Smat meters cut energy costs

Source: Technology Digital

Date :17/07/2007 14:40:20

People rarely think about the importance of energy supply to running a successful business - unless they suddenly have a power cut and most of the work grinds to a halt.

By John O’Hanlon

Many businesses also pay little attention to their electricity bills unless they go up significantly – considering them to be a fixed cost. But with the recent record prices and volatility in the European energy market UK businesses really should be aware that the cost of energy is certainly not fixed and should be setting their stall straight for the future.

Recent Datamonitor research has shown that after the best price possible, the services offered by energy suppliers that SMEs value the most are energy saving and efficiency advice and greener energy options. When the price of energy is high, businesses want immediate energy savings advice – and when the pressure is off the price, any thought they do give to energy is likely to be around green and environmental issues. However, the smartest businesses are addressing both of these issues before they become too urgent, making them good savings now and undoubtedly laying the foundations for more significant savings in the future.

Automated meter reading (AMR) through a Smart Meter enables customers to track and price their energy consumption by providing actual readings of the energy being used on a half-hourly basis. It is a tool that all medium-sized businesses should be getting to grips with at the moment and yet Datamonitor’s research also showed that most SMEs are unaware of it.

This seems surprising given the significant benefits of accurate billing through Smart Meters, especially to businesses with five or six different sites as it enables single-date billing for multi-site businesses. Furthermore, The Government’s Energy White Paper, released in May, stated that they want all but ‘the smallest of small businesses’, to have Smart Meters within the next five years. Smart meters could also play a crucial role in reducing carbon emissions if they were more widely adopted, as they encourage improved energy efficiency through monitoring and targeting usage.

Independent business-only energy supplier BizzEnergy was the first to introduce Smart Meters in the UK and their Senior Account Manager David Lincoln Lewis points out, “Having a Smart Meter takes the guesswork out of billing as it constantly provides actual meter reads to energy suppliers. Businesses are unlikely to accrue money just in case their estimated energy bill is too low – so when an actual meter read results in a higher bill coming in, it can often cause cash flow problems. With a Smart Meter those problems are avoided.”

Smart metering also enables a much more detailed understanding of energy use within a company, as there is software available that provides graphical representation of the exact usage. Just seeing where and when energy is being used within a business is usually the first step to reducing or adjusting usage. As Lincoln Lewis puts it, “The key advantage is that smart metering enables companies to make real decisions with real data. It also often means we are able to move customers onto tariffs that actually reflect their business hours. As a result they can feel comfortable they are actually getting best value for money as we have a full and accurate picture of their usage.” Ensuring that you are on the correct meter profile class can mean that you save 20 percent on your electricity bills straight away before even considering behavioural changes or an energy management programme.

Ultimately, smart metering brings benefits to SMEs that were previously only available to large industrial and commercial companies, due to prohibitively high meter costs and connection charges. In turn, businesses can benefit from being able to move onto better tariff options and energy efficiency opportunities that can reduce bills – savings of 5 to 20 percent are being reported. As a result it can also lessen impact on the environment – which is partly why the Carbon Trust would like them to be compulsory for all SMEs.

The cost of having a Smart Meter in a business premises is also significantly lower than most people imagine, even though one meter is needed for each site within the business. A Smart Meter costs around £400 to buy outright but if you own a meter you are responsible for maintaining and updating it, so a lease purchase agreement is often preferable. As Lincoln-Lewis explains, “We enable our customers to lease Smart Meters over a three, five or ten year period. A business signing up for a ten year lease deal at the moment would pay £265 over ten years – which works out at 50p a week.”

Given the significant potential energy savings and accounting problems it saves, every medium sized business should at least investigate the possibility of going down the smart metering route. It is also worth noting that having Smart Meters installed through one energy supplier is no barrier to switching to a different supplier in the future, as all suppliers support the same platform.

Whilst considering reducing energy usage and benefiting from accurate billing through using Smart Meters, businesses should also look at the source of the energy they are using. The Energy White Paper stated that the amount of energy coming from renewable sources in the UK must treble by 2015 to 15 percent - this means that every business needs to play its part. Greener energy options are certainly becoming increasingly available and Good Energy and Ecotricity are two independent energy companies that have based their ethos around green energy. However, most major and smaller independent suppliers also have a green option that existing customers can switch to, meaning going green doesn’t necessarily mean having to change supplier.

Since 2005 it has been compulsory for energy providers to show exactly where their supplies come from, so that customers can make an informed choice about their energy sourcing and easily compare what the different suppliers offer. The system is known as ‘Fuel labelling’ and it has undoubtedly improved openness between supplier and customer and enabled more informed decision-making on the part of the customer. BizzEnergy, for example, has been officially confirmed as providing an impressive 10 percent of its fuel from renewable sources, two and a half times the national average for UK suppliers. BizzEnergy also offers a ‘Green Choice’ product that is generated from renewable sources only, as well as providing energy efficiency advice to customers.

It is a concept that would be alien to most other industries, but UK energy suppliers today are proactively working with their customers to help them consume less of their product and make green options more available and at a lower cost. With the environmental agenda becoming increasingly important across the world as the effects of global warming start to be felt closer to home, responsible UK businesses need a very good reason not to play their part, especially when the result is as good for the balance sheet as it is for the environment.