Electricity accounts for such a significant proportion of overall overhead costs for an Australian small-to-medium enterprise (SME), as with households. Finding the right deal is doubly pressing lately, given that average prices and bills have risen over the last few years for companies nationwide.
Ownership and management must be proactive in optimising energy costs within the business, taking actions including leveraging comparison tech (using intuitive tools such as Econnex to compare business electricity plans) and minimising any unnecessary operation of high energy-usage appliances and systems, such as air conditioning.
It’s time to break down the landscape for business electricity plans in Australia, exploring what tends to use the most energy, how much a business might expect to pay in Australia, and what steps can be taken to minimise the damage, including business energy plan comparison.
Introduction to Business Electricity in Australia
Before you start surveying the options, it’s essential to collect the correct information. Every Australian business is different; each one has a different balance of appliances, machinery, and other electrical systems that it needs to operate effectively. It’s critical to monitor your business’ individual energy consumption using innovative technology like a smart meter to understand which solution might best fit your needs.
Moreover, each Australian state has its own mix of energy legislation and incentive programs that may influence the decision-making process for your company. It’s advisable to read up on the relevant laws and programs, ensuring that they are still applicable, to make a well-informed choice.
Difference between Business Electricity Plans and Residential
As their consumption patterns and needs differ, energy retailers throughout Australia apply different rates and tariffs to businesses compared to residences. Typically, a business is likely to use more power than a household, although that varies significantly according to the company’s trade. A manufacturer operating heavy machinery will likely use more than a residential painting company.
There may also be some differences in the hardware, such as the smart meter, accompanying your business electricity plan. If your business uses significantly more energy than the standard household, a regular residential smart meter won’t handle the load requirements. It needs a higher range to accommodate the extra consumption.
Do Costs for Business Electricity Plans Vary State-by-State?
Each Australian state and territory has its own energy market, with independent pricing and differences in applicable legislation. For example, consumers in South Australia may find that they pay more per kilowatt hour than those in Queensland. These variations in business energy deals are influenced by factors such as the availability of natural resources, state energy policies, and competition among providers in that region.
Beyond that, the prices from retailers may even vary between the major cities and more rural areas within a particular state. Urban businesses might enjoy more competitive rates due to higher provider density, whereas rural enterprises could possibly face higher costs due to challenges with energy infrastructure.
What Uses the Most Electricity in an Australian Business?
It’s a little like asking how long a piece of string is. As mentioned, energy consumption can vary significantly from one Australian business to another, depending on the nature of what it does. However, generally speaking, some appliances and systems may account for a significant percentage of your company’s energy bill (if they are in use). These include:
- Internal heating/air conditioning - As with residential energy bills, climate control can be a substantial factor. Heating and air conditioning systems tend to use more energy compared to other appliances and can operate practically unchecked for multiple hours throughout the day. For some businesses, these systems may account for up to 40% of their net energy spending, especially in colder months.
- Lighting solutions - This also depends on how many employees are in the office or how many industrial spaces require lighting. Every lightbulb adds a little bit extra to the bill; how much depends on its energy efficiency and level of brightness.
- Other electrical appliances - Refrigerators, dishwashers, computers and monitors, coffee machines – the use of all of these smaller appliances can really stack up over time (depending on how many people regularly use office facilities and so on).
- Water heating. Water heating systems can be greedier for energy than you might expect, possibly accounting for up to 25% of overall consumption.
How to Analyse Your Business Electricity Consumption
To paint an accurate picture, you should take readings of your energy consumption or check the details on your energy bill at regular intervals throughout the year and at different times of day. Net energy consumption will likely vary between seasons, as appliances such as heating systems are used more or less to account for changes in temperature, and customer volumes fluctuate.
Further, depending on the plan that your company chooses, the price per kilowatt hour (kWh) may vary between peak and non-peak periods of the day, which your retailer may also change according to the season. Consider the differences in the applicable rates when determining the best strategy for your company.
Determine Energy Consumption to Optimise Your Business Energy Plan
A basic strategy to optimise your business energy plan might include some of the following actions:
- Check what time of the day you tend to run appliances. Does that time vary between seasons or as customer volumes change? How does the usage pattern line up with peak or off-peak periods in your current plan?
- Check how the use of appliances varies between seasons. If you use heavy machinery twice as much in the summer months, you’re likely to pay more on energy costs during that time (and that’s even before exploring rate and tariff changes between seasons from the retailer).
- Compare business electricity plans every six months (at least). Use our Econnex platform to compare options available for your postcode from our panel of retailers. Prices can fluctuate quickly, and it’s always recommendable to regularly shop around for a potentially better deal.
Factors to Consider when Determining the Ideal Business Electricity Plan
Before you explore the range of options from our panel of Econnex providers, you may wish to consider some of the following factors that can ultimately influence what your company pays:
- Which pricing model works for me - There are generally three types of pricing structures available from energy retailers for Australian businesses:
- Single-Rate Plans - These plans lock in a rate for the duration of the contract, providing stability and predictability in costs. They're ideal for businesses that prefer budget certainty.
- Variable-Rate Plans - Here, rates can fluctuate based on market conditions. While they offer the potential for savings when rates drop, they also carry the risk of higher costs during peak demand periods.
- Plans with Time-of-Use Tariffs - These plans charge different rates depending on the time of day, with higher costs during peak hours. They're more suitable for businesses that shift their high energy usage activities to off-peak times.
- What are the available contract terms - If your business is locked into a twelve-month energy plan contract, it may be more challenging to compare and switch to a potentially better option (at least without paying a break-contract fee). However, long-term contracts might offer lower rates. Conversely, short-term contracts may provide more flexibility but might come with higher rates. It's about finding the right balance based on your business's stability and growth projections.
- Are there any sign-up offers or discounts - Many providers attempt to win corporate customers with attractive discounts and sign-up incentives, which we outline on Econnex when you compare business electricity plans. While these can lead to initial savings, assessing the long-term value of the plan you intend to choose is still essential. For example, a plan offering a substantial discount for the first six months might nevertheless be more expensive in the long run than a plan with consistently lower rates.
How to Reduce Business Electricity Costs
Are you looking to reduce your company’s expenditure on energy? Consider some of the following actions that you may be able to take:
- Regulate and monitor air conditioning/heating. Perhaps you don’t need your office to be quite so toasty, or maybe the air conditioner can be powered down for the last hour or two of the business day (unless it’s absolutely sweltering). You don’t want your employees feeling uncomfortable, but you may still be able to adjust your climate control to reduce its impact on your expenses.
- Open a few windows. Natural ventilation solutions can help keep the office space cool without immediately resorting to systems that guzzle energy.
- Explore solar panel solutions. Solar panels can reduce your energy bills and carbon footprint at the same time, representing an economical and sustainable solution for several companies. While the upfront cost can be significant, you can leverage available feed-in tariffs (FiTs) to improve returns and reduce your consumption from (and reliance on) the grid.
- Consider a gas water heater or heat pump. There are several pieces of innovative water-heating technology that may allow you to reduce overall energy consumption compared to electric heaters.
- Consider your insulation options. Insulation can play an integral role in maintaining comfortable internal temperatures while reducing energy consumption. The type of insulation you use should be well-suited to the local temperature conditions in your postcode, as different kinds are manufactured for specific climates.
- Switch to energy-efficient lightbulbs. Lighting can account for a substantial percentage of net energy consumption. Adopting energy-efficient bulbs will help reduce that cost without compromising too much on performance.
- Use appliances with higher star ratings. The more appliances (including company fridges, dishwashers, coffee machines and so on) you can get that approach the elusive five-star energy rating, the better off you’ll be regarding your company’s energy bills.
Compare Business Energy Deals on Econnex Comparison
Another surefire way to ensure you’re locking in the best prices and saving on energy bills is to compare business energy plans using intuitive comparison technology, such as our Econnex Energy Comparison platform. It’s a simple and effective way to compare various commercial energy plans from our panel of providers available in your postcode.
You could compare plans to prospectively find a better deal in three simple steps:
- Enter your postcode on Econnex Comparison.
- Add a few extra details so that we can find the plans relevant to you.
- Compare your options and apply online within minutes.
That’s it! That’s all you need to do to help ensure that you’re accessing the ideal energy plan from our panel of providers for your company. When you adopt energy-saving initiatives AND compare available plans to source the best pricing for your needs, you put yourself (and your company) in the best position possible to save on electricity costs.
Let’s get started. Compare, switch, save.