Some immediate steps that can be taken to manage energy costs, as well as current incentives and financing opportunities, are shared by JONATHAN JUTSEN, founder and executive director of Energetics.
A doubling of electricity prices over five years means that energy can no longer be treated as a general overhead cost, but has to be used productively. Large electricity network price increases will continue for the next couple of years due to infrastructure investments that are locked in, and network costs make up roughly 50 percent of retail electricity prices. In addition, the carbon price has come into effect, driving up electricity and gas prices by a further 15 to 20 percent, and resulting in additional smaller supply chain price pass-throughs from energy/carbon intensive inputs to business. So, how can businesses take a proactive approach to managing energy costs?
SECURE THE BEST ENERGY CONTRACT
Businesses can reduce energy prices through more effective competitive procurement and active contract management. Companies’ energy bills comprise multiple components. By disaggregating the bill, most of these can be competitively sourced and through risk management energy and other components can be minimised. Although network prices are regulated, most customers have a choice of tariff that can be applied to billing.
SEIZE THE OPPORTUNITY TO IMPROVE ENERGY EFFICIENCY
The escalation of energy prices together with the carbon price and the high exchange rate, which has reduced the cost of imported energy savings equipment, have dramatically reduced the payback period for energy savings projects between 2008 and July 2012. This has been compounded by the introduction of substantial grant funding for energy efficiency, cogeneration projects and clean energy projects.
Incentives and financing opportunities include:
- Clean Technology Investment Program: $800 million grants available for general industry over six years, plus $200 million specifically available for food and foundry industries. Grants cover 25 to 50 percent of the capital funding (33.3 percent for most businesses).
- Innovation Program: $200 million R&D grants in renewable energy, low pollution technology and energy efficiency covering 50 percent funding support will be available from July 2012.
- Low Carbon Australia: finance available from Low Carbon Australia allows suitable projects to be delivered without capital outlay and a positive cash flow from day one.
- State schemes:
- New South Wales: Energy Savings Scheme (ESS) provides payments for electricity savings.
- Queensland: Energex funds free electricity savings assessments and provides incentives for electricity/peak demand savings projects.
- Victoria: Victorian Energy Efficiency Target (VEET) is expanding, though it is currently not available for Environment and Resource Efficiency Plans (EREP) companies.
DEVELOP THE COMPETENCY OF ENERGY MANAGERS
In response to high energy prices, we are seeing the emergence of the professional energy manager. To support this important profession, we are working to establish an energy managers’ network to support practising energy managers. To further develop this profession, the Certified Energy Manager (CEM) course has been introduced into the Australian market. This is the certification process of the US Association of Energy Engineers. Energy managers’ competency can be increased by attending CEM training sessions.