Every company is unique. When it comes to electricity use, there is no one-size-fits-all answer. Electricity usage has no definitive solution. This was a general conclusion reached after dealing with various businesses (including yours).
My previous article sought to describe a simplified structure aimed at optimising energy to achieve profit projections. Referencing the cost of electricity per kWh as at the end of December 2021 for residential and business premises, my article also went ahead to lay the foundation on how to get the best out of electricity usage in order to maximise profit as a business.
Following my publication, I received a series of emails that generally expressed interest in knowing more about how businesses can take advantage of the in-depth information shared. One will bear witness to the fact that over the past 20 or so years, our electricity supply set-up and use has changed completely – and it will certainly be different in the future, possibly due to more reliance on solar energy.
Through its Edge-certification programme, the World Bank has recently taken key consideration of resource-efficient buildings; particularly in the use of electricity. This should demonstrate to a business owner how electricity resource allocation is a global priority in order to maintain competitiveness. Businesses can receive specialised training in how to save electricity (and money) through an IFC programme, as well as information on how to safeguard their operations from the risks associated with electricity use.
The Economics of Electricity for Businesses (Demand and Supply Management)
The Public Utilities Regulatory Commission (PURC) increased the price of electricity by more than 27 percent effective September 1st, 2022; which means that if a business relies on the national grid for operations, electricity bills are now a serious consideration for its success or failure.
It is therefore imperative for businesses to think of ways to reduce cost of electricity use through simple but effective solutions. A company can use the load scheduling/shifting system or energy-efficient equipment to implement ‘the demand-supply’ method of managing its electricity costs. This can be achieved by configuring high energy-consuming equipment to run during off-peak times, which is typically between 6pm and 6am daily. The energy-intensive equipment schedule can be used depending on whether the business is situated in an industrial or residential area.
Load Scheduling/Shifting Explained
Load scheduling is popular among the Ghanaian business communities due to ‘dumsor’ – in simple terms, shifting electricity use from expensive peak hours to less expensive off-peak hours. This entails turning off or programming appliances like the washing machine or dishwasher to only run during off-peak hours; letting natural light and air into the office space in the morningp and using the air-conditioner only in the afternoon when the weather gets hotter. You can accomplish this by setting a timer or reminder on your various smart devices.
A business must understand its daily electricity consumption, the energy-rated equipment, appliances or fixtures that have been used, and whether it is on a residential or commercial tariff for any of these systems to work for it.
Daily Electricity Usage for Business-Specific Profiles
Every company has an average daily electricity consumption at various times of the day. If you operate a walk-in restaurant, you’ll find out that during lunch hours your energy consumption tends to be much higher than it is at night. A typical corporate office uses four times as much electricity during the day to run air-conditioners as opposed to just servers overnight.
Let us consider specific sectors of businesses and briefly throw light on how electricity use is likely to affect their operations.
- People have varying reactions to air-conditioned environments, which makes managing air-conditioners during office hours very critical. In a corporate office, depending on number of employees and their desired thermal comfort in the workplace, how much electricity cost comes at the end of every month should be considered when planning an office set-up. Modern workplaces include complex technology, such as servers, that depend heavily on power to run properly. To maximise the use of power in these places, it is prudent to practice a more ‘open-door’ set-up to work instead of enclosed offices. Building insulation and illumination can also be considered while planning or selecting the appropriate set-up.
- Retail establishments like supermarkets and pharmacies, to name a few, use a lot of electricity during the day. Lighting and air-conditioning systems are to be blamed for this high price. By utilising energy-efficient LED lighting and high-rated air-conditioners – preferably those with at least a 3-star rating – a business in this category can reduce the amount of electricity used.
- Since on-site amenities and kitchen equipment are frequently used in the evening, the hotel and lodging industry is probably going to benefit from the evening bias of electricity consumption profile. Rates are lower at night because it’s not as busy as other times of the day for businesses that are open all day. According to our internal research, the hotel and lodging industry uses more energy for cooling and heating to keep guests comfortable. In this industry, a larger portion of electricity is used for lighting, air-conditioning and other cooling equipment. Business owners should concentrate on improving energy-efficient equipment, draught-proofing and insulating rooms to prevent energy losses in order to reduce how much money a business spends on electricity. Peak usage is observed between the hours of 3 pm and 6 am.
- Due to the use of equipment that is performance-oriented rather than energy-efficient, one company uses electricity more than others. In terms of electricity use, the hospitality sector is a significant contributor. They require electricity for breakfast, lunch and dinner, so it would be wise to use solar energy instead of a more expensive sources of energy. There is a lot more reliance on air-conditioners and large heating-cooling equipment than in other businesses, which rely primarily on lighting.
- In the manufacturing industry, there isn’t a one-size-fits-all solution; rather, the type of product you produce will determine the machines you use, followed by the air-conditioners and lighting, which will then determine how much electricity you use. In the manufacturing industry, getting the most out of a machine means figuring out how much fresh juice or cement powder we can get from turning it on. For a business like this to benefit from low tariffs, production must take place during off-peak hours in order to maximise use of electricity in the sector.
If there is a business that uses electricity more as compared others, it is because of the equipment that is used. Some equipment is not energy-efficient but rather performance-oriented depending on the industry. When this business type is identified, an appropriate recommendation can be made.
Being Energy Efficient
The way a business works to cut the amount of electricity used in its operations is by using energy-efficient equipment or considering the building design with insulation and more fittings. Businesses can relate with how to use electricity efficiently and get the most out of it by understanding how it works (refer to your business type). It is crucial to remember that the value derived from energy efficiency lies in the energy that is not used; and for businesses to achieve this best value, they will need to investigate the unused energy and how it affects business operations.
There are several proven scientific methods for increasing energy-efficiency, some of which include:
- Enhanced lighting: Using controlled sensors or LED lighting technology to turn on or off lights or other equipment only when necessary is one way to increase efficiency.
- To improve the wider range of temperatures, think about highly efficient air-conditioners with ratings of 3-stars from the Ghanaian Energy Commission, or look for leaks inside the working space.
- The replacement of all broken appliances is another suggested strategy for being energy-efficient. Since these appliances tend to use more energy, it is advisable to create a life-cycle plan for each appliance used by the company.
Businesses must also consider how their managers use electricity. Research as conducted by the Department of Electricity and Materials at the Institute of Technology for Development (LACTEC) in Brazil has shown that behavioural patterns play a significant role in how high or low business costs can be reduced when they are examined. To address these gaps, managers can be scheduled for training on a quarterly or bi-annual basis in order to be efficient in electricity use.
Understanding electricity allows business owners to confidently project costs and decide where to invest and where not to. In my next article, I’ll discuss the concept of solar energy generation as an option for businesses. This is intended to guide business owners so as to decide whether to invest in a specific solar project or not.
Keep in mind that when you understand how electricity is used in your business, your profit margins will improve and waste associated with specific energy investments will be avoided.
The author, Eddie Cudjoe, is a Managing Partner at Airban Homes (www.myairbanhomes.com), a Ghanaian real-estate firm. He is based in Accra, Ghana, and works in the company’s corporate office where he offers advice to numerous entities and businesses on matters relating to power management, property acquisition, obtaining financing as a first-time homeowner, and project management. Eddie also works with the Properties & Facilities Management Department of Fidelity Bank Ghana Limited. Contact him on [email protected] or 030 298 4032