With the expected implementation of the Carbon Tax Bill in 2019, amid rising energy prices, companies should consider developing new energy strategies to curb their energy consumption, says financial advisory firm PSG Group subsidiary Energy Partners engineering head Barry Drotsche.
The ideal strategy to contain and manage the energy spend of a business should include, firstly, the relationship between the company’s profits and its energy expenditure, which can also help to reduce the carbon footprint, he says.
“Each operation is different and a business owner has to know whether a chosen solution will provide the best return on investment. It is, therefore, important to understand how much of the energy costs are absorbed by the business, how much can be passed on to customers and which parts of the operation is responsible for unrecovered energy spend.”
It makes sense to invest in energy-saving measures that are primarily focused on reducing the costs to the operation. Energy management measures, such as having active control measures in place, using efficient lamps and running air-conditioning during early off-peak times, could have a more pronounced effect on profit margins than installing solar photovoltaic (PV) systems, he highlights.
However, businesses that have to absorb more of their daily energy costs without being able to pass the costs to clients could benefit from investing in generation capacity, such as PV or hybrid energy solutions, which are more cost effective than the grid.
“A manufacturing operation or a business that has to keep its own pricing low for customers to remain competitive will see a direct link between its total energy expenditure and its profit margin. Investing in a PV system to reduce the amount of electricity it takes from the national grid during daylight hours may, therefore, be the logical first step in this instance.”
Drotsche adds that effectively measuring electricity consumption and quantifying the effects of different energy-saving interventions are paramount.
He points out that having an in-depth understanding of energy-saving strategies from the start will enable a business to build a solution around its individual needs.
“A thorough understanding of what a company needs to grow its profit margin increases the ability to innovate around existing challenges and obtain the most profitable solution for the business,” Drostsche concludes.