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How to Reduce Your Business Energy Costs

Published on 14th July 2020 - Last update on 15th July 2020

Running any business means keeping tight control of your costs. There is no point in running your business at all if your expenses - the money you pay out each month - exceed the income you draw in.

Anything you can do to reduce your costs can increase your profits – so it makes sense to look at one of your major cost factors – your energy use.

Electricity and gas costs can be very high these days. Industry averages estimate that even the smallest businesses spend around £2730 per year on electricity and £1050 on gas, totalling £3780.

If you run a factory with a large base of machines, or even if you run a large office, you can find that your energy use has become a steadily increasing expense. As a result of constant energy usage within your business, not only are you adding unnecessary costs to your budget, but you’re also emitting additional carbons on the environment and having a serious negative impact on the way it functions. For the good of your business – and for the good of the planet – you need to look at how you use energy, and where you can save on it.  

You need to run an energy audit.

Questions you need to ask

  • Are you running process or production machinery? How old is it? Is it using energy-efficient motors?
  • Do you have special environmental needs – refrigeration or minimum temperatures?
  • Are there always lights on in your business? What kind of lights are they?
  • How long are the lights on for? 9 a.m. to 9 p.m.?
  • Is the heat always on during the winter?
  • Is the air conditioner always on during the summer?
  • Are you doing anything already to eliminate the need for a heater or AC unit?
  • What type of temperature are your employees comfortable in?

You can hire an energy audit company to do an energy audit of your office, but many utility companies offer a free energy audit program to ensure that you are using energy efficiently. Give them a call and see if they can help you identify areas to trim down your energy needs.

Putting what you have learned to work

Once you have the results from your energy audit, you should be able to see where you are wasting energy and start taking steps to improve things.

Establish energy-efficient working. Depending on the utility company you are paying, they usually have off to high peak times during the day. Can you perform energy-intensive processes during the low or off-peak times? Using off-peak energy for smelting baking and other heat-sensitive activities can cut energy bills by a third or more.  

Look at your lighting

Lighting for display and security may be always on. If you are still using old-style incandescent and fluorescent lighting it is time to change. Replace existing bulbs with CFLs - CFL and LED lights consume less power and offer much longer lifespans. Commercial lights qualified by the DesignLights Consortium (DLC) or Energy Star can even reduce energy consumption by up to 75% and increase the lifespan of your fixtures by 2-3 times, meaning substantial savings in both energy and maintenance.

There may also be a secondary saving. Old-style lighting wastes energy as heat. In a large sales floor or showroom, or even in a large open plan office, lighting may make the air uncomfortably hot. This requires the use of air conditioning. Replacing bulbs may mean you can turn the air conditioning down – or even off altogether.

Of course, the costs of replacing every light fitting across your business will be substantial, but you may be able to cut the cost by replacing the luminaire - the bulb itself - instead of the entire fixture

This is known as retrofitting and will reduce costs by a cheaper light costs along with easier installations.

Hibernate and switch off

Forget screen savers and use the hibernation feature of computers and laptops. The hibernate feature in laptops and desktops allows you to save your existing work as it is and you can continue from the same point the next day. You can schedule your workstation to switch to hibernate mode after working hours and during weekends.

Better still, switch off equipment when not in use. Make sure that you turn off all printers, scanners, microwave, lights, air conditioners, coffee vending machines at night, during weekends or holidays. They continue to draw power even if they are plugged in.

Switching them off after working hours will conserve energy, reduce heat waste and cut your energy bill.

Go easy on air-con

Your air conditioning systems may be essential in summer but you may not need it all year round, especially if you can open a window instead.  And remember there are alternatives. While a typical central air conditioning unit uses 3,500 watts of energy when running, the average ceiling fan uses only 60 watts — even when running on high. 

Remember it’s good practice to replace air conditioning filters on a regular basis – ideally bi-monthly. Replacing a dirty, clogged filter with a clean one can lower your air conditioner's energy consumption by 5-15%.

Reducing waste heat in your workplace will reduce the need for your air conditioning – making it a double win.

Keep exterior doors closed

For retail businesses, an open door can be a real plus, inviting in shoppers who might otherwise walk past. But if you need to see an increase in custom as Christmas approaches, keeping the door open can bring the chilly air in too, forcing you to crank up the heating. It’s important for retailers to provide an inviting environment for shoppers by keeping it warm inside, so make sure the door is kept firmly shut to help conserve heating.

Revolving external doors can provide an efficient solution to this issue, providing a barrier against the chilly air outside.

Defrost fridges and freezers

Your workplace fridges and freezers are taken for granted and often not given the best care and attention. But taking time out once a year to give these vital, hardworking appliances a bit of support can reduce their consumption significantly, extend their service life, and even help you avoid health and safety issue. Leaving freezers frosted up or not keeping the fridge well-stocked all reduce the running costs.

For the average domestic fridge freezer, the annual running cost is estimated to be around £62.00– but this is much higher if you don’t help it to run efficiently. The costs of running a commercial freezer are naturally much higher still.

Need to replace inefficient and costly equipment in your business? Find out how Asset Finance can help 

Buy energy-efficient devices

Energy-efficient devices cost more upfront but, over years of use, they’re going to save you money. This holds true for any equipment that runs on electricity – spending a little more can result in significant savings over subsequent years.

If you run a large production floor, you may have an estate of machines that are less energy-efficient than they should be. Specialist firms exist who can retrofit machines with new controllers, motors and ancillaries which can help reduce energy waste. Machines that run cooler can last longer and give more accurate results – improving your production standards as well as cutting your costs.

A little known fact : Laptops use up to 85% less energy than desktop PCs.

Stay comfortable

Keeping staff comfortable can increase productivity. Invest in a programmable thermostat that can automatically adjust the temperature of your workplace when no one is working, which can add up to significant savings for your business.

In older buildings, look out for small drafts that may leak the air. Small drafts can result in businesses losing substantial portions of their heating and cooling costs. Proper air sealing of the work environment can eliminate this kind of energy loss.

You can’t afford to make your premises uncomfortable, but you can’t afford to spend too much either. Keeping your office temperature one degree down during winters and one degree up during summers can reduce the power it uses by up to 10%.

Work smarter

Changing your working practices can help reduce your energy needs. Educate your employees about the energy-saving features of air conditioners, printers and microwaves, and let them use those features to cut energy costs.

Discard old gadgets if they don’t have energy-saving features and buy energy-efficient peripherals to replace them. If your old heater or air conditioner is not working at maximum efficiency, it could draw unnecessary power which may cost you money. Replace your decade-old heaters and air conditioners with energy star ones.

Use technology to hold virtual meetings. New technologies like Webex and Skype allows you to hold virtual meetings, give presentations and make long-distance phone calls without even going to your client’s premises. You can save money on the amount of fuel and tickets.

Give your employees an option to work from home on alternate days. With VPN technology, an employee can connect to the office network safely and securely. With fewer employees in the office, less lighting and cooling would be required. Technology gives employees the advantage of flexible work arrangements.

Consider switching providers

The simplest way to reduce your energy costs is to evaluate whether or not you can get a better deal for your electricity elsewhere. This can often be done by using an online comparison tool.

There are a number of factors impacting the amount that businesses pay for their electricity – including location, the type of business and usage habits.

But there are also factors that you can influence. Ofgem’s 2017 ‘State of the Energy Markets’ report found that smaller UK businesses are paying 50% more for electricity than very large consumers. This may be because larger business customers have more leverage to negotiate better deals or switch to a cheaper supplier.

It pays to shop around. There are currently 60 energy suppliers in the UK, but over half (58%) of small businesses have never switched suppliers, or have only switched once. In a competitive market, this is a massive missed opportunity.

And another way to reduce energy costs

There is another way to reduce energy costs is to produce your own energy. However, until recently, doing so has been expensive, and required investment in boiler houses and generation equipment. But now with as the latest generation of solar, wind and combined heat and power (CHP) technologies work in tandem with power storage, on-site energy generation could be within reach – turning you from a net energy user into a net producer, with an extra income stream.

Renewable technologies are already providing on-site power solutions to manufacturers, retailers and other businesses, and are proving adaptable solutions for businesses concerned with cutting their power bills or considering a combination of power and heat solutions. On-site generation solutions vary in scale, complexity and cost, and can be engineered to fit the specific requirements of each and every business.

They include on-site solar photovoltaic (PV) solution, which gathers solar energy and cuts reliance on power imports from the grid, is a great solution for many companies that are seeking to cut their power bills. However, in areas that receive less daylight, many organisations interested in generating large quantities of their own power and heat would be best served by investing in a CHP solution, integrated with process machinery. 

Another solution may be wind power. Wind is a resource that Britain has in great abundance, depending on where you’re located. And being an endless clean source of energy, the potential for making savings is literally blowing over your head, should you decide to make use of it. Plus, thanks to technological advancements in this area, onshore wind turbines are also becoming more efficient than ever before, and are continuing to do so.

Remember, if you generate any surplus energy you could to sell this energy back to the National Grid or your energy provider under the Feed-in Tariff (FIT) scheme. Therefore, as well as saving your business money, it could also be used to generate an income. Just remember that if you are intent on building a wind turbine for your business and sell surplus energy, the equipment must be fitted with an accredited Ofgem generation meter and you’ll also need to form an agreement with your Distributed Network Operator

Getting the funding you need

If your business needs to reduce the cost of energy, it might be necessary to invest to do so. New energy-efficient equipment and light bulb upgrade programmes will take investment - and if you want to look at bringing in your own energy generating equipment, the costs will be high.

At Rangewell, we can help you find the funding you need, with solutions such as Asset Finance, which could let you bring in new equipment - from more efficient appliances to complete energy generating systems and spread the cost - or even avoid any upfront costs altogether. 

Our team of business finance experts work with you to get to know your business and understand the kind of arrangement and features you need - and help find the lenders most likely to help. To find out more, call us at Rangewell on 020 3637 4150 - or email  [email protected] Our service is free.


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Richard Mitchell

Richard Mitchell

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