10 Things You Should Know About Reducing Electricity Costs
Originally posted as 10 individual social media posts, we thought we would wrap them all up in one place.
We talk to customers every day and these are things we know most people are unaware of.
Have a read and give us a call to find out how we can help you manage your electricity costs.
1. What’s the difference between electricity demand and consumption, and why does it matter?
To make informed decisions on how to reduce electricity costs, you need to understand how electricity is measured.
Kilowatts (kW) is the measure of electricity that is required to power a device or site at a single point in time. This is referred to as “demand”.
Kilowatt Hours (kWh) is the measurement of electricity use over time and is called “consumption”.
For those of us on the electricity network: everyone pays for consumption, but only some of us pay for demand. We all pay different rates depending on who we are, how much electricity we use, and when we use it.
If you are thinking about going off grid, knowing about demand and consumption is very important when designing and using your Stand Alone Power System (SAPS).
To find out more about how Tropical Energy Solutions can help you manage your electricity costs, contact us:
Ph: (07) 4772 7394
Email: info@tropicalenergysolutions.com.au
Address: 1 Carse St, Hyde Park, Qld, 4812
2. Changes to the way Ergon Energy charge customers have created an opportunity to reduce electricity costs through Power Factor Correction.
In the past Ergon Energy’s large customer tariffs included a demand charge based on Kilo Watts (kW). Demand charges are now based on Kilo Volt Amps (kVA).
Kilo Watts is a measurement of electricity use at a point in time. Ergon Energy records energy use every half an hour and charges customers for the highest reading in each monthly billing period (called peak demand).
Kilo Volt Amps is the Kilo Watts plus the wasted power that is created by inductive loads. An analogy is to think of filling a pool with a hose that has leaks all along its length. Kilo Watts can be considered the water that comes out of the hose nozzle into the pool. Kilo Volt Amps can be considered the water that goes into the pool plus the water that is wasted through the hose leaks.
In the past Ergon Energy’s large customer tariffs included a demand charge based on Kilo Watts (kW). Demand charges are now based on Kilo Volt Amps (kVA).
Using the pool analogy – customers are now paying for the wasted water leaking from the hose.
The gap between the higher Kilo Volt Amps and lower Kilo Watt peaks can be reduced through Power Factor Correction. This generates cost savings by:
- Reducing the waste which customers are now paying for.
- The cost of Kilo Volt Amps per unit being lower than Kilo Watts (eg $25 Vs $28 for Tariff 44).
- The threshold (ie free amount) being higher for Kilo Volt Amps (eg 35 kilo Volt Amps Vs 30 Kilo Watts for Tariff 44).
It works by installing a unit that uses capacitors or inductors to ensure that voltage and current are in phase to improve the overall power factor. Basically, it removes the waste.
Power Factor Correction has been around for many years. As customers did not have to pay for high Kilo Volt Amp demand caused by poor power factor however, there has not been a great deal of interest in addressing it (the exception is organisations that are directly affected by reduced quality electricity supply due to poor power factor).
It’s a well established sector within the electrical industry, with leading manufacturers providing proven solutions.
To find out more about how Tropical Energy Solutions can help you manage your electricity costs, contact us:
Ph: (07) 4772 7394
Email: info@tropicalenergysolutions.com.au
Address: 1 Carse St, Hyde Park, Qld, 4812
3. How your customer classification affects how much you pay for electricity.
With electricity, what you pay for and how much you pay very much depends on what type of customer you are. You may be classed as:
- Residential Customer: which is pretty self-explanatory, it’s your electricity account at home.
- Small Business Customer: a business customer who uses less than 100,000kWh per year.
- Large Business Customer: predictably, a business customer who use more than 100,000kWh per year.
- Farming Customer: this has been obsolete since 1 July 2021 however there are many customers who remain on transitional tariffs that are not available to new customers.
There are many tariffs available to each classification. Electricity tariffs are a bit like mobile phone plans. Depending on how you use your phone (calls, texts, and data), some plans are better for you than others. Electricity is the same; the amount of electricity you use overall, how much you use at any point in time, and when you use it (day/night and summer/winter) means that some tariffs are going to be more attractive than others.
Using a selection of the main tariffs for each classification, this is how we pay for electricity:
We all pay for consumption:
Tariff 11 (residential) = 21¢/kWh
Tariff 20 (small business) = 24 ¢/kWh
Tariff 44 (large business) = 11 ¢/kWh
Farming Tariffs = 18 – 58 ¢/kWh
We all pay service fees:
Tariff 11 (residential) = 97 ¢/day
Tariff 20 (small business) = $1.33/day
Tariff 44 (large business) = $44.53/day
Farming Tariffs = $1.13 – $2.71/day
Some of us pay for demand:
Tariff 44 (large business) = $28/kW
As you can see, tariff selection, and the ability to be reclassified as a different customer type, can allow significant savings to be made.
Once you know what type of customer you are and how you are paying for electricity, you can start to do something about how much you are spending on it.
To find out more about how Tropical Energy Solutions can help you manage your electricity costs, contact us:
Ph: (07) 4772 7394
Email: info@tropicalenergysolutions.com.au
Address: 1 Carse St, Hyde Park, Qld, 4812
4. Using data to find cost saving opportunities.
When you look at this graph do you just see a whole heap of squiggly lines? We see opportunities to save money, and you might be surprised to see how simple some of the solutions can be.
To find out more about how Tropical Energy Solutions can help you manage your electricity costs, contact us:
Ph: (07) 4772 7394
Email: info@tropicalenergysolutions.com.au
Web: www.tropicalenergysolutions.com.au
Address: 1 Carse St, Hyde Park, Qld, 4812
5. Does energy management actually work?
This graph shows our Electricity bills for the last two and a half years. From $1,000 bills to $1,200 credits and not paying a bill more than $10, we think we have pretty much nailed it.
And here’s the secret: it’s not just a solar system that’s doing this!
To find out more about how Tropical Energy Solutions can help you manage your electricity costs, contact us:
Ph: (07) 4772 7394
Email: info@tropicalenergysolutions.com.au
Address: 1 Carse St, Hyde Park, Qld, 4812
6. Who is managing your electricity costs?
I don’t mean who is paying the electricity bills. I mean who is analysing your electricity usage and planning ways to reduce it?
Like any facet of your business, managing electricity costs should be addressed by a nominated person, or team, who has it included in their position description. They should be someone who has some knowledge about how you use electricity, how you pay for it, and what opportunities are out there to reduce the cost of it.
It seems crazy, but while most businesses have staff members whose roles include safety officer, diversity coordinator, fire warden, IT point of contact, and social club president, they don’t have someone assessing how electricity costs can be reduced. A cost, by the way, that most businesses have seen increase significantly over the past 10 years.
There are many solutions for reducing electricity costs and the ones that are right for you depend on your individual circumstances.
To find out more about how Tropical Energy Solutions can help you manage your electricity costs, contact us:
Ph: (07) 4772 7394
Email: info@tropicalenergysolutions.com.au
Address: 1 Carse St, Hyde Park, Qld, 4812
7. What happens when you don’t manage your electricity use?
These photos are a very small selection of some of the things we have seen in the field. They all contribute to higher electricity costs.
Some of them seem a bit extreme but remember, they were all found at sites where business owners didn’t actively manage their electricity use.
To find out more about how Tropical Energy Solutions can help you manage your electricity costs, contact us:
Ph: (07) 4772 7394
Email: info@tropicalenergysolutions.com.au
Address: 1 Carse St, Hyde Park, Qld, 4812
8. A bit of free advice on solar and batteries
- Not all solar systems are equal. There is a reason cheap systems are cheap.
- Time spent researching is time well spent.
- Go local, there are plenty of companies who will give you the right system at the right price, and after sales service.
- Talk to a Clean Energy Council Accredited Solar System Designer or Installer. Unlike a salesperson, they have to sign off on their work. They have an electronic Accreditation ID that looks like this:
To find out more about how Tropical Energy Solutions can help you manage your electricity costs, contact us:
Ph: (07) 4772 7394
Email: info@tropicalenergysolutions.com.au
Address: 1 Carse St, Hyde Park, Qld, 4812
9. Is the Queensland Government handing out money to install solar systems on your home or business?
No, they’re not!
This may come as a bit of a shock to some of you who have seen a lot of messages on social media saying they are.
When you install a solar system, you should be eligible for financial incentives as a price discount through the creation and sale of Small-scale Technology Certificates (STC’s, click here for to go to our blog article that explains this in detail). STC’s are available for solar systems installed anywhere in Australia.
All the hype about “government money available for some post codes”, “Queensland government grants now available”, and “apply now – offer ends soon”, is just that – hype. It’s a lie, it’s misleading, and it’s just plain dishonest.
Our advice is to do your research, ask lots of questions, and go with a reputable local company.
To find out more about how Tropical Energy Solutions can help you manage your electricity costs, contact us:
Ph: (07) 4772 7394
Email: info@tropicalenergysolutions.com.au
Address: 1 Carse St, Hyde Park, Qld, 4812
10. What are you buying when you purchase a solar system?
When you install a solar system, you are actually buying three things:
- The system components: the solar panels, inverter, racking system, and associated cables and switches etc. The quality of these varies greatly and just because they are on the Clean Energy Council (CEC) approved list doesn’t mean they are good quality.
- The installation work: You need someone who is not just qualified to install solar but also takes pride in their work.
- Service: Look for honest and suitably qualified solar system designers and installer who will provide you with the solar system that is best for you, not them.
We’ve said it before and we’ll say it again – our advice is to do your research, ask lots of questions, and go with a reputable local company.
To find out more about how Tropical Energy Solutions can help you manage your electricity costs, contact us:
Ph: (07) 4772 7394
Email: info@tropicalenergysolutions.com.au
Address: 1 Carse St, Hyde Park, Qld, 4812