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Saving on electricity costs: A how to for industry

By: Stephanie McDonald
14 March, 2011

Electricity costs have steadily risen over the past five years, with prices expected to increase dramatically in the near future.

What will the hike in prices mean for Australia’s industrial sector?

With electricity costs on the rise, it might come as a surprise that according to a recent Ai Group survey, two-thirds of Australian companies haven’t improved their electricity usage in the past five years.

"I’ve found that most companies simply pay the electricity without considering how to reduce their costs," Charlie Cordoba from Solar and Energy Solutions said.

"This is mostly because they just add electricity costs to their overheads and pass that onto their clients. Hence, the end user is really paying for that electricity."

The survey also found most companies don’t anticipate making changes to electricity use, with Cordoba saying any increases will continue to be passed onto the consumer.

According to Cordoba, there are several ways manufacturers can reduce their electricity costs. One is to compare electricity plans with different providers and find a better deal.

The other is to reduce electricity consumption. This option doesn’t need to be expensive or require installing expensive products.

For example, LED light technologies can be a cost effective way to reduce energy consumption.

Tenrod’s ecoLED tubes can halve power consumption and can replace 1-for-1 standard T8 fluorescent tubes.

"Providing the office is lit by standard fluorescent tubes, it can be as easy as buying the same number of LED tubes from us and replacing the fluorescent tubes, just like changing a light globe. There’s no need to change the fittings," Ian Lai from Tenrod Australia said.

However, Lai says how cost effective this solution is will depend on how many hours the lights are kept on.

For manufacturers who are willing to go one step further, introducing solar photovoltaic (PV) systems can dramatically reduce electricity costs.

PV systems can replace most, if not all a company’s electricity use. Solar powered water pumps can also be installed.

PV systems allow manufacturers to shut down their lighting after-hours and reduce electricity use even further.

"[Solar systems] will reduce their electricity bill significantly but not make too much of a dent in their bottom line or yearly profits since it is an overhead that they are reducing," Cordoba said.

"The return on investment can reach around the 50% mark when looking at the outlay to install against money saved over time to recover those costs.

"Most installs will be paid back in two to five years, but then it produces free energy over 30 plus years."

Comtest Laboratories has implemented several electricity-saving initiatives at its own company. For example, equipment is turned off at the powerpoint overnight and it replaces lighting tubes regularly and limits the hours of operation.

"We have also set timers on the air-conditioners and hot water services [and] we have no machinery at our facility," Greg Caspar from Comtest Laboratories, said.

"We are aware there are new devices coming into the market which do reduce power consumption electronically by changing phase angles and limiting voltages to certain devices, such as lighting."

There is no doubt that companies who fail to address their electricity use will pay the price.

"Without changing their usage process and cost negotiations, it will mean that profits will be reduced or they become less competitive with pricing increases," Caspar said.

"It may even be necessary to reduce size, which will impact on the business viability. Increasing prices is not always an option in a competitive environment."

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