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Finding the energy

When it comes to power costs, upfront investment can pay dividends in the long term. Jai Breitnauer looks at the areas where financial – and environmental – sustainability margins can be easily achieved.

By Jai Breitnauer | April 15, 2016 | News

Jason McDonald, head of sales and marketing for Meridian.

Whatever your business size, there’s only two ways to make the books balance at the end of a quarter – you either make more money, or you spend less, and the latter is significantly easier in the short term.

One area ripe for the picking is energy expenditure. There are too many variables to be able to say what is the average percentage of business turnover that goes on power, but chances are it’s higher than you want it to be. After all, everyone will compliment you on your great new store fitout, but no one will thank you for keeping the lights on – that’s an expectation.

“Buying power can be a bit of a reluctant spend,” says Jason McDonald, head of sales and marketing for Meridian. “That’s why we have a dedicated business unit who work with our clients to keep bills as low as possible.”

Meridian is New Zealand’s largest electricity generator, and fourth largest energy retailer. It’s a bit different from most of the big ‘gen-tailers’ in the market. For a start, the government is a 51 percent shareholder, and it’s committed to generating 100 percent renewable energy. It owns seven hydroelectric plants, and five windfarms across both islands, providing 33 percent of the country’s electricity.

“We also offer an online tool, My Meridian, that gives our customers’ regular consumption reports, up to half-hourly if required, thanks to smart meter technology,” says McDonald. “This means it’s really easy to see what is costing money, and the effects of investment into tech upgrades.”

Armed with this level of detail, Meridian’s business specialists can advise businesses on consumption, and refer to third parties for assistance with new infrastructure, such as energy efficeint lighting and even solar power.

“We’re also the only power company plugged into Xero, which makes life easier and saves time for our customers.”

According to the EECA, the Energy Efficiency and Conservation Authority, there are many ways of improving energy efficency, through both investment in technology and improvement in energy management practises.

“Any business can easily make energy savings with a simple audit of their environmental space, and it costs nothing except a little time,” says Richard Briggs, business partnerships and channel manager. “Make sure that heating and air con aren’t competing with each other because the photocopier is covering a sensor, encourage staff to shut down computers and turn off lights … our research shows 10 percent of energy costs can be saved by measures that don’t cost your business anything.”

That being said, should your business want to invest in the latest energy and money-saving gizmos, EECA can help with that too.

“We currently have three models of support that have been running for about 18 months,” explains Briggs. “Firstly, we work on a one-to-one basis with the top 200 energy users in New Zealand.” Those colossal businesses are able to access their own account manager who will work alongside senior management to achieve set goals.

“Then there is the middle tier, say the next 1000 organisations underneath the top 200,” says Briggs. “They can use our programme partners, the contractors who service the top 200 with support and guidance from our account managers, to replicate that top tier service model.”

Finally, there is the SME tier. “There are over 400,000 businesses, all very small and diverse with different needs and goals. You can’t account manage them on that scale,” says Briggs. But that doesn’t mean the EECA can’t help. “We’re currently working toward developing relationships with industry bodies and associations, who can filter down our message and use our support models to help their own members achieve energy efficiency goals.” They also have online tools to help self-guide businesses through the process.

“Our focus is energy efficiency,” says Briggs. “Often, this is about the quick wins, but it can require investment in infrastructure as well.”

We’ve taken a look at the areas where you can achieve energy efficiency with either no capital outlay, or a short-term investment that will pay dividends in a set time period, saving your business money – and perhaps saving the planet a little bit as well.

Make an energy management plan

Investment level: $0

Payback time: 0 – two months

Consuming energy is often a very passive act. We use lights, heat, air con, plug sockets etc, and never really think about whether we could use them less, or differently. Then we’re surprised by the bill at the end of the month.

It can be a more proactive experience though, and creating an energy management plan is the first step to that. 

First, take a look at your business and how it uses energy. “Do you leave the shop lights on all night? Why? Do all your staff members shut down computers or mobile POS systems? Is electronic equipment switched off at the wall? Are you running half-empty fridges that could be merged? There’s a helpful checklist on the EECA website,” says Paula Cooper from the EECA.

Once you have assessed your business’ immediate energy needs, write a checklist of changes you feel you should make. Shutting down all electrical equipment at night, making the most of natural light with opened curtains and clean windows, making sure you don’t have the heating or cooling systems on when a window or door is open – they’re all common sense, easy wins.

“Finally, and this is the key to making it work, you need to get staff buy-in,” says Cooper. “There’s no point in writing energy efficient procedures if no one follows them.”

It’s important for senior staff to show leadership in this area, but enable everyone to take ownership and feel they are making a difference by setting up a multi-level team to implement the new policies. Review regularly, give updates so people can see the effects of adhering to the programme and keep an open dialogue with staff so you can gauge changes in organisational behaviour.

Make an energy management plan

Investment level: $0

Payback time: 0 – two months

Consuming energy is often a very passive act. We use lights, heat, air con, plug sockets etc, and never really think about whether we could use them less, or differently. Then we’re surprised by the bill at the end of the month.

It can be a more proactive experience though, and creating an energy management plan is the first step to that. 

First, take a look at your business and how it uses energy. “Do you leave the shop lights on all night? Why? Do all your staff members shut down computers or mobile POS systems? Is electronic equipment switched off at the wall? Are you running half-empty fridges that could be merged? There’s a helpful checklist on the EECA website,” says Paula Cooper from the EECA.

Once you have assessed your business’ immediate energy needs, write a checklist of changes you feel you should make. Shutting down all electrical equipment at night, making the most of natural light with opened curtains and clean windows, making sure you don’t have the heating or cooling systems on when a window or door is open – they’re all common sense, easy wins.

“Finally, and this is the key to making it work, you need to get staff buy-in,” says Cooper. “There’s no point in writing energy efficient procedures if no one follows them.”

It’s important for senior staff to show leadership in this area, but enable everyone to take ownership and feel they are making a difference by setting up a multi-level team to implement the new policies. Review regularly, give updates so people can see the effects of adhering to the programme and keep an open dialogue with staff so you can gauge changes in organisational behaviour.

Energy saving tips from Meridian

  • Fit LED lighting. It uses less than a fifth of the power of normal light bulbs. Turn lights off after hours.
  • Upgrade kitchen and catering appliances. Modern appliances are much more energy efficient. Keep equipment well ventilated.
  • Check window seals and insulate your outlet’s ceiling and under floor.
  • Install an auto-close external door to avoid letting too much hot or cold air in.
  • Use sunshades on hot days to reduce the ambient temperature naturally.
  • Turn off all non-essential equipment at the wall at the end of each day.
  • Keep your heating, air conditioning and hot water systems well maintained.
  • Meridian partners with companies like Enercon to facilitate energy audits to help its large business customers identify areas where they can save power and money. Ask if you would like to take part.
  • For customers who want to make the investment in solar generation, Meridian offers competitive buyback rates for excess electricity. Currently with just over 3,500 solar customers, it believes it has the largest share of the solar market.

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Light me up

Investment level: $10,000

Payback time: Over three years

Light bulbs represent an ongoing maintenance cost that’s easily overlooked. Whether you own your own High St bricks and mortar store, or rent a box in a mall, forking out for luminescence will no doubt take its toll. After all, light bulbs are expensive, and a bit of a ‘grudge purchase’ all things considered. When was the last time a customer wandered into your store and said, “Ooh, love the glow from those light bulbs”?

Until recently, New Zealand has been pretty reliant on the old incandescent bulb. In a business setting, these light bulbs can represent a cheaper upfront cost, but they also introduce a maintenance cycle that can be expensive and disruptive to customers. Recent developments in LED lighting have, however, made investing in this type of bulb a smart move for retailers.

“We changed all our forecourt lighting to LED in 2012, with the help of a grant from EECA,” says Gerri Ward, sustainability manager for Z Energy – one of New Zealand’s biggest retail outlets with 216 stores to date. “We ran the project out in partnership with Philips, but we were cautious. We invested $2.7m into the project, focusing just on canopy lighting, and EECA supported us with a $580k grant. Without that grant it would not have been economical over six months.”

Z Energy owned 212 stations at the time, and a handful already had LED lighting. The company retrofitted the remaining 171.

“We instantly got positive feedback from staff about the new lighting,” Ward says. “LEDs cast a much more even light, where as the old-style bulbs would cast pools. The LEDs meant that the forecourt was more visible making the working environment safer, and improving the customer experience.”

But what about cost? LED light bulbs are actually up to 3,600 percent more expensive than incandesents to buy, with the average consumer LED bulb costing $18 against the 50c cost for their more traditional counterpart. Although in a bulk-buy business setting you would benefit from discounts, it’s still a lot of money to fork out.

“We saw an 11 percent saving on energy costs per annum,” says Ward, who also points out that the bulbs last significantly longer than the older types. “The light bulbs have a 10 year warranty, but we expect them to be going well beyond that.” Plus, there’s practically no maintenance costs. “In a remote area like Gisborne, it could cost $500 for an engineer to replace a light bulb and be very disruptive to the business,” says Ward.

The light bulbs will pay back Z Energy’s investment next year, just five years after they were installed, and will of course continue to return that 11 percent p/a saving. Plus, Z can boast a 16 percent carbon reduction – it saves the equivalent emissions of 350 NZ homes each year. The company is so impressed it’s now rolling out LED lighting in internal areas as well.

“There’s this misperception that sustainability is something you do when times are good,” says Ward. “Our experience is an example of why that’s wrong. No one can dismiss the economical, social and environmental positives of this project.”

Jason Happy, national facilities manager for Kiwi Property.

Powered by sunshine

Investment level: Min $10,000

Payback time: Eight to 12 years

Until recently, the business of electricity has been a fairly one-way street. A big company generates it, you use it, and you pay them for what you use. However, as new tech creeps on to the market, and older ideas become more refined, it’s becoming increasingly cost effective to look at generating your own power.

“We own and manage six malls and a number of office buildings from Christchurch to Auckland,” says Jason Happy, national facilities manager for Kiwi Property. “We’ve been on a 12-year sustainability journey, from the energy side to waste water. Sylvia Park in Auckland, for example, was deliberately built with a white roof to remove the heat-island effect, and uses a fresh air cooling system when possible.”

So it seemed Sylvia Park, with its large flat roof and already incorporating certain sustainability measures, was the perfect guinea pig for the company’s first foray into solar panels. It is also the largest project of its kind in New Zealand. Working with Tauranga-based PowerSmart, which has some experience of large-scale projects, the Kiwi Property team have fitted 3000m2 – or 12 tennis courts – of solar panels to the roof of the mall.

“There’s an economy of scale, so it was comparatively cheaper per m2 than a domestic installation,” says Happy. Even so it was a huge outlay, and so the company were pleased to find the project would pay itself off within eight years.

“The panels provide 20 percent of the base load of the buildings’ electricity,” says Happy. “That generates an $80,000 saving per annum, which is a commercially acceptable return for us.”

In just over 12 months the installations has generated enough energy to power 62 homes for a year, and reduced the annual carbon emissions from the centre by 65 tons. The company is now looking at installing solar into other properties in its portfolio.

“Green buildings are future proof,” says Happy. “They’re a sound investment, and the public perception of them is positive too. On a hot, sunny day when the building is packed full of people and we’re using lots of power to keep the building cool, that’s also when solar panels come into their own. It makes sense.”

Mark Gilbert, director and chair of NZ leadership organization, Drive Electric.

Electric dreams

Min Investment: $60,000

Payback time: 20+ years

New Zealand is reliant on electricity for so much, and we’re proud that 80 percent of it comes from renewable sources. Yet, when you look at the country’s total energy budget, only 36 – 38 percent of the energy used here is clean. The discrepancy comes largely from cars. With six out of every 10 people owning a car, and 70 percent of the vehicles on the road owned by businesses needing to get people and product from A to B, it’s no wonder the fossil fuel tally is taking its toll.

In many ways, this doesn’t make sense. Recent data from a government monitoring programme shows that petrol costs are almost back to their mid-80s high of 240 cents a litre (c/L). After a sharp rise in 2008 the average cost of petrol for the last seven years has been around 220 c/L. Diesel has followed a similar pattern coupled with steady increases in road user charges, making the cost of running a standard car quite high. In comparison, electric vehicles can cost very little to run - according to the ECA, just 30c p/litre comparatively.

“The issue is largely the upfront cost,” says Mark Gilbert, director and chair of NZ leadership organization, Drive Electric. “There are currently no Electric Vehicles (EVs) under $60k, the cheapest being the Mitsubishi Outlander.”

Until 2012, Gilbert was the managing director of BMW Group New Zealand, and is a big supporter of electric vehicles, driving one himself. He believes that EVs could be a great solution for NZ businesses in the long term.

“You pay a premium upfront, but EVs have very few moving parts. The fuel and maintenance costs are much less, so it evens out,” says Gilbert, who notes that on days when he travels out of town, he can actually charge his EV for free at Auckland Airport.

“By charging an electric car you are using 80 percent renewable energy, and it also means we have to import less fuel so there are benefits there to the economy as well.”

Gilbert still believes work needs to be done though to encourage uptake.

“There are incentives in other countries,” he says. “In the UK, around £5,000 of the cost can be covered by those. As a result, there are over 40 models on the market, from town vehicles to family cars to small vans, plus plenty of public charging points and other support.”

In New Zealand, we currently have only five EV models available, and while many energy companies – including Meridian – are introducing tariffs that help support cheaper charging of EVs, the infrastructure is still lacking.

“Very few SMEs will be able to invest $60k into an EV,” says Gilbert. “But things have improved dramatically in the last 12 months. The government is looking at an incentive package, the infrastructure is increasing, and companies like Renault are considering entering the New Zealand market. More choice will drive down cost.”

EECA offer a handy tool to help compare the cost of vehicles. Check it out online to see how much you could save by investing in an EV.

This story originally appeared in NZRetail magazine issue 742 February / March 2016

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