Energy costs remain a significant expense for many businesses. From offices and retail premises to warehouses, manufacturing facilities and hospitality venues, finding ways to reduce energy consumption can make a meaningful difference to operating costs.
The good news is that businesses do not necessarily need to make major investments to start saving. Improving energy efficiency, understanding where energy is being used and investing in technologies such as solar power can all help reduce electricity and heating costs.
Here are five practical ways businesses can reduce their energy bills while also improving energy efficiency and reducing their carbon footprint.
1. Install commercial solar panels
Installing commercial solar panels can be an effective way for businesses to reduce their reliance on electricity from the grid. Solar PV panels generate electricity during daylight hours, allowing businesses to use their own renewable energy instead of buying as much electricity from their supplier. The financial benefit will depend on factors including the size and orientation of the solar installation, electricity consumption, electricity prices and how much of the generated power is used on site.
Why solar energy makes sense for businesses
- Generate renewable electricity on site.
- Reduce the amount of electricity purchased from the grid.
- Make better use of large commercial roof spaces or suitable land.
- Reduce exposure to future changes in electricity prices.
- Potentially receive payments for eligible electricity exported to the grid.
- Reduce the carbon emissions associated with electricity consumption.
Businesses with a good match between their daytime electricity consumption and solar generation can particularly benefit from using more of the electricity they generate themselves.
What about excess solar electricity?
If an eligible installation exports electricity to the grid, it may be possible to receive payments through the Smart Export Guarantee (SEG). The SEG applies to eligible renewable electricity generators in Great Britain, including solar PV installations up to 5MW. However, eligibility requirements apply and SEG suppliers set their own tariff rates and terms. Businesses are paid for eligible electricity exported to the grid rather than electricity they use themselves.
Rather than relying on a fixed figure for annual savings, businesses should have their potential solar generation and financial return calculated using their actual electricity consumption and site characteristics. Before installing solar, review your electricity usage throughout the day. A business that uses a significant amount of electricity during daylight hours may be able to maximise the financial benefit by using more of its solar generation on site.
2. Upgrade to energy-efficient LED lighting
Lighting can represent a significant proportion of electricity consumption in commercial buildings, particularly in offices, retail premises, warehouses and industrial facilities. Replacing older lighting systems with modern LED technology can reduce electricity consumption while also reducing maintenance requirements because LEDs generally have a longer operating life than many older lighting technologies.
Benefits of LED lighting include:
- Lower electricity consumption compared with many older lighting systems.
- Longer operating life, potentially reducing replacement and maintenance requirements.
- Improved control over lighting levels and operating times.
- The ability to combine lighting with occupancy and daylight sensors.
- More efficient use of lighting in areas that are only occupied periodically.
The potential saving will depend on the existing lighting system, operating hours and the efficiency of the replacement system, so businesses should calculate savings based on their own circumstances rather than relying on a universal percentage.
Make lighting even more efficient
Smart controls, timers, occupancy sensors and daylight controls can help prevent lights being left on unnecessarily. For example, warehouses, toilets, corridors, storage areas and meeting rooms may benefit from automatic controls that switch or dim lighting when spaces are unoccupied.
3. Carry out an energy audit
Before investing in new equipment, it makes sense to understand exactly where your business is using energy. An energy audit or energy assessment can help identify inefficient equipment, unnecessary energy consumption and opportunities to reduce costs.
An energy assessment could look at:
- Heating and cooling systems
- Lighting
- Building insulation and draughts
- Refrigeration
- Manufacturing equipment and machinery
- Compressed air systems
- Office equipment
- Hot water systems
- Operating schedules
- Electricity consumption at different times of day
The findings can then be used to prioritise improvements based on their potential energy and financial savings. For larger organisations, the Energy Savings Opportunity Scheme (ESOS) may also apply. ESOS is a mandatory energy assessment scheme for organisations that meet specific qualification criteria. For smaller businesses, a full professional audit may not always be necessary. Reviewing energy bills, meter data and equipment operating schedules can provide a useful starting point.
Start by identifying simple sources of waste. Adjusting operating schedules, correcting heating controls or switching off equipment outside working hours can sometimes deliver savings without significant upfront investment.
4. Optimise heating, cooling and ventilation
Heating, cooling and ventilation can account for a substantial proportion of energy use in many commercial buildings. Improving the efficiency of these systems can therefore be an important part of reducing energy bills.
Ways to reduce heating and cooling costs
- Service heating and cooling equipment regularly.
- Use appropriate temperature settings and operating schedules.
- Avoid heating or cooling unoccupied areas unnecessarily.
- Install smart heating controls, timers or smart thermostats.
- Reduce draughts and unwanted heat loss.
- Improve insulation where appropriate.
- Keep doors and windows closed when heating or cooling systems are operating.
- Consider heat recovery systems where suitable.
- Replace inefficient equipment when it reaches the end of its useful life.
There is no universal saving that can be guaranteed from simply changing a thermostat by 1°C. The impact will depend on the building, heating system, weather, occupancy and existing temperature settings. Instead, businesses should look at their heating controls and operating schedules as part of a wider energy-efficiency strategy.
Heating empty offices, meeting rooms, warehouses or other areas outside their normal operating hours can result in unnecessary energy consumption. Automated controls can help prevent this.
5. Encourage energy-saving behaviour
Technology is only part of the solution. The way employees use equipment and buildings can also have an impact on energy consumption. Creating a simple energy-saving policy and making staff aware of how they can reduce unnecessary consumption can help businesses maintain efficiency improvements over the long term.
Simple changes businesses can encourage:
- Switch off lights when areas are not being used.
- Shut down computers and equipment when they are no longer required.
- Avoid leaving machinery running unnecessarily.
- Make sure heating and cooling systems are not operating when buildings are unoccupied.
- Keep doors and windows closed when heating or cooling is in use.
- Encourage employees to report energy wastage or faulty equipment.
- Monitor energy consumption and share progress with staff.
Energy monitoring systems can also help businesses understand when and where electricity is being consumed. This makes it easier to identify unusual consumption patterns and measure the impact of energy-saving measures.
Set measurable targets and regularly review your energy consumption. What gets measured is easier to manage.
Look for grants, funding and tax incentives
There are various sources of financial support that may help businesses invest in energy efficiency and renewable energy. However, funding availability, eligibility and the level of support can vary depending on the location, size and type of business and the project being undertaken.
Government guidance currently points businesses towards grants, loans, financing schemes and tax incentives that may help with energy-efficiency investments. Local councils and regional organisations may also offer their own funding programmes.
Smart Export Guarantee
Eligible renewable electricity generators can potentially receive payments for electricity exported to the grid through the Smart Export Guarantee. Suppliers set their own tariffs and contract terms, so businesses should compare available offers.
Capital Allowances
Businesses may also be able to claim capital allowances when purchasing qualifying energy-efficient or low-carbon equipment. The exact tax treatment depends on the type of equipment and the circumstances of the business. Check the latest government, Ofgem and local authority guidance before committing to an energy-efficiency project, as funding programmes and eligibility criteria can change.
Reduce energy costs and improve efficiency
Reducing energy bills doesn’t have to mean making one huge investment. For many businesses, the best results come from combining several measures. Improving heating controls, upgrading lighting, monitoring energy consumption and changing everyday habits can all help reduce unnecessary energy use. For businesses with suitable premises and electricity consumption, commercial solar panels can provide another opportunity to generate renewable electricity and reduce reliance on grid-supplied power.
The most effective approach is to understand where your business is using energy, identify the biggest opportunities for improvement and then prioritise investments based on their potential return. With energy efficiency becoming increasingly important for both costs and sustainability, acting now can help businesses become more efficient, resilient and prepared for the future.