The Cost of Electricity Impacting Business

What Impact does the cost of Electricity have?

Achieving maximum productivity is the driving force in business, but it seems to be coming at an ever increasing cost. In order to achieve this goal, many businesses have installed more machinery and equipment, all of which requires more “energy” to run.

I recently spoke to someone a week after they had shut the doors to their business after 28 years due to not being able to afford the massive energy bill which had gone from $78,000 to $180,000 per month. How did this happen? Was there an alternative? In trying to understand the problem, I asked some questions and it seems they had tried everything they could to reduce their cost. In desperation they calculated what they could afford per day and simply shut the plant down when it reached that point, hoping this would somehow keep them in business. Unfortunately this was not sustainable as they could not produce enough to ‘stay in business’.

Where is the Problem?

This is not an easy question to answer as there are many factors causing this rise in energy cost. Rather than looking to find answers for it, let’s look at some of the things we need to do to try and maximise efficiency. Unfortunately it seems that we looked at efficiency in terms of throughput or productivity only and have not considered running cost. This needs to be the starting point.

You need to evaluate the cost of running a machine vs the throughput of it. Let’s work with a machine that has a 20Kw motor and it can produce 100 items per hour. Now look at what your business pays for every KWh and calculate the cost to run that machine for 1 hour. Let’s assume you pay 35 cents per KWh. That means this motor will cost you around $7 per hour. Now start adding all the lighting, hot water services, kettles etc. and suddenly the cost to produce 100 units tells a different story.’ (don’t forget about the lights that stay on at night for security)

This is where inefficiencies need to be removed from the plant. Can the machine perform the same function with a 15Kw motor, can we install energy efficient lighting, does the kettle need to run all day etc.

The Next Step

Get your Electrical Contractor to conduct an energy audit on your plant. This report needs to show the current consumption, areas for improvement, cost to implement and what your return on investment would be. This sounds fairly simple, but it needs to be a very intensive audit. Look for those items that are termed “low hanging fruit” first. (items that can be implemented immediately at a relatively low cost, but immediate results) Then move to the medium and long term items where there would be higher ‘input’ cost, but definite gains with viable ROI.

Need help? Contact us at SparkyHelp and let’s discuss the options available to get your plant running efficiently.