by Ray Wilson.

Originally published in Chamber of Commerce & Industry Business Pulse June 2017

Chamber of Commerce & Industry WA Business Pulse, June 2017


Many businesses are concerned about rising energy prices. Yet few have taken action to implement, usually simple, energy efficiency measures which can save 20-40% on annual power bills.

Cost effective energy efficiency also makes good business sense with benefits in staff comfort, health and productivity and reduced maintenance costs. Leading brands are finding environmental responsibility is good for business through improved stakeholder engagement with their employees, customers, suppliers, and investors.

Sustainable or ‘green’ procurement practices are increasingly driving environmental management in supply chains.  An easy first step that can be achieved at little cost, or even usually cost benefit is energy efficiency, as you are also seen to contribute to reducing greenhouse gas emissions and tackle climate change.

ClimateWorks estimates that Australia’s built environment accounts for almost one quarter of our national emissions. Improving the energy efficiency of Australia's commercial buildings could save $2.3 billion per year across the national economy, while cutting emissions by 23 million tonnes per year. Implementing all practical energy efficiency opportunities could deliver almost $20 billion in financial savings by 2030.

Energy assessments undertaken by Carbon Neutral for high energy consuming commercial sites have identified solutions such as heating, ventilating and air conditioning (HVAC) controls, lighting retrofits, voltage optimisation, variable speed drives for electric motors, solar PV and ongoing performance management typically delivers 30-50% reductions in energy use and cost, with payback periods from 2 to 5 years.

Energy Efficiency Audit

energy audit

At a large aggregated scale, Woolworths report their energy efficiency and low carbon technology projects initiatives which focused on refrigeration, air-conditioning and lighting have delivered operating cost savings of $172 million, from $137 million in capital investment. The estimated reduction in carbon emissions was more than one million tonnes. This was achieved through use of low greenhouse gas emitting refrigerants, efficient redesign of customer-facing refrigeration cases, large scale adoption of efficient fluorescent light and LED lighting, and improved energy management systems (Woolworth’s Corporate Responsibility Report, 2015).

The Australian Government’s Energy Efficiency EXchange website provides information and case studies about energy efficiency savings for SME’s across a wide range of sectors. Many of the most effective programmes in these sectors have been delivered in partnership with sector-specific business associations (for example wineries, dairy farmers, hotels, fruit  production etc).

energy tariff tendering

Carbon Neutral did some work in the panel and paint bodyshop sector, where case study information was shared. Initiatives such as Variable Speed Drives and controllers for baking oven exhaust and intake fan motors had a 1.8 year payback period. Re-negotiating electricity and gas supply tariffs delivered annual savings of $16k for one site. Solar was an obvious option given large roof areas and was cash flow positive from the start through a power purchase arrangement by “leasing” roof space to electricity generators in return for long term, cheap, renewable energy contracts.

Older commercial office premises in the CBD, including solar installation, have yielded a 40-60% pa energy savings, increased NABERS/Green Star ratings and return on investment from 2 to 5 years. Work done by Carbon Neutral partner Climate Change Response has identified savings of more than 25% in the energy consumption from the implementation of simple projects in one entity’s buildings, with payback periods of between 1.5 and 3 years. This corresponds to an annual saving in energy costs of ~$400,000.

energy savings

For small and medium sized businesses it’s worth looking at energy efficiency if annual electricity bills are over $12,000. Some reasons for not taking advantage of the benefits from energy efficiency include a lack of awareness, low status of energy as an operating or overhead cost, other priorities, lack of time, lack of internal control, perceived better use of capital, and risks (technical, commercial and financial) that the potential efficiencies may not be achieved. Most businesses need help to explore their individual options. The challenge then is implementation as most SMEs are too time-poor to organise and project manage the implementation. These issues can be addressed by using a qualified and experienced energy auditor/assessor who can also assist project management and implementation.

The need for Australia’s business community to lower their exposure to energy pricing impacts and shift their focus to progressively more efficient and sustainable operations and transition to a global low-carbon economy is supported by organisations such as CitySwitch.  The Energy Efficiency Council is working to build confidence in energy efficiency providers and the Measurement and Verification (M&V) process through certification, as investments require a high level of certainty that the energy savings will materialise. There are now Australian standards that cover how energy audits should be undertaken. 

Energy efficiency service providers can be found through the Energy Efficiency Council, industry associations, and perhaps surprisingly Western Power and electricity retailers. When procuring the services of an energy efficiency professional it is important, as with all service providers, to shop around for the best value for money, seek evidence of track record, require references, and ensure the provider uses the Australian Standards.