Sharing energy efficiency

This past year has seen great change and uncertainty in the energy and regulatory market for business. From increases in energy costs due to network augmentations and more increases on this front expected, to the splitting of the Renewable Energy Target (RET) into two parts, to the introduction and/or adjustments of a variety of state-based schemes, along with more stringent requirements for the commercial building disclosure scheme, and now, an expected carbon tax along with a plethora of grant and tax-break incentives to come with it. While my intent is not to discuss the specifics of what all these changes will mean, one thing is for certain, energy prices will increase and the effects on many businesses will be difficult to ignore.

For decades, Australian businesses have benefited from cheap energy. As a result, generally only the most energy-intensive companies have focused on energy-efficient equipment and processes while most have not invested resources into understanding how they use energy and how they can reduce it. This is something that will have to change for various businesses to remain cost competitive. Nevertheless, this task is not insurmountable.

Despite the expected increases in electricity, our overall price of electricity should still be fairly cost competitive. According to the International Energy Agencies’ 2010 statistics, Australia’s current industrial electricity prices are at the lower end when compared to other developed economies. This would mean that even with the expected increases over the next few years we should only move up more towards the mid-range of prices. This repositioning of our energy prices relative to our competitors does not have to spell the end of Australian business as some have reported. However, it does mean that many businesses will have to start considering energy efficiency as a vital part of maintaining their cost competitiveness. Rather than viewing this as a negative, I see it as one of the greatest growth opportunities Australian businesses have been presented in years.

The green future the government has planned offers the potential to create new technologies, new jobs and new opportunities. For building owners, research is demonstrating that green star-rated buildings and those with elevated energy efficiency ratings deliver greater returns than less efficient buildings. For manufacturers, the growth in demand for green products and services is expected to be significant. Plus, energy efficiency in and of itself has the potential to save money regardless of any increases to revenue. That, combined with the price increases discussed above, implies that companies should be investing in cost-effective, energy-saving technologies. However, this hasn’t been the case even when financial incentives were strong.

Companies historically have faced a formidable number of barriers to overcome before investing in energy conservation. Some lack technical knowledge and capabilities. Others have reservations about the ability of energy-saving equipment to perform as promised. These technologies and systems can often be capital intensive, which can make financing an issue. For smaller businesses, initiatives can be impractical as their application is best suited to large-scale installations where they are both financially and/or technically more viable. So, what should we do differently to overcome these issues?

In the majority of scenarios, solutions have been isolated to an individual building scope. However, by using an aggregated approach, projects can often become more viable. This means shifting our singular focus on how we undertake energy-efficiency improvements to think about project implementation at a group level rather than at an individual building or business level. This can allow for economies of scale and greater project reliability, which can’t be achieved on an individual basis. Some examples of this include:

Centralised trigeneration, where instead of each building containing its own chiller, boiler and cooling towers, they’re located centrally and heating and cooling water is delivered to local buildings along with electricity generated from the plant. A slight twist on this could be allowing only heating and cooling water to be delivered to one building, but sizing the plant such that it can produce excess electricity and feed it to local buildings which also helped purchase the trigeneration plant.

Another example may be aggregating energy performance contracts of multiple buildings into one to allow for purchasing power and reduced overhead costs associated with individual buildings. In addition, it may allow for small buildings that would otherwise not be considered to be included in the project.

A final example is aggregating demand-side management capabilities amongst many small users to allow for peak shaving or shifting occurring in a significant manner.

These are just a few illustrations of ways that business will need to start thinking and start looking beyond the boundaries of their own building and business, breaking from the traditional methods of receiving standard services (like hot water, heating, cooling, demand management) and embracing such services from unconventional sources or unusual contracting methods. By placing greater emphasis on business alliances, there is the potential to garner the benefits from a shared service approach and make energy efficiency more accessible for more businesses.

*Jennifer Baltatzidis has a Bachelor of Science and Engineering in Bioengineering from Arizona State University. Her career in the power utility industry includes distribution design, power plant engineering and renewable energy, with an extensive background in power plant energy-efficiency management.