Would you feel comfortable leaving your bath running with water gushing down the drain?
Probably not. But Australian Businesses are doing something similar every day with their electricity, says Tim Bray, the Chief Executive Officer of Ecocentric Energy.
“Electricity is one of the largest corporate overheads, but very few can pinpoint where their biggest leaks are…most businesses don’t even know where to start,” says Mr Bray.
One spokesperson from Iconic Energy agrees, stating that business owners are paying excessive electricity bills without realising. “This lack of information on energy consumption combined with volatile energy prices increases the company’s risk exposure, resulting in higher costs and impacting profitability.”
Are you paying more for electricity than you need to?
In July 2015, Energex announced that it was changing the way they calculate network tariffs in Queensland. The new policies mean that businesses with an annual consumption greater than 100 MWh are being charged for the power they are supplied rather than the power they are using. This is known as ‘demand charge’.
The charges take account of the reactive power supplied to the site. Consequently, customers with a poor power factor are experiencing significant increases in their network charges.
According to Energy 4 Business, “customers with a poor power factor will see their network charges increase by around 8-9%, and business owners with an especially poor power factor will see cost increases of around 12-13%”.
But wait, it gets worse. If on just one day a month, your business’s energy consumption goes over the specified kW limit in any one 30 minute period, you will be hit with a “demand charge,” even if that day’s consumption was a one-off.
For example, Giles Parkinson says that “if you use 40kW in that time period, you will need to pay another $400 for that month.” It’s also important to note that the new policies are impacting customers within the Energex network regardless of which retail provider they are currently with.
So what is your ‘power factor’ and how can you improve it?
A simple analogy to explain power factor is that of a cappuccino. Since Energex introduced its new tariff policies in July last year, businesses have been paying for both their coffee (the real power being consumed) and their froth (the reactive power that they don’t need).
Your power factor is measured on a scale between 0 and 1. A business with a power factor rating of 0.8 is using only 80% of the power supplied to their premises, but paying for the extra 20% that they don’t use. In other words, the higher your power factor, the more efficient your business is.
The simplest way to improve your power factor is by adding a ‘power factor correction’ unit to your distribution system. It will stop your electricity company from supplying you with extra electricity and free you from having to pay for it.
(Image via Ergon Energy)
How do you get power factor correction for your business?
Power factor savings add up fast. According to leading power factor correction company, Allied Construction and Roofing, “changing the way your facility draws power is the fastest and easiest way to slash energy expenses…in many cases, the payback time of purchasing the equipment is within 12 months”. Installing a power factor correction is easy — all you need to do is call an expert, and they will do all of the hard work for you!
You can book a free power factor assessment with Allied today. For a free check, measure and quote call Allied on 1300 650 114, or send us an online enquiry to find out how much money you could be saving.