GUIDE TO IMPROVING

ELECTRICITY USE IN
YOUR BUSINESS
DEMAND-SIDE MANAGEMENT SOLUTIONS

visit cleanenergycouncil.org.au
ABOUT THE
FPDI PROJECT
The Clean Energy Council is the peak body for the clean energy industry ACKNOWLEDGEMENTS
in Australia. We represent and work with hundreds of leading businesses
operating in solar, wind, energy efficiency, hydro, bioenergy, energy storage, This report was produced with funding support from
geothermal and marine along with more than 4000 solar installers. ARENA. ARENA was established by the Australian
Government as an independent agency on 1 July
The Clean Energy Council is committed to accelerating the transformation of
2012 to make renewable energy technologies more
Australia’s energy system to one that is smarter and cleaner.
affordable and increase the amount of renewable
This guide was produced as part of the Future Proofing in Australia’s energy used in Australia. ARENA invests in renewable
Electricity Distribution Industry (FPDI) project, a collaborative project energy projects, supports research and development
involving the Clean Energy Council and its members, the Australian activities, boosts job creation and industry
Renewable Energy Agency (ARENA), and other key stakeholders. development, and increases knowledge about
This project aims to enhance the flexibility and resilience of Australia’s renewable energy.
electricity distribution systems for the future.
With the objective of enhancing the flexibility and resilience of Australia’s
electricity distribution systems and the installations connected to them, the
FPDI project will analyse existing and emerging issues.
Ultimately the project seeks to build the foundations to facilitate the
effective and efficient integration of renewable energy systems for
Australia’s electricity distribution industry. A subsequent goal is to ensure
The Clean Energy Council thanks Entura and the
that the benefits of the transformation of this key industry toward a
Moreland Energy Foundation Limited for their efforts
renewable energy future are accessible by the sector’s various stakeholders.
in preparing this report.
The project’s detailed scope of work includes technical, economic and
regulatory analysis, forums, knowledge gathering and dissemination of the
project outcomes. This approach is intended to create the environment
for well-rounded stakeholder engagement throughout the project that will
reinforce project outputs and target specific beneficial outcomes from each
aspect of the project.
Further details of the project, its scope, governance and objectives can be
found at cleanenergycouncil.org.au/fpdi

The Clean Energy Council also thanks the FPDI

project Steering Committee for their time and effort
in providing crucial guidance and review of this
work. These stakeholders include ARENA, Alternative
Technology Association, Australian Energy Regulator,
CSIRO, Department of Industry, Energex, Energy
Networks Association, Energy Retailers Association
of Australia, Marchment Hill Consulting, Pacific Hydro
Pty Ltd, AusNet Services and University of Technology
Sydney.

Guide to improving electricity use in your business

MESSAGE FROM THE
CLEAN ENERGY COUNCIL

Australia’s electricity supply is

in a state of transition. For small
to medium-sized businesses,
this transition brings risks, but
also opportunities – to lower
operating costs, get an edge on
your competition and differentiate
your business by using new
KANE THORNTON technologies.
Chief Executive Using technologies like solar PV, battery storage, load shifting and integrated energy
management systems can be a sensible step to reduce your electricity bills. However,
one of the biggest challenges when it comes to reducing your energy use or your bills
is finding clear and easy to understand information on what the opportunities are, and
what might work for your business.
The objective of this guide is to help SME business owners to understand the options for
managing their electricity consumption. This guide is a how-to reference designed to
help you better understand how you use electricity, and from there investigate the types
of ‘demand-side management’ options that will help you reduce your operating costs.
The Clean Energy Council hopes this guide will help the SME sector to discover the many
opportunities available when it comes to saving electricity (and money). At the same
time, by providing the information businesses need to make an informed decision, we
hope this guide will help protect companies from the risks associated with the transition
in our electricity supply.
Australia’s energy system looks very different to what it did 20, 50 or 100 years ago
– and we’re certain it will look very different again in the future. We want to see SMEs
embrace that change, and be at the forefront of adopting new technologies that will
hold Australia in good stead to embrace a lower-carbon future – and maintain our
impressive economic position.

Guide to improving electricity use in your business

CONTENTS
DEMAND-SIDE MANAGEMENT SOLUTIONS AND YOUR BUSINESS 2

WHAT ARE DEMAND-SIDE MANAGEMENT SOLUTIONS? 3

WHY ARE DEMAND-SIDE ENERGY SOLUTIONS IMPORTANT? 3
PURPOSE OF THIS GUIDE 3
DEMAND-SIDE MANAGEMENT SOLUTIONS – A QUICK REFERENCE GUIDE 4
GUIDE TO IMPROVING ELECTRICITY USE IN YOUR BUSINESS 4

1. UNDERSTAND YOUR ENERGY USE 6

DAILY ELECTRICITY CONSUMPTION PROFILES EXPLAINED 8

RETAIL 9
ACCOMMODATION 9
HOSPITALITY 10
WHOLESALE/WAREHOUSE 10
OFFICE 11
MANUFACTURING 11
LARGER BUSINESSES 12

2.RESEARCH DEMAND-SIDE MANAGEMENT OPTIONS 13

ENERGY EFFICIENCY 14
EMBEDDED GENERATION 15
ENERGY STORAGE 16
LOAD SHIFTING 16

3. WEIGH UP THE OPTIONS 17

4. UNDERSTAND YOUR ELECTRICITY TARIFF 20

IS YOUR TARIFF APPROPRIATE? 21

SUPPLY CHARGES 22
CONSUMPTION CHARGES 23
CAPACITY CHARGES 24

5. SEEK HELP 26

6. DOES THE BUSINESS CASE STACK UP? 28

BUSINESS CASE EXAMPLE 30

7. OVERCOME BARRIERS? 32

WHAT’S NEXT FOR DEMAND-SIDE MANAGEMENT SOLUTIONS? 34

Guide to improving electricity use in your business 1

DEMAND-SIDE
MANAGEMENT SOLUTIONS
AND YOUR BUSINESS
With electricity prices on the ‘DEMAND-SIDE MANAGEMENT’
(DSM) SOLUTIONS CAN HELP
rise, energy bills are becoming a YOU MANAGE YOUR ENERGY
COSTS.
more important consideration for Some examples of DSM solutions are:
small to medium-sized enterprises • energy efficiency
(SMEs). Improving the way your • on-site renewable energy

business uses energy with some (embedded generation)

• energy storage
simple solutions can be an easy (for e.g. batteries)

way to help reduce operating • load shifting

(which allows you to move your energy
costs. consumption to a cheaper time of day)
AND SOLAR
ENERGY EFFICIENCY
Energy (kWh)

1.6

1.4

1.2

1.0

LOAD LOAD SHIFTING

0.8
SHIFTING AND BATTERIES

0.6

0.4

0.2

12am 6am 12pm 6pm

2 Guide to improving electricity use in your business

WHAT ARE DEMAND-SIDE MANAGEMENT
SOLUTIONS?
Demand-side management (DSM) solutions are available to
energy customers to reduce their energy use, produce their own
energy on-site, store their own energy for later use or shift their
electricity consumption to different times of day. Each solution
has its own financial and environmental benefits. Which solution
is right for your business is dependent on your consumption
(what you use energy for and what time of day you use it), what
type of electricity tariff you’re on and other factors such as your
business premises.

WHY ARE DEMAND-SIDE ENERGY

SOLUTIONS IMPORTANT?

The electricity network is built with enough capacity to supply a

maximum output of electricity (peak electricity demand). This
is generally at its height in the early evening and is particularly
high on hot evenings in summer when a lot of air-conditioning
is being used by businesses and households. DSM solutions
can help reduce peak electricity demand by ‘smoothing’ out
electricity consumption, or moving or reducing consumption in
peak times. At a community level this can help reduce the fixed
component of electricity bills and at an SME level this can deliver
significantly lower operational costs through smarter on-site use
of electricity. Reducing this peak network electricity demand
means that further investment in the electricity network may be
avoided.

PURPOSE OF THIS GUIDE

The purpose of this guide is to equip your business with helpful

information to manage your electricity use better, including how
to understand your electricity tariff and your daily electricity
consumption profile. The guide will also step you through
the characteristics of DSM solutions and how they might be
of benefit to your business. This will help you to identify and
implement the DSM solutions that are right for your business.

Guide to improving electricity use in your business 3

DEMAND-SIDE
MANAGEMENT SOLUTIONS
A QUICK REFERENCE GUIDE
OFFSET COSTS
WITH SOLAR PV

ENERGY
EFFICIENCY
Energy efficiency is about reducing the amount of
overall energy required to operate your business.
This can include upgrading to more energy efficient
machinery, appliances or fittings, improving your
business premises (for e.g. through insulation) or
changing behaviour such as turning off lights or
adjusting the thermostat on your air-conditioner.
INSTALL
INSULATION

EMBEDDED UPDATE

GENERATION EQUIPMENT

Embedded generation refers to on-site generation

of electricity ‘behind the meter’ to be used by the
business itself. This can include any small electricity
generator but at the SME level the main embedded
generation is solar PV. Embedded generation does
not so much reduce the energy you use as offset it,
meaning your energy costs are lower. There is also
the potential to export electricity you don’t use to the
electricity grid for use by others.

GUIDE TO
1 2 3
UNDERSTAND RESEARCH WEIGH UP
YOUR ENERGY DEMAND-SIDE THE OPTIONS
IMPROVING USE MANAGEMENT
ELECTRICITY OPTIONS
The right type of demand-side Choosing which demand-side Some solutions are simpler to
USE IN YOUR management solutions for your management solutions match implement than others and
BUSINESS business will depend on what
you use energy for and what
your business starts with
knowing a bit more about the
some have stronger returns
on investment – it pays to
time of the day you use it. available options. understand these factors.

4 Guide to improving electricity use in your business

 PRE-COOL
BUILDING

LOAD
SHIFTING
Load shifting refers to solutions that allow a
reduction in electricity demand at peak times when
electricity is expensive to a time when electricity
is cheaper. This includes turning off or scheduling
non-critical appliances (for e.g. washing machines
and dishwashers) out of peak times, or pre-cooling
your business premises earlier in the day so that air-
conditioners don’t need to run at as much in the late
afternoon or early evening. Load shifting measures
MAKE THE MOST can also be soft, for example text notifications to turn
OF OFF-PEAK
off appliances for short periods of time.

ENERGY
ADJUST
STORAGE
THERMOSTAT
Energy storage for SMEs largely refers to batteries
C
o or battery energy storage systems. What this means
STORE FOR is that electricity from the grid or generated on-site
LATER
(solar or wind) can be stored and used either as back-
up or when electricity from the grid is more expensive.

4 5 6 7
UNDERSTAND SEEK HELP DOES THE OVERCOME
YOUR BUSINESS CASE BARRIERS
ELECTRICITY STACK UP?
TARIFF
Understanding your electricity You can’t do it all on your own. In order to ensure a solution There are sometimes a few
tariff will make a big impact Once you are armed with a makes sense for your business non-financial hurdles to
on which demand-side little bit of knowledge, you’re the return on investment has to overcome before you’re able to
management solutions you ready to dig deeper or get be right. implement a solution – it pays
can take advantage of. some help from others. to be aware of these.

Guide to improving electricity use in your business 5

 UNDERSTAND
YOUR ENERGY
USE
EVERY BUSINESS IS DIFFERENT
AND YOURS IS NO EXCEPTION.
The extent to which particular
demand-side management (DSM)
solutions will suit your business
depends primarily on:
• Your daily electricity consumption
profile
• What types of energy-using
equipment, appliances and fittings
you have in your business
• What electricity tariff you’re on
Although there is some variation in the
way different businesses use energy, there
are similarities within individual business
types.

1
6 Guide to improving electricity use in your business
Guide to improving electricity use in your business 7
DAILY ELECTRICITY
CONSUMPTION PROFILES
EXPLAINED

A daily electricity consumption The shape of the daily electricity Whether you have a daytime bias (peak in
profile captures the amount of consumption profile is important and the middle of the day) such as this SME or
electricity consumed by an SME at differs dependent on your business type. an evening bias such as a take-away food
different times of day. You might Think of it like the ebbs and flows of business or hotel will dictate what DSM
have previously noted your daily your business – if you’re a café there are solutions will work for you. In particular,
usage of electricity on a bill measured certain peak periods of activity around technologies such as solar are more
in kilowatt hours (kWh). Your daily lunch time. In the example below of effective for SMEs with a daytime bias.
electricity consumption profile goes an office, there is relatively low usage
a level deeper and shows you at what overnight (electronic equipment such
times of day you use the electricity. as servers) with the bulk of electricity
usage during office hours. The small
peak at 1pm (where the office is using
approximately four times as much
electricity compared to overnight) shows
additional lunch time activity in the office
kitchen.
Energy (kWh)

1.6 INDICATIVE DAILY

ELECTRICITY CONSUMPTION
1.4 PROFILE - OFFICE

1.2
LUNCHTIME
1.0 LOW USE
PEAK
LOW USE
USUAL DAYTIME
OVERNIGHT OVERNIGHT
ACTIVITY PLUS
0.8 KITCHEN USE

0.6

0.4

0.2

12am 6am 12pm 6pm

8 Guide to improving electricity use in your business

RETAIL ACCOMMODATION

If you run a retail business, you’re most likely to consume If you run an accommodation business it’s likely you’ll have
the most energy during the day when your shop is open. This a strong evening bias to your daily electricity consumption
means that if opening hours are mostly during the day, the daily profile. This is because accommodation rooms and other on-site
electricity consumption profile is often a very good match for amenities are often used more during the evening. Businesses
solar PV. that operate late into the night may be able to access cheaper
energy outside peak times compared to other business types.
Retail businesses use energy in different ways but the majority
of energy use is through heating and cooling (HVAC) and Accommodation businesses use a lot of energy in heating and
lighting. This means retail is a good fit for energy efficiency that cooling the indoor environment to keep guests comfortable.
focuses on these ‘end uses’. Given the importance of customer Lighting is also a reasonably large component of energy use.
comfort, energy efficiency solutions will need to ensure that this Energy efficiency improvements should focus on these energy
is maintained. uses, for example improvements to the building itself like draught
proofing and insulation and upgrades to heating and cooling
appliances can provide good savings.

RETAIL ACCOMMODATION
Indicative daily electricity OTHER Indicative daily electricity OTHER
consumption profile and typical consumption profile and typical
energy use breakdown. energy use breakdown.
EQUIPMENT
HVAC EQUIPMENT

HVAC
ENERGY (kWh)

ENERGY (kWh)

LIGHTING
LIGHTING

12am 6am 12pm 6pm 12am 6am 12pm 6pm

Guide to improving electricity use in your business 9

HOSPITALITY WHOLESALE
/WAREHOUSE

If you run a hospitality business you will likely require specialised If you run a wholesale or warehouse business, when you operate
equipment for making, cooking and storing food and beverages. depends on the types of goods you house. You might start earlier
Whether you run a café, fast food business or a restaurant/bar than other businesses in order to provide same day delivery
can make a significant difference to when you use most of their service. Warehouses are normally based in poorly insulated large
energy. The key indicator is what service periods your business spaces with high ceilings, making heating and cooling ineffective
caters for (i.e. breakfast, lunch or dinner). Cafés, for example, and costly.
have an electricity consumption profile well matched to solar, but
The daily electricity consumption profile is normally steady across
restaurants open in the evening may not.
the day with peaks when lighting and machinery is in operation.
Hospitality equipment is often specialised and designed for Retrofitting LED or other energy efficient lighting is normally a
function, not energy efficiency. The easy wins tend to be in good option for these businesses as is installing skylights to make
heating and cooling, hot water and refrigeration. For example the most of natural light. Many warehouses or wholesalers deal
non-perishable drinks fridges can be put on a timer to save mostly in refrigerated goods, which require energy throughout
energy overnight. the day. This type of appliance can be a good energy efficiency
opportunity.
Depending on the proportion of energy consumption during the
day, a warehouse/wholesale business may be well matched to solar.

OTHER
HOSPITALITY WHOLESALE HVAC
Indicative daily electricity
consumption profile and typical
REFRIGERATION /WAREHOUSE OTHER
HVAC Indicative daily electricity
energy use breakdown. HOT
WATER consumption profile and typical
energy use breakdown.

EQUIPMENT
ENERGY (kWh)

EQUIPMENT
LIGHTING
LIGHTING
ENERGY (kWh)

12am 6am 12pm 6pm 12am 6am 12pm 6pm

10 Guide to improving electricity use in your business

OFFICE MANUFACTURING

If you run an office, your energy use during the day will depend If you run a manufacturing business, your energy use depends
on hours and staffing levels. You also face the challenge of on what you manufacture – there is no ‘typical’ electricity
regulating the temperature in the office to suit people with profile. In most manufacturing businesses the machinery used
different thermal comfort expectations – this can be tricky. The to produce the product is the largest energy user in the business
daily electricity consumption profile is the opposite to an average with lighting, cooling and office equipment also contributing to
house, with most energy used during the day but only limited the overall energy use. Time of operation also varies with the
amounts at night. This is a good match for solar PV. type of production, with many SMEs (for e.g. food) operating
overnight or starting early to cater for customer needs.
Heating and cooling use the most energy in offices, with lighting
the next biggest user. Increased use of office machinery (such as Many manufacturing businesses do not heat the premises as
servers) in recent times has increased office energy use while also the manufacturing process provides heat as a by-product. In all
increasing cooling requirements. manufacturing businesses the key is to maximise the efficiency
of machinery, but also work on secondary energy uses (such as
Energy efficiency improvements to lighting and heating,
refrigeration) to provide savings, allowing you to keep electricity
ventilation and cooling (HVAC) systems can be teamed with
use low during downtimes. Utilising solar is an option for most
improvements to the building shell such as shading or insulation
manufacturing businesses and the type of premises often makes
to reduce energy use and provide financial savings.
for good roof access.

OFFICE OTHER
MANUFACTURING OTHER
Indicative daily electricity Indicative daily electricity HVAC
consumption profile and typical consumption profile and typical
energy use breakdown. energy use breakdown.
LIGHTING
EQUIP
PMENT REFRIGERATION
HVAC
ENERGY (kWh)

ENERGY (kWh)

EQUIPMENT

LIGH
HTING HOT
WATER

12am 6am 12pm 6pm 12am 6am 12pm 6pm

Guide to improving electricity use in your business 11

LARGER BUSINESSES

IF YOUR BUSINESS IS A LARGE CONSUMER OF ENERGY THERE

ARE CERTAIN ADDITIONAL FACTORS THAT SHOULD BE TAKEN
INTO ACCOUNT WHEN MANAGING YOUR ENERGY USE.

FINANCIAL PAYBACK
The financial return on DSM solutions depends on a number
of factors including your tariff and your daily electricity profile.
Larger businesses generally pay less per unit for electricity,
meaning that the initial investment may take a bit longer to
provide a return.

AVAILABLE ELECTRICITY TARIFFS

The types of electricity tariffs available to your business increase
with your electricity consumption and how much your peak
electricity demand is. Larger customers tend to have more choice
than smaller customers in the type of tariff available.

NEGOTIATE OWN ELECTRICITY CONTRACT

All businesses are able to enter into a negotiated contract
rather than use a standard market contract, but it makes better Cogeneration plant

sense for larger electricity consumers. Negotiated contracts COGENERATION AND TRIGENERATION
need to be explicitly entered into by the electricity customer.
When using a negotiated contract a wide range of options are Cogeneration and trigeneration are proven technologies which
considered, with the terms usually determined according to the generate electricity and thermal energy (heating) from a single
specific characteristics of the customer’s requirements. If you fuel source (usually natural gas). For buildings with a high thermal
are thinking that your business would benefit from a negotiated energy or cooling load such as hospitals or gyms with pools this
contract, you should get in touch with your electricity retailer technology may be worth considering, keeping in mind the future
directly. increases in gas prices and a technically complicated connection
process.
NETWORK SUPPORT AGREEMENTS
POWER FACTOR CORRECTION
Larger customers make a greater impact on the network than
smaller customers and at times of network peak demand this is Some larger commercial electricity customers may be charged
especially important as electricity at this time is very expensive. for apparent power (kVA) rather than real, or true, power (kW). If
This can also impact the stability of the grid with the potential for your business is being charged for apparent power then it could
blackouts or brownouts to occur. As a result there is an interest for be in your interest to take steps to reduce your power factor. If
retailers in being able to curb consumption at times of network you have a low power factor using a power factor correction (PFC)
peak demand to reduce costs and to the electricity distributors in device could decrease your electricity costs by improving your
maintaining supply. In some cases, a network support agreement power factor.
might be able to be negotiated between large electricity users
and the relevant network business. This type of agreement
provides financial compensation to businesses that reduce their
consumption at time of peak energy use.

12 Guide to improving electricity use in your business

RESEARCH
DEMAND-SIDE
MANAGEMENT OPTIONS
THIS SECTION OUTLINES
THE VARIOUS DEMAND-
SIDE MANAGEMENT (DSM)
OPTIONS AVAILABLE TO
YOUR BUSINESSES IN
MORE DETAIL.

2 Image courtesy Thunder Road Brewing Company

Guide to improving electricity use in your business 13

ENERGY
EFFICIENCY

Energy efficiency acts to reduce the amount of energy

required for your business to operate. Energy efficiency
EXAMPLES OF
involves either installing equipment such as building ENERGY EFFICIENCY
insulation, more efficient fittings and appliances or changing
behaviours.
TECHNOLOGIES:
Energy efficiency is an overall reduction in the amount of
Efficient lighting
electricity used, but does not usually focus on a reduction at
a particular time of day. Energy efficiency also has significant • Technologies such as LED lighting or lighting control
environmental benefits. ensure light is efficient and only provided when
necessary such as times when building is occupied.
For energy efficiency the value is in the electricity not
consumed. Some electricity tariffs may make the value
of this energy greater or less. Importantly, the options for Heating Ventilation Air Conditioning (HVAC)
energy efficiency within your business relate to how you use
energy (refer to business types) and the best value options • Insulation and building design
depend on what you can do without affecting your business • Installation or retrofit of more efficient HVAC units
operations.
• Changes to thermostats to allow for a greater range of
Although not the focus of this guide, behavioural change internal temperatures
can also be a simple and cost effective solution to reduce the
volume and timing of consumption to achieve the desired
DSM outcomes. A number of organisations can assist with Energy efficient appliances
training for staff on more efficient use of energy.
• Upgrading or expansion of appliances from domestic
appliances through to process equipment to reduce the
amount of energy used
IMPACT OF ENERGY EFFICIENCY
ON CONSUMPTION

Energy Energy consumption

consumption with energy efficiency
ENERGY (kWh)

Halogen replacement with LED

12am 6am 12pm 6pm

14 Guide to improving electricity use in your business

EMBEDDED
GENERATION

Centralised generation such as coal-fired power stations have SOLAR PHOTOVOLTAIC (PV) GENERATION
historically dominated electricity generation in Australia.
Solar photovoltaic (PV) generation is the most common type of
The alternative is on-site (or embedded) generation of electricity embedded generation in Australia. Solar PV is suitable for both
to be used ‘behind the meter’, such as by your business itself. urban and rural environments and a range of sizes can be cost
This offsets the energy you consume and in most circumstances effectively installed for an SME.
allows you to export surplus energy back to the grid. The rate at
North-facing roof space is the preferred orientation, however
which businesses get paid, or the feed-in tariff, for the exported
viable systems can be designed for east and west-facing roofs.
electricity varies between states.
Depending on your hours of operation this may actually
Embedded generation reduces the amount of energy you pay improve the financial return on investment as time-of-use
for, but not how much energy you actually use. Most embedded tariffs (explained later) may mean that your electricity is more
generation is renewable and therefore has a significant expensive in the late afternoon/evening when a west-facing solar
environmental benefit. installation is still producing.
In general the sizing of the PV system should be matched against
the demand for energy, minimising the export of energy, due to
the low feed-in tariff received in most regions of Australia.
For further information on installing solar PV refer to the Clean
Energy Council’s ‘Guide to installing solar PV for business
and industry’ solaraccreditation.com.au/solarforbusiness
SMALL WIND TURBINE GENERATORS
Small wind turbine generators convert wind energy into electrical
energy. Wind turbine projects at a smaller scale can suffer from
high planning and installation costs and are often uncompetitive
TYPICAL SME PROFILE with solar PV. But in a rural setting with a good wind resource,
WITH SOLAR IMPACT their viability improves considerably meaning they may match
solar PV for financial return.

Energy Solar Net OTHER OPTIONS

consumption generation consumption
A number of other embedded generation opportunities are
available for SMEs, such as fuel cells and cogeneration, but these
ENERGY (kWh)

are generally viable only in quite specific circumstances and often

contribute to fossil fuel pollution.
Cogeneration in particular may be suited to SMEs with high
heating loads (accommodation with swimming pools or large
industrial processes).

12am 6am 12pm 6pm

Guide to improving electricity use in your business 15

ENERGY LOAD
STORAGE SHIFTING

Energy storage can take a variety of forms, but battery storage Load shifting refers to moving an electricity load from one period
is the most practical option for SMEs. Battery arrays have a long of time to another. It differs from other strategies such as energy
history of being used in off-grid applications to make more efficiency because the total amount of energy being consumed
use of power generated by solar PV. Recently businesses have doesn’t change. Load shifting is generally done to:
started to investigate their potential for on-grid situations. When • Move energy consumption from a high cost tariff period to a
combined with solar, they can be used to move electricity from a low one (such as moving from peak to off-peak)
period with excess generation to one without. • Reduce consumption in a period of network peak demand
Historically, because of their high cost, SMEs that have grid (expensive energy) by spreading out the consumption over a
connections have only used battery storage to back up critical longer period
systems (such as computer servers) for short periods of time. To At its simplest, load shifting is using the timer on your appliances
be used daily a much larger amount of storage is required. (for e.g. dishwashers and washing machines) to run during low
cost tariff periods in the early morning, or changing your work
Although costs for battery systems are declining rapidly it is schedule. At the more complex end, it includes having Demand
important to consider the operational lifespan of any battery Response Enabling Devices (DREDs) installed on equipment such
options that you investigate to make sure your expected payback as air-conditioning, refrigeration systems, pumps and PV systems.
is realistic. Also ask your system installer or manufacturer about This allows the equipment to be turned off (with your permission)
battery recycling and disposal processes to avoid environmental for short periods of time by an energy supplier. A good time to
impacts. The Australian Battery Recycling Initiative also consider this is when this type of equipment is being upgraded.
has some useful information on battery recycling online:
For load shifting to be of benefit, you need to have tariffs which
batteryrecycling.org.au
reward reductions at certain time of day – load shifting will have no
effect if you are on a flat rate. Also, load shifting will not be practical
if you do not have substantial electricity loads that can be shifted, or
if those electricity loads already operate at off-peak times.

TYPICAL SME PROFILE WITH SOLAR TYPICAL SME PROFILE

AND STORAGE IMPACT WITH LOAD SHIFTING

Energy Solar Battery Net consumption Energy Load

consumption generation charge solar and battery consumption shifting
ENERGY (kWh)

ENERGY (kWh)

12am 6am 12pm 6pm 12am 6am 12pm 6pm

16 Guide to improving electricity use in your business

WEIGH UP
THE OPTIONS

3 Guide to improving electricity use in your business 17

WEIGH UP THE OPTIONS

The table opposite outlines a number of demand-side management (DSM)

solutions and the relative strengths and weaknesses of each approach for
SMEs. There are a number of performance indicators which you should keep TECHNOLOGY BY
in mind when investigating DSM solutions:
PERFORMANCE
SIMPLICITY
INDICATOR
Some solutions are more complex than others, for example solar PV is quite
straightforward once installed but other technologies may take longer to
investigate or are commercially complex to navigate. LEGEND
SITE INDEPENDENCE STRONG
Some solutions work on almost any site and others need a specific resource Indicates that the DSM solution has a
in order to be viable (for e.g. wind). Others may not be applicable to the relative strength in this indicator, for e.g.
scale that your business operates at. it is comparatively easy to implement or
readily available
AVAILABILITY
NEUTRAL
Is the product commercially available in a competitive market? For example
while batteries are available the domestic market is still maturing. Neither a strength or weakness of the
option.
PAYBACK PERIOD
WEAK
Rates of return for DSM solutions are varied and SMEs often expect a short
payback to have the confidence to invest. Indicates that the DSM solution has a
relative weakness in this indicator, like
COMMERCIAL CERTAINTY long payback periods or site-dependent
benefits.
DSM solutions are often emerging and can have varying results. However
solutions such as lighting retrofits have a very high degree of commercial
certainty. .
IT’S WORTH NOTING:
ENVIRONMENTAL IMPACT • Different energy efficiency strategies have
Some DSM solutions have a positive environmental impact through different degrees of complexity and vastly
reductions in greenhouse pollution, others simply represent a cost saving. different payback periods.
• Payback periods for solar are largely
APPLICABILITY
dependent on what time of day you use
Some solutions are a good fit for your business but may not be for others. energy, the cost of your electricity and what
Your daily electricity consumption profile is the key indicator here. type of electricity tariff you are on.
The two DSM options that currently provide consistently average or better • Changing energy behaviour can be an
outcomes for most SMEs are energy efficiency and solar PV. However there effective way of reducing energy, but
are many factors that will affect the results. the impact can often be increased when
supported by a technological DSM solution.

18 Guide to improving electricity use in your business

 APPLICABILITY TO
PAYBACK PERIOD

ENVIRONMENTAL

YOUR BUSINESS
INDEPENDENT

AVAILABILITY

COMMERCIAL
CERTAINTY
SIMPLICITY

IMPACT
SITE

ENERGY
EFFICIENCY

EMBEDDED GENERATION
Premises with high daytime
SOLAR PV demand e.g. retail, office, daytime
hospitality, manufacturing,
daytime wholesale/warehouse.
Solar payback periods
are also exposed to future tariff
changes
Rural SMEs
WIND

Larger SMEs with high thermal

COGENERATION/ heating or cooling
TRIGENERATION

BATTERY ENERGY
STORAGE
SYSTEMS

LOAD CONTROL - DEMAND SHIFTING\INTERRUPTION

BUILDING
ENERGY
MANAGEMENT
SYSTEMS
SMEs which can shift significant
LOAD CONTROL loads to other times of day

Guide to improving electricity use in your business 19

 UNDERSTAND
YOUR ELECTRICITY
TARIFF
UNDERSTANDING THE
TARIFF THAT YOU PAY FOR
ELECTRICITY IS IMPORTANT IN
DETERMINING WHICH DEMAND-
SIDE MANAGEMENT (DSM)
SOLUTIONS MAKE SENSE FOR
YOUR BUSINESS. UNDER CERTAIN
TARIFFS, IT IS NOT POSSIBLE TO
REALISE A BENEFIT FROM ALL
DSM SOLUTIONS.

4
20 Guide to improving electricity use in your business
IS YOUR TARIFF
APPROPRIATE?

A BRIEF Regardless of whether you are investigating DSM solutions, un-

derstanding your electricity tariff is an important part of business
ENERGY LESSON energy literacy. There may be savings immediately available by
switching tariffs irrespective of a DSM solution, but this is really
dependent on the daily electricity profile of your business.
Energy is power multiplied by time,
For standard offers you may find some combination of the
so a low power device used for longer
following:
may use the same amount of energy
as a high power device used for a
1. A SUPPLY CHARGE
shorter period of time. Your energy
(in this case electricity) is measured 2. A CONSUMPTION CHARGE
in kilowatt hours (kWh). The kilowatt
is the power and the hours is the time 3. A CAPACITY CHARGE
period over which you use it. (also known as demand
When looking at what you pay for or volume charges)
electricity you should note that your
bill has several components, which 4. ADDITIONAL CHARGES
may vary depending on the type of or premiums like GreenPower
contract you are on. For SMEs you will
generally be on a standard offer, which
is published by energy retailers on their
website. If you have an individually
negotiated tariff then your specific
situation may differ from those
explained below.

Guide to improving electricity use in your business 21

1 SUPPLY
CHARGE

Also known as the ‘service charge’ or ‘fixed charge’, this is a

charge that applies for supplying electricity and is independent
of how much electricity you use. It is generally charged by the
day. Supply charges cannot be impacted by DSM solutions, so if
you have large supply charges you may want to look at changing
tariffs to maximise the benefit.

SUPPLY COMPONENT
OF ELECTRICITY BILL

22 Guide to improving electricity use in your business

 2 CONSUMPTION
CHARGES

Different types of tariffs and the DSM solutions that are best matched to that type are outlined
below. You should keep in mind that there may be benefits in moving to another tariff type to
reduce your current costs or to maximise the financial benefit associated with a DSM solution.

FLAT RATE TIME-OF-USE/FLEXIBLE PRICING

Consumption charges (kWh) are charged at the same rate, Generally two or three different rates (for e.g. peak, off-peak and
regardless of time of day, year, or total consumption level. shoulder) that are applied according to the time of day, meaning
there is an advantage in using energy at particular times of day
Flat rate consumption charge over others. All time-of-use tariffs are cheaper during the night.
Note that this type of charge should not be confused with a
Energy Tariff ‘controlled load’, which is also commonly referred
Energy to an off-peak
Tariff
consumption consumption
tariff. Controlled loads are specific devices (such as water heaters)
that are usually wired separately to the rest of the building, while
ENERGY (KWh)

ENERGY (KWh)
an off-peak tariff here would apply to the whole facility.

Time-of-use consumption charge

Tariff Energy Tariff

consumption
ENERGY (KWh)

TIME

12am 6am 12pm 6pm 12am 6am 12pm 6

ICABLE
PL • ENERGY EFFICIENCY

DSM
AP

• SOLAR TIME TIME

(note that a time-of-use tariff may
S

SO maximise a solar benefit)

N

LU T I O

m 12pm 6pm 12am 6am 12pm 6pm

ICABLE
PL • ENERGY EFFICIENCY

DSM
AP

• SOLAR PV
• LOAD SHIFTING
S

SO
N

LU T I O (from a peak time to a shoulder

or off-peak time)

Guide to improving electricity use in your business 23

 2 CONSUMPTION
CHARGES

ASCENDING BLOCKS DESCENDING BLOCKS

This tariff structure is like a flat rate in that it is not dependent on Similar to ascending blocks, but when the thresholds are crossed
the time of day, but when your consumption hits a certain point the cost per unit goes down.
it steps up in unit cost. Basically, the more you consume, the more
Solutions that limit the amount of energy you consume are still
expensive electricity gets. Undertaking solutions that limit the
effective but paybacks are longer as the energy you save is likely to
overall amount of energy you consume are effective and may
be cheaper.
keep you on the lower tariff rates.

Ascending blocks consumption charge Descending blocks consumption charge

ated Aggregated
Tariff Tariff Aggregated Aggregated
Tariff Tariff
mption consumption consumption consumption

RY JANUARY MARCH MARCH JANUARY JANUARY MARCH MAR

ICABLE ICABLE
PL • ENERGY PL • ENERGY

DSM DSM
AP

AP

EFFICIENCY EFFICIENCY
• SOLAR PV • SOLAR PV
S

SO SO
N

LU T I O LU T I O

24 Guide to improving electricity use in your business

 3 CAPACITY
CHARGES

FEED-IN TARIFFS (FITs) This is a charge on your peak electricity demand made during a
billing period. One way of viewing capacity charges is as a fine for
These are tariffs that are paid for electricity that is exported to the
using too much energy at a particular time of day or year.
grid, as opposed to being consumed. They apply when you have
on-site generation (such as a solar PV system) and the rates and Capacity charge
availability varies between states and electricity retailers. For the
most up-to-date feed-in tariff rates, check with your relevant state Energy Capacity charge
government department or your electricity retailer. consumption level

ENERGY (kWh)
Feed-in tariff consumption charge

Energy Solar Solar

consumption generation tariffs
ENERGY (kWh)

12am 6am 12pm 6pm

ICABLE
PL • ENERGY

DSM
AP

EFFICIENCY

12am 6am 12pm 6pm • SOLAR PV

S

SO
N

LU T I O • LOAD SHIFTING
ICABLE
PL • SOLAR PV

DSM
AP

• STORAGE
• LOAD SHIFTING
S

SO
N

LU T I O

OTHER In addition to the charges outlined above, you may have premium
charges for the use of grid-supplied renewable energy (GreenPower).
CHARGES These are usually charged by unit.

Guide to improving electricity use in your business 25

 SEEK HELP

DEPENDING ON YOUR BUSINESS

SIZE, THE AMOUNT OF TIME
YOU HAVE ON YOUR HANDS
AND YOUR UNDERSTANDING
OF ENERGY ISSUES, YOU MAY
NEED ASSISTANCE FROM
PROFESSIONALS IN ORDER
TO ASSIST WITH DEEPER
INVESTIGATION OF PARTICULAR
DEMAND-SIDE MANAGEMENT
(DSM) SOLUTIONS.

5
26 Guide to improving electricity use in your business
Many resources are freely available to businesses and others come Information on other DSM solutions is available through
at a cost. The trick is being able to obtain free or low cost trusted a number of sources including the Clean Energy Council:
independent advice. cleanenergycouncil.org.au.
Understanding your tariff and your daily electricity profile are
critical. For any DSM provider the conversation should start with SOME OTHER KEY SOURCES ARE:
how your business operates. Communicating the characteristics of • Energy Efficiency Exchange
your business to a solution provider will enable them to provide a Federal Government website which focuses on medium to
clearer picture of what benefits you could expect from a particular large businesses eex.gov.au
solution.
• Alternative Technology Association
In addition to this there are a number of criteria or questions Information on solar and limited information on storage
which could be asked of DSM solution providers to help with your options ata.org.au
decision making.
• Better Building Finance
THE COMPANY Help for businesses and others to understand environmental
upgrade agreements (an innovative financing model
How long has the company been in operation? which links repayments to a rates mechanism)
Does the company have any business customers who you betterbuildingfinance.com.au
could contact about their experience with a similar installation • Positive Charge
done? Positive Charge is a community service, backed by local
Does the company carry appropriate certifications, for e.g. do councils run as a social enterprise by the Moreland Energy
they use Clean Energy Council-accredited solar installers or are Foundation and provides energy efficiency and renewable
they a Clean Energy Council Approved Solar Retailer? energy advice positivecharge.com.au
• CitySwitch Green Office
THE PRODUCT A free service that supports office-based businesses to improve
What is the expected operational life of the product? energy and waste efficiency, with extensive online resources,
toolkits, education and networking events and dedicated
What are the operation and maintenance requirements on the
program managers. cityswitch.net.au
product?
• Your local distribution grid owner
Will there be any potential impact to my business operation?
Distribution Network Service Providers (DNSPs) can be a great
Do you have any specification sheets that you could provide? source of information on electricity tariffs and the interaction
Has there been an independent cost-benefit analysis and/or with the network. If you’re looking at a new solar or storage
technical testing done on the product? solution, the DNSP will also be involved in the project and will
provide critical information on the process to connect to the
Does the product come with a manufacturing warranty and an
grid. Check online or speak to your electricity retailer to get the
installation warranty?
details of your local DNSP.
A detailed guide on how to install solar for your business is
available in the Clean Energy Council ‘Guide to installing
solar PV for business and industry’:
solaraccreditation.com.au/solarforbusiness

Guide to improving electricity use in your business 27

 DOES THE BUSINESS
CASE STACK UP?

THE MOST IMPORTANT PART

OF THE BUSINESS CASE IS
THE PAYBACK PERIOD OF THE
DEMAND-SIDE MANAGEMENT
(DSM) SOLUTION. THIS
IS A FUNCTION OF THE
CAPITAL, OPERATIONAL AND
MAINTENANCE COSTS OF THE
SOLUTION AND THE ENERGY
SAVINGS.
Businesses are often time poor
and the idea of investing time in
a solution that will provide only a
small benefit (even if the capital
cost outlay is very low) may
mean other priorities are more
important.

6
28 Guide to improving electricity use in your business
FINANCE OPTIONS INCENTIVES AND REBATES
Finance options are available to reduce the upfront cost of Incentives and rebates are widely available through various
capital equipment. Generally speaking, if the savings from a DSM national and state-based schemes. These are subject to periodic
solution are ongoing and greater than the cost of repaying the change and you should take care if basing your business case
loan, then the benefit to your business is immediate. The key is on a short term rebate or incentive. For a comprehensive list of
having certainty over the outcome of the solution. available rebates to SMEs by state and territory visit the ‘Your
energy savings’ website: yourenergysavings.gov.au/rebates
A number of innovative financing models are available to SMEs,
particularly for solar PV and energy efficiency. A number of these Businesses should also look for any government initiatives
are discussed in the Clean Energy Council ‘Guide to installing (for e.g. tax-based incentives) specific to investment in new
solar PV for business and industry’: solaraccreditation.com.au/ assets or energy saving measures, as these are sometimes
solarforbusiness available.
One of these is a solar power purchase agreement (PPA). Under a
WHAT IMPROVES OR DETRACTS FROM
solar PPA, a third party developer owns, operates, and maintains
THE BUSINESS CASE?
the solar PV system, and a host customer agrees to site the
system on its roof and purchase the energy generated. There are a number of factors which improve the business case
for different DSM solutions. For example:
An alternative is an environmental upgrade agreement (EUA).
This is a relatively new type of finance for upgrading commercial • If you are paying a higher electricity tariff then the payback
and other buildings, reducing operating costs, increasing on solutions will be shorter.
renewable energy and improving energy, waste, water or energy • If you are in a climate with high solar radiation then your
efficiency. It allows for upgrades to be paid back through council solar payback is shorter.
rates, providing greater certainty for lenders and reducing risks
to your business if, for example, you expand and move premises. • If you are on a time-of-use tariff and your energy efficiency
EUAs may not be available in all council areas. Environmental upgrade relates to an appliance that is only used when
upgrade finance options for businesses are explained in more your business is in operation (for e.g. lighting versus drinks
detail at: betterbuildingfinance.com.au refrigerator) then your payback will be shorter.

Guide to improving electricity use in your business 29

 BUSINESS CASE
EXAMPLE

This office of 40 people has an annual electricity Given this profile it makes sense to concentrate
consumption of 88,000 kWh per year, efforts initially on energy efficient lighting and a HVAC
with a cost of $21,328. (heating and cooling) control upgrade.
HOT
Their energy consumption WATER
OTHER
The upgrade had:
profile is typical of an office
Total capital cost of
as shown below.

$9,800
EQUIPMENT HVAC

Base energy Energy efficiency

consumption consumption
Savings of 10,500 kWh or
LIGHTING

$2,450 per year

ENERGY (kWh)

A payback of

4 years
This represents approximately 20% savings
during office hours.

12am 6am 12pm 6pm

Base energy Energy Solar Final

30 Guide to improving
consumption efficiency electricity use in your business
consumption
consumption
(kWh)
 HOT
WATER
OTHER

EQUIPMENT HVAC

Base energy Energy efficiency

consumption consumption

LIGHTING
ENERGY (kWh)

The daily electricity profile still had a strong peak during By moving from a flat rate to a time-of-use (ToU) tariff
office hours as shown below. the business was able to save an additional $380 per
year.
Because this reduction occurred during a period of peak
(during
12am the daytime
6am office
12pmhours), the
6pmoffice owner Flat rate: 23.5c/kWh
considered switching tariffs to take advantage of this.
ToU tariff: 31.3/ 21.0/ 15.6c/kWh
After this, they considered installing solar, given the
Base energy Energy Solar Final
consumption efficiency consumption good match of their daily electricity consumption profile
consumption
to solar generation.
ENERGY (kWh)

By installing a 24 kW system
they saved a further

$8,050
per year on their electricity bills.

Installing this system cost them just over

$50,000, but they expect to see a payback on
this in approximately 6 years.

12am 6am 12pm 6pm

Guide to improving electricity use in your business 31

 OVERCOME
BARRIERS

THE PREVIOUS SECTION

OUTLINED SOME OF THE
PARTICULARS OF THE BUSINESS
CASE AS THEY APPLY TO
SMES SEEKING DEMAND-SIDE
MANAGEMENT (DSM) SOLUTIONS.
THERE ARE A NUMBER OF
BARRIERS WHICH MAY IMPACT
ON YOUR BUSINESS BEING
ABLE TO FOLLOW THROUGH ON
IMPLEMENTATION OF SOLUTIONS.
THESE CAN, IN MOST INSTANCES,
BE OVERCOME, BUT IT IS
IMPORTANT TO ACKNOWLEDGE
THEM UPFRONT AS REQUIRING
SOME FURTHER INVESTIGATION.

7
32 Guide to improving electricity use in your business
BARRIER DESCRIPTION APPLICABILITY APPLICABILITY DOES THIS
– BUSINESS – DEMAND- BARRIER
TYPE SIDE SOLUTION APPLY
TO YOUR
BUSINESS?

Are mechanical Depending on the tenancy arrangement Particularly Load shifting,

services out of SMEs may not own and/or operate the retail, office and some energy
your control (i.e. mechanical services. In this case a special hospitality, but efficiency
are owned and/ arrangement between landlord and tenant potentially other initiatives.
or operated by may be required for some DSM options e.g. sectors.
the building agreement for higher rent to offset landlord
owner)? purchase.

Do you rent your Depending on ownership of the building Particularly Solar, some
premises and not there may be restrictions in installing some retail, office and energy efficiency
have control of rooftop plant. Some financing options e.g. hospitality, but initiatives.
the roof space? environmental upgrade agreement, solar potentially other
leasing, may reduce this barrier. sectors.

Is your electricity Depending on the state and circumstances, All All

use sub-metered there may not be a direct benefit of
or apportioned? employing demand-side technologies e.g.
your electricity cost may be apportioned
based on your business size or you may
need to install a new meter to access solar
benefits.

Are you likely to Due to expansion/uncertainty over lease All Any permanent
move business and other factors there may be no certainty infrastructure
location before of operating in the same location. For unable to be
the cost of the DSM solutions with longer paybacks some transported to
DSM solution has certainty of business location is required. future premises
been paid back Financing options which ‘run with the land’ (e.g HVAC
through lower such as Environmental Upgrade Agreements system)
energy costs? (EUAs) may overcome this barrier.

Is your Tariffs are subject to change and SMEs need All All
current tariff to have a level of confidence that a tariff
arrangement change will not significantly impact the
short term? business case.

Guide to improving electricity use in your business 33

WHAT’S NEXT FOR DEMAND-SIDE
MANAGEMENT SOLUTIONS?

IN THE SHORT TERM SOLAR PV AND ENERGY • New and more cost-reflective tariffs – tariffs are
EFFICIENCY WILL REMAIN THE MOST VIABLE subject to change and one of the likely changes in the short
OPTIONS FOR SMES, BUT FUTURE DECLINING term is more widespread cost-reflective tariffs. If adopted,
COSTS, TARIFF CHANGES AND FURTHER these provide much greater financial incentives for businesses
COMMERCIALISATION OF TECHNOLOGIES to avoid consumption during times of network peak demand
ARE LIKELY TO IMPROVE THE BUSINESS CASE – effectively through retailers charging significantly more
FOR BATTERIES AND LOAD SHIFTING IN THE for electricity at these times and less for energy throughout
MEDIUM TERM. the rest of the day. Some of these opportunities are already
available to larger businesses and are likely to be available to
There is no crystal ball, but some of the likely SMEs in the future.
changes in demand-side management (DSM)
• Changes to the fixed electricity charges – as
solutions are:
electricity demand continues to fall, the cost of maintaining
• Utility prices – although electricity price increases are the electricity network as a proportion of the overall cost of
likely to flatten compared with the significant rises of the last electricity will likely increase, meaning that there may be
five years, gas prices are forecast rise significantly over the increases in your fixed (daily) electricity charge.
next several years. This means SMEs should consider whether
• ‘Soft’ load shifting solutions – the customer/retailer
gas appliances should be replaced like for like, or whether
relationship is likely to change with new business models
there an electric alternative available.
being explored. For example, it is likely that in the short
• Declining cost of battery storage combined with to medium term measures such as text notifications and
increased operation lifetime – we are likely to see remotely controlled appliances to curb electricity use at
significant reductions in the cost of battery storage over the network peak times in exchange for reductions on your bill
next five years. One of the major hurdles in Australia is simply will become commonplace.
the maturing of the distribution chain. This will improve the
business case for solar PV/battery combinations.

GLOSSARY AND DEFINITIONS

c/kWh Cents per kilowatt-hour PPA Power purchase agreement
CEC Clean Energy Council PV Photovoltaic
(direct conversion of light into electricity)
DSM Demand-side management
SME Small to medium-sized enterprise
FiT Feed-in tariff
(applicable to electrical energy SRES Small-scale Renewable Energy Scheme
exported to the grid)
STC Small-scale Technology Certificate
HVAC Heating, ventilating, and air-conditioning
ToU Time-of-use
kWh Kilowatt-hour (tariff changes depending on time of day)
(a standard unit of electrical energy)

34 Guide to improving electricity use in your business

Guide to improving electricity use in your business 35
CLEANENERGYCOUNCIL.ORG.AU

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