With the recent volatility in the energy market, Choice Energy conducted a webinar educating businesses how to lower their energy costs and what to expect in the future of energy.
In case you missed it, here are five learnings from Choice Energy's webinar on tackling business energy costs and reducing risk from the volatile energy grid this year.
The webinar can be viewed here.
1. Timing is everything
Timing is actually everything when it comes to managing your energy contract and optimising your spend.
If you are on a flexible small-market agreement, Choice Energy encourages you to review your energy contracts annually, or work with someone who can do this for you. For the majority of small businesses across the country, every January and July there is an annual increase to electricity prices and how your business responds could be the difference in significant energy savings.
For larger businesses on fixed energy contracts, Choice Energy suggests never to wait until the end of your contract to negotiate your next one. If you do, you will be left with limited options and less bargaining power. If you don’t renew your next contract before your last one finishes, you risk falling on default rates which can be costly. Ensure you are on the front foot and know when your energy contract is up for renewal, or work with a broker who can manage this for you. A broker can also assist you with tactics such as forward-contracting, blend and extend options, and metering that help with managing your risk.
2. Solar is the most powerful tool to shield your business from rising costs
Due to rising popularity in solar from business and home owners alike, more solar manufacturers have come to the table, offering a range of budget to premium options. There has also been an influx of installers offering varying standards of quality. This has resulted in confusion from consumers over technology, equipment and install methodology. Choice Energy strongly encourages you to ensure you work with a Clean Energy Council member, who is also an approved CEC Retailer to ensure they maintain the highest standards.
To get the best ROI Choice Energy also encourages you to work with a group who doesn’t treat your solar system like an appliance but a piece of equipment that must be maintained and monitored for up to 25 years. As the price of solar has fallen over 10-12 years, thanks to the suite of federal rebates to help offset the cost, the evidence is clear, solar is the most proactive way to protect your business from continued volatility across the energy market.
3. Battery storage is not commercially viable...yet
Despite increasing interest, battery storage could still be years away from being commercially viable for businesses. Currently the payback periods range from 8-10 years with a technology life of 10 years. With battery prices highly volatile, Choice Energy recommends waiting 3-5 years where they hope to see downward movements. Regardless, if you’re making the switch to solar now, be sure to make sure your system has hybrid capability so you can make the switch easily when batteries are viable
4. Solar doesn’t require a big upfront investment and savings can be found from day one
As the solar industry has changed, one of the key concerns amongst many business operators is perceived upfront cost. But solar doesn’t necessarily need a large upfront investment to make it worthwhile for your business. Choice Energy recommends keeping cash flow as strong as possible by leveraging federal solar rebates and third party clean energy finance to help pay off the system. This means you’ll use a portion of your post-solar energy savings to help pay off the system, but still be better off.
A range of key factors need to be considered before determining whether solar is a good fit for your business. The team at Choice Energy recommends you must either own your building or plan to be at the site for a minimum of 5 years to make your investment worthwhile. Your business should have at least 100 square meters or more of unusable space for the solar panels, and be spending at least $400 per month on electricity
5. Seek independent expertise when you don’t have time
Historically, many operators would pay their energy bills each period, not questioning or challenging what else might be available to them, categorising them as a necessary evil. But as the market volatility and prices have increased, Choice Energy has seen greater engagement from business operators seeking more education and control over costs. For those wanting assurance around managing costs, an independent energy expert is a great option to allow business operators to focus on what they do best.
So, what does the future of energy look like for Australia and Australian businesses?
We don't have a crystal ball, but the future of energy in Australia remains volatile, with suggestions that an El Nino weather event will add further pressure to the energy grid impacting business energy costs.
Alarmingly, Australia has also seen an acceleration in coal fired power station closures while facing significant delays in new renewable energy sources that are supposed to act as replacement capacity, set to impact supply and demand for all energy users.
This sentiment is echoed by Head of the Australian Energy Market Operator, Daniel Westerman’s thoughts, who recently said that the renewable energy transition is not moving fast enough, "Bringing these new projects to market and connecting them into the grid urgently is critical to ensure consumers continue to have reliable power when they need it.”