Gas and electricity bills are among the biggest expenses businesses face. According to the Carbon Trust, concern about energy costs among small to medium-sized enterprises (those with up to 250 employees) rose from 46% in 2016 to 67% in 2019.
If you’re running a business, you’ll be keen to find out more about how monitoring costs and reviewing your firm’s energy efficiency can be beneficial for both financial and environmental reasons.
From choosing the best gas and electricity tariffs for your company, to simple changes that can result in significant savings, here we offer our top tips on how to save money on business energy.
1. Switch tariffs at the end of a contract
Usually, when your gas or electricity contract comes to an end, you’ll be automatically rolled over to a more expensive tariff, called an ‘out-of-contract’ rate or a ‘rollover rate’. If and when this happens, it’s time for action – because complacency can cost you dear.
The best tactic is to start shopping around when you’re coming up to the renewal window of your current contract – this is usually between one and six months before the end of your agreement.
You’ll be reminded of your renewal date by your current supplier.
When this happens, speak to your current supplier about the best deal it can offer and write this down. You should also use a comparison service to look at other gas and electricity tariffs from a range of suppliers so that you can find the best tariff for you.
As business gas and electricity are sold separately, it’s also worth comparing whether it’s cheaper to buy them from different suppliers or the same firm.
Make sure you research any contract thoroughly before you commit as, unlike with domestic energy deals, you won’t have a cooling-off period.
It’s worth paying particular attention to:
- type of tariff – for example, fixed or variable
- whether rates vary at different times of the day and on different days of the week
- length of the contract – typically between one and five years
- any exit fee applicable if you wish to leave early
- options to use green energy
- whether you’ll get a discount for paying by direct debit.
It doesn’t usually make financial sense for businesses to change energy tariffs before the end of a contract as exit penalties (the price you pay to leave early) can often wipe out future savings.
2. Arrange an energy audit
As well as switching tariffs, maximise your savings by planning an energy audit of your business. This will give you an overview of how your company uses energy and will help you to identify any areas of waste.
Companies that employ more than 250 people or have an annual turnover in excess of £42.5 million (€50 million), and an annual balance sheet total in excess of £36.6 million (€43 million), must have an energy audit done as part of the government’s Energy Savings Opportunity Scheme (ESOS) but smaller businesses can also carry audits out themselves or ask a specialist company to help.
You can download templates and checklists to help you with this, while the Carbon Trust also has tools and guides to help businesses save energy including an SME benchmarking tool which allows you to see the typical energy use in your sector, and a Better business guide to saving energy
3. Check age and efficiency of business equipment
Look at the equipment that you use as a business, from IT equipment and kitchen appliances to machinery and items such as vending machines. Think about how old it is and its efficiency rating.
Some steps to take to improve your equipment’s efficiency, therefore driving costs down in the long term, include:
- Upgrading older, less-efficient equipment
- Putting in place a maintenance timetable
- Cleaning equipment, such as fridges, regularly.
4. Shut equipment down when it’s not in use
While you’re looking at your equipment, think about when it’s on. Do you make sure that equipment such as printers, photocopiers, microwaves, lights and computers are turned off overnight and at the weekend if they aren’t in use? If not, implement this change.
Each unnecessary light left burning and each piece of equipment left on standby or in dormant mode might only be costing you pennies, but taken as a whole, the potential savings might be significant.
5. Get your people involved
Changes such as making sure computers are shut down overnight and turning lights out require the involvement of staff. So, think about how you can communicate energy-saving measures across the business and consider drawing up an energy-saving plan to engage everyone in your operation.
You can download reminders such as posters or stickers for your staff here which point out that small changes make a big difference.
As an example, a poster from the Carbon Trust points out that office lights left on overnight can use enough energy in a year to heat a home for almost three months.
Items like kettles can also use more energy than necessary if they are overfilled.
6. Look at your lighting
According to the Department for Business, Energy and Industrial Strategy (BEIS), in a report on lighting as part of the Energy Technology List, lighting uses around 20% of the electricity generated in the UK.
The Energy Technology List is a government register of energy saving products.
The report says businesses can deliver significant savings by upgrading lighting. For example, it says a business can save up to 80% in ongoing costs by upgrading from conventional lighting to LED technology.
The report also talks about lighting controls as a method to save money – savings of 30-50% are common when automatic controls are used.
Lighting controls available include daylight-linked controls, occupancy sensors and flexible manual controls.
7. Think timers and thermostats
Did you know that heating costs increase by around 8% for every 1C increase in temperature?
So, look carefully at your how you use your heating as a business and whether you can change anything to cut costs. Some ideas include:
- Using timers that align with occupancy during the day/night and at weekend
- Altering timers for periods when your business is not open
- Making staff aware of heating settings and encouraging them not to change them
- Ensuring you’re not heating rooms or areas that aren’t in use
- Looking at the position of your radiators and checking there isn’t anything blocking the heat coming from them.
If your business uses air conditioning, ensure you set some rules around its use too, such as asking staff to turn it off before leaving a room.
8. Don’t throw money out of the window – or door
If you find that you’re turning the heating up to maintain a pleasant temperature in your premises, check that heat isn’t escaping through open doors or gaps.
At the opposite end of the scale, if your building is too hot, encourage staff to ask about turning the heating down rather than opening a window or door to let all of the heat out.
9. Insulate
As well as obvious gaps, you could be losing heat in your business premises due to uninsulated areas such as cavity walls and lofts. So, do a walk around your building considering where heat could be escaping.
Think about your windows too. If you’ve not got double or secondary glazing, consider replacing your windows or putting new glazing into your existing frames.
10. Get smart with a meter
When you switch energy supplier, you may be offered a smart meter if you haven’t already got one. All businesses must be offered smart meters by the end of 2024 under a roll-out scheme by the government. Larger businesses may have a half-hourly meter.
A smart meter may help you be more efficient with gas and electricity as they can help you work out when you use the most energy. Your bills will also be based on exactly what you’re using, which is a great incentive to become more efficient.
11. Generate your own electricity
According to the Economist Intelligence Unit, one in three electricity-intensive businesses is generating at least some of its own electricity, and two thirds of businesses, whether they are generating or not, are looking at ways to increase the amount they generate on site.
Generating your own energy as a business can help you to save money as well as boosting your brand’s reputation for environmental awareness. You’ll also have the option of selling electricity back to the grid if you generate more than you use.
Solar power is a popular option to generate energy as a business, with other options including wind power, biomass and hydroelectric.
You’ll need to invest in equipment to generate your own electricity and may need planning permission but you’re likely to reap the benefits in the long term. So, do your sums and work out if it’s a realistic option for you.
