedures for data centres and computers and minimise or shut down after-hours energy use of larger equipment such as boilers, chillers and air compressors.
- Remind after-hours cleaners to turn off the lights when they leave.
Service your equipment
- Regularly cleaned and serviced equipment operates better. For example, if you don't regularly clean refrigerated display cabinets, they can use up to 10% more energy.
- Make sure sensors and timers are working well.
- Set up a process to check for leaks in compressed air and steam systems.
- Conduct your energy assessment regularly to understand where energy can be saved. Simple steps to reduce energy consumption can provide immediate cost savings.
It's important to understand and track your energy use and costs over time
We have information on how to access and understand your energy data.
Audit your energy use
An energy audit will identify where your business uses energy and what you can do to reduce this. An audit will recommend specific improvements, including reviewing tariffs, investing in energy efficiency upgrades, and suitable renewable energy options.
Call in an energy assessor
Energy assessors will help you reduce your energy bills.
Choose an assessor that can:
- demonstrate energy auditing experience within your specific sector or industry
- provide details of their relevant expertise with appropriate qualifications and/or industry accreditation
- produce references, testimonials, and relevant case studies
- deliver energy audits to industry best practice standards (AS3598:2014).
Word of mouth
Have you asked your friends or business colleagues about their energy use? They may know the right experts to help you. Also – check with your local council, business or industry association about specialist energy assessors who can help with your specific needs.
Sustainability Victoria has also developed a range of best practice guidelines, tools, apps and training support
You can help manage energy demand through financial incentives and by changing behaviour
On top of paying for each unit of energy used, your business may be among the many paying additional charges based on when energy is used. This can show up on your energy bills in several different ways:
- demand charges – charges for the largest amount of power you used at any one moment in the billing period or season. These are charged per kW rather than per kWh
- peak or Time of Use charges – charges for energy used at set times, for example, 3 pm to 9 pm on weekdays
- businesses that use a large amount of energy may face higher charges during heat waves and other high-demand days.
Demand management can either use less power during peak times or switch to operating your onsite generation and battery storage energy instead of sourcing it from the grid.
If your business is a large energy user, you could be paid for reducing your demand through the Reliability and Emergency Reserve Trader (RERT).
It is important to understand your energy usage so you can choose the best plan for your business. All businesses can develop strategies for reducing or managing energy consumption during peak demand times.
How do I get started?
An energy assessor can check out opportunities for your business to manage demand, alongside onsite generation and retail options.
You can be billed for demand charges if your business is a large energy user (spending more than $50,000 annually). A broker can help you understand how to reduce these charges. Check out the Energy Efficiency Council's database of independent energy assessors
Sustainability Victoria also has a list of Victoria-wide independent assessors
Energy efficiency is one of the best ways for your businesses to reduce costs
Many Victorian businesses are saving energy by updating old appliances and equipment with new ones. This can be simply upgrading to more efficient lights or replacing existing equipment with energy-efficient options. In 2018, more than 17,000 businesses participated in the Victorian Energy Upgrades program, and each is expected to save around $3,700 on their annual energy bills. The larger the energy user, the larger the saving.
Why you should upgrade
The Victorian Energy Upgrades program is available to every Victorian business and organisation.
It discounts a wide range of energy-saving products, including
- lighting
- heating and cooling
- hot water systems
- refrigerated display units
- motors
- water-efficient pre-rinse spray nozzles.
These discounts are available through accredited providers across Victoria. Choose one that suits your needs, and then track your bills to see your savings.
Discounts only apply to products approved under the program that meet minimum efficiency, quality, and safety benchmarks.
Custom upgrades
Incentives are also available for businesses and organisations to invest in large, complex energy-saving projects.
Custom upgrades can be tailored for a particular site. Measure the difference in energy use before and after the upgrade to determine the incentive level. This can be measured in 2 ways:
- the measure and verification (M&V) method, which determines incentives based on analysis of energy use data before and after the upgrade
- the benchmark rating method is based on improvements in commercial buildings' NABERS rating
Solar solutions
Many businesses are implementing behind-the-meter energy solutions to produce their energy on-site to meet some of their needs. Government incentives are available for investments in energy efficiency upgrades and onsite renewable energy installations. The best combination will likely be bespoke – optimising different actions depending on site and business specifics.
Solar panels
A rooftop or ground-mounted solar panel system is your first option to generate your energy.
Solar panels may work for you depending on when you use electricity and the structure of your electricity tariff. To understand if solar panels are right for your business, you'll first need to understand your energy use.
Check out these useful sites
The Clean Energy Council (CEC) has a range of useful resources
- solar panel installation guide for business
- approved solar panel retailers
- list of accredited installers.
Solar with battery storage
If your business uses more power daily, installing solar panels could help cut costs. If your business uses power at night, you could install solar panels and store the excess power in batteries. These can provide power on demand when the sun isn’t shining.
A CEC-accredited solar designer can size a solar panel and battery storage system to cover your daytime and night-time electricity needs.
Other technology options
Generating energy onsite can also involve other technologies, including solar thermal (concentrated solar power), co-generation (combined heat and power), waste to energy and biomass (organic matter used as fuel).
The best combination of these technologies will depend on your site and energy profile, including when you use energy and what combinations of heat, gas and electricity are required.
Therefore, solutions to manage energy costs are often bespoke, and you may need expert advice.
The Energy Efficiency Council has a list of experienced and independent energy consultants to help you get the best option for your needs.
The Beyond Zero Emissions Electrifying Industry Report describes how businesses can switch to electricity from other (often more expensive and carbon intensive) fuel sources.
Distributed energy in the property sector – today's opportunities provide useful and up-to-date information on clean energy technology options for different building types, locations and loads.
What options are available to help finance your energy projects?
Financial incentives
Government incentives are available for investments in energy efficiency upgrades (through the Victorian Energy Upgrades program) and onsite renewable energy installations (through the Clean Energy Regulator).
ARENA and the Clean Energy Finance Corporation (CEFC) are potential funding sources for innovative and large projects.
Financing options
Different financing options are available to fund energy efficiency or renewable energy investments.
Sustainability Victoria offers a free finance facilitation service to all businesses, property owners, councils and community groups looking to invest in energy efficiency and renewable energy.
Environmental Upgrade Finance (EUF)
Owners of existing, non-residential buildings can get help financing environmental upgrades through Environmental Upgrade Finance (EUF). Under a EUF agreement, a lender provides finance to a building owner, and the local council collects repayments through the rates system. The council then passes the property charge onto the lender.
Find out whether you can access EUF through your local council.
Solar leasing
Solar leasing offers some benefits over ownership of a solar panel system, including:
- low or no up-front costs for the installation of solar panels
- no requirement for system maintenance
- immediate savings on energy bills.
An alternative to solar leasing is where a provider installs and owns a renewable energy source, for example, a rooftop solar on the business's site. Electricity generated is supplied solely to the business at an agreed rate.
This may be sometimes referred to as a Power Purchase Agreement (PPA). Talk to your existing energy retailer and if they offer this product, compare their offering with other retailers. You may also want to look at the Clean Energy Council’s list of approved solar retailers. You may wish to look at Power Purchase Agreements (see Step 10).
Solar for small business
The Victorian Government is also offering rebates for small businesses to install rooftop solar panels. To find out more about the program, visit Solar Victoria.
Have you considered sharing energy via an embedded network or microgrid?
Many businesses operate from multiple buildings in the same or similar location where each building is separately metered and has different energy requirements (such as manufacturing, warehouse and administration blocks).
Embedded network
Businesses may also be located within an embedded network. Embedded networks are private electricity networks that serve multiple premises but have one metered connection to the National Electricity Market (NEM). Examples of embedded networks include apartment blocks and shopping centres.
If your business is in a shared building or embedded network, it may be possible to create a smart embedded network and share energy production to save money. A smart embedded network would operate similarly to a 'behind-the-meter' solar system. However, the system would be connected to multiple meters and contain smart distribution technology to provide multiple premises.
Microgrid
A microgrid is a small electricity network that can operate independently from the grid and may also be an option for cutting power costs. The energy within a microgrid may even be able to be traded between participants.
Virtual power plants
Having your generation equipment with smart controls may also allow you to participate in Virtual Power Plants (VPPs). A VPP is created by grouping multiple small solar panels and battery systems to mimic a larger power station.
This is like a utility-scale solar farm, but instead of being in one location, the systems can be in different places and combined into a single entity that can plan and adjust production and trade on the National Energy Market.
You can even make extra money by trading excess power. The Victorian Government has recently approved a series of microgrid demonstration projects, which include innovative behind-the-meter models and smart embedded networks. These projects will test microgrids' social, economic and regulatory challenges and may inspire microgrid participants elsewhere.
The Energy Efficiency Council lists distributed energy and microgrid providers based on location, business sector, or specific products and services.
Power purchase agreements (PPA)
Larger businesses may contract their energy supply through a power purchase agreement (PPA).
A PPA is a contract between 2 parties – one who generates electricity (the seller) and one who buys electricity (the buyer). The PPA defines the commercial terms for the sale of electricity between the 2 parties, including:
- when the project begins commercial operation
- the schedule for delivery of electricity
- penalties for under delivery
- payment terms
- termination.
There are many forms of PPA in use today, and they vary according to the needs of the buyer, seller, and intermediary for example financing counterparty. Before exploring a power purchasing agreement, it is important to consider the following:
- interest in securing a long-term stable electricity price
- the expiration date of your current energy contract
- commitment to procuring renewable energy
- size of your energy load (MWh per year)
- when you use your energy (load profile), for example, 9 am to 5 pm weekdays only, evenings, weekends
- requirements at one or more sites
- ability to enter into a contract for power for a minimum of 7 or more years (noting the longer the contract, the lower the power price) or ideally from 10 to 15 years duration
Resources
The Business Renewables Centre Australia (BRC-A) is an initiative supported by the Victorian Government to facilitate the aggregation of power purchasing agreements and to provide a line of sight between energy sellers and buyers. The BRC-A will also have tools and guidance for those businesses considering this.
In 2018, the City of Melbourne concluded an aggregated PPA involving 14 off-takers. Read more about the Melbourne renewable energy project.
Aggregated energy procurement
This is a centralised purchasing model where 2 or more organisations (or a third party on behalf of those organisations) join to combine their needs and leverage negotiating strength. Participating businesses share the costs of legal, accounting and procurement advisors.
Progressive energy procurement
This involves forming a framework agreement under which electricity is bought in ‘blocks’ at different times, rather than buying all electricity requirements at once at a single price. By buying blocks of electricity, a business can secure low prices as they arise in the market and avoid renewing a contract at ‘the high’ and locking in high prices. It is a variation of the standard purchasing model that spreads the timing risk, allowing the electricity buyer to benefit from ‘averaging in’ or what is also known as portfolio insurance.
Speak with a professional energy consultant to identify the best options for your business.
Page last updated: 12/11/24