How to Cut Energy Costs: A Guide for SMEs

What’s more, research suggests employees are choosing to work in the office rather than remotely to cut home energy bills. More people in the workplace means higher energy usage and bigger bills. So how can SMEs cut energy costs but remain productive?

We’ve put together some handy tips to help with energy efficiency. But before we get started, what financial support is available for business owners?

Can businesses get help with energy bills?

In September 2022, the government announced business customers would now get the same level of support with their energy bills as domestic ones. The energy bill relief scheme runs from 1^st October 2022 until 31 March 2023. Those who qualify will get discounted gas and electricity rates.

The scheme is available to everyone on a non-domestic contract including:

• Businesses
• Voluntary sector organisations (like charities)
• Public sector organisations (like care homes, schools, or hospitals)

who are:

• On existing fixed price contracts agreed on or after 1st December 2021
• Signing new fixed-price contracts
• On deemed/out-of-contract or variable tariffs
• On flexible purchase or similar contracts.

There are some exclusions. You may not qualify for the discount if you use gas or electricity for the purpose of generating power you sell back to the grid. Power stations, for example.

What is the energy discount and how do you get it?

For all non-domestic users in Great Britain, the government-supported price is set at:

• £211 per megawatt-hour (MWh) for electricity
• £75 per MWh for gas.

As estimated wholesale costs for energy this winter of £600 per MWh for electricity and £180 per MWh for gas, you’ll be paying a lot less during the six months the scheme is running.

If you use heating oil or other fuels instead of gas, you will be provided with comparable support. The government’s expected to announce these discounts shortly.

You don’t have to do anything to get the non-domestic discounts. It’s automatic. Expect to see the discount from November 2022 when your supplier bills you for October’s usage.  

If you’re out of contract, don’t worry. Set up your contract as normal. Your supplier will automatically apply the relevant discounts to your bills for the duration of the relief scheme.

The government will review the scheme in December and decide if support needs to continue after the March 31^st cut-off date. In the meantime, here are some tips to help you save energy and reduce your bills.

Energy-saving tips for businesses

1. Tell your staff

Start by letting your staff know you want to make the company more energy efficient. Small changes to employee behaviour – even if it’s just turning off the lights in a room when they leave it – can make all the difference. Making energy saving a team effort.

 

2. Carry out an energy audit

Before you can start cutting energy costs, you need to identify where and how your business wastes energy. If you don’t have a smart meter, think about installing one. Daily meter checks will show you your average usage and reveal when there are spikes.

You should also carry out an energy audit to work out how, where and when your business uses gas and power. And how much you spend on each.

The Department for Business, Energy & Industrial Strategy estimates an audit will cost around 1% of your total energy bill. But you may find your current supplier will offer you a free energy audit when you switch tariffs. Your other option is to do it yourself.

How to do a DIY energy audit

Analyse the data

Go through your energy bills for the last two years. If you can, break down the usage by category (heating, air conditioning). Or look at gas and electricity usage per month/quarter/year.

If heating and air conditioning costs are high all year round, you could reduce them by adding insulation or window treatments. If your bills have increased in the past year, why is this? Have your staff been working longer hours, for example? Or is your equipment running less efficiently and using more energy?

 

Walk around your site/premises

Take a walk around your business’s location to see if you can spot any problem areas. Consider:

• Equipment and machinery – is it running efficiently?
• Lighting – what bulbs do you use?
• Ventilation/air conditioning – is the air con on at the same time as the heating? Are windows open when the heating’s on?
• Heating – are thermostats set to the correct temperature? How close are employees’ desks to radiators?
• The building itself –

Other things to look out for include:

• Checking if your equipment is turned off or left on standby at night. On standby, it’s still using power.
• What about your thermostats? Are they set to the right temperature?
• Is your heating/air-con scheduled to switch off at weekends and weekdays overnight?
• What bulbs do you use for overhead lighting? CFL or LED?
• Are hot water tanks, boilers and pipes insulated? Are existing cavity walls insulated?

 

Create an action plan

Now you know how, where and when you’re using energy, plan how to reduce it. Focus on quick fixes like insulation, timer switches and thermostat settings to start with. Then move on to the bigger, more costly projects – replacing old boilers, windows, and lighting systems. The initial outlay might be expensive but you’ll be saving in the long run. 

List the changes you’d like to make and the amount they’ll cost alongside a column noting the money you expect to save. It’ll help you keep track of changes and budget year on year.

 

3. Use energy-efficient lighting

Get smart with your lighting. It accounts for around 40% of your energy usage so it makes sense to start savings here.

• Swap incandescent bulbs for LEDs, CFL or halogen. The initial cost is far outweighed by the energy and money you’ll save. They last longer too.
• Ask staff to turn off lights when they leave a room or see no one is in there
• Consider motion or light sensors in areas that don’t get used all the time – like toilets and corridors.
• Fit vertical blinds instead of horizontal ones. They let in more natural light.

 

4. Check climate control

You want to keep your employees warm in the winter and cool in the summer, of course. But bear in mind that increasing the temperature by just 1 degree can cost you up to 8% more. And leaving your air conditioning on all day in summer can add another 30% to your bill.

Along with monitoring temperatures and timing, there are other things you can do to help:

• Clean vents, fans, and air-con filters so they do their job more efficiently. The harder they have to work, the more you’ll pay for your energy.
• Move desks, filing cabinets, shelves, and workbenches away from your radiators so they don’t absorb heat.
• Seal unused doors and windows (excluding emergency exits) and fit draught excluders on external doors, or leaky windows.
• Ask staff to dress for the weather. Wear a jumper to work in winter, for example, instead of turning up the thermostat.

 

5. Turn off tech and machinery

If you run a manufacturing business, you’ll have machinery running costs to pay. Save energy and costs by switching off motors during lunch hours. And turn off machinery at the end of each day. If you label switches by machinery, your employees will know what they can turn off and how to do it correctly.

Laptops use less energy than desktop computers, just remember to turn them off at the end of the day. Also, unplug phone chargers, PCs, and printers when not in use. It’s a myth that leaving computers in standby mode costs you nothing. Even a blinking power light drains energy.

Remind your employees to turn off and unplug daily. And check banks of switches – do they need to be left on or can you unplug them (or remove some of the plugs)?

 

6. Kitchen savers

Whether running a kitchen is part of your business or you have a small one for employees’ use, there are lots of ways you can save energy.

• When you’re replacing appliances, from freezers to toasters, choose those that use the least energy. Check the energy labels and look for a product with the best energy rating for the size you need.
• Switch off microwaves, kettles, air fryers, ovens and dishwashers at the socket when not in use.
• Run your dishwasher only when it’s full.
• Clean filters on fridges and freezers often and make sure there’s enough space around them so they don’t overheat. Defrost them regularly and don’t overfill.
• Check oven doors fit properly (adjust the latches if necessary) and seals are in good condition

 

    7. Go paperless

Turning off your printer when it’s not in use will save energy. But how much do you really need to use it anyway?

Save trees and money by going paperless where you can. Use electronic signing services like Digisigner or DocuSign. And share documents via apps like google docs or dropbox instead.

Useful energy efficiency resources

• Department for business, energy and industrial strategy
• Energy saving trust
• Carbon trust
• Ofgem
• UK SME climate hub

Business insurance from Towergate

Cost saving shouldn’t mean skimping on your business insurance. If there’s a claim and you have a gap in your cover or you’re underinsured, you could end up seriously out of pocket. Protect your work, your bank balance, and your employees with Towergate’s range of business insurance policies.

We offer tailored business insurance and trade-specific policies to suit your needs. For more information visit our small business insurance page. Or call 0344 346 0409 to speak to a specialist adviser.

About the author

Alison Wild BCom (Hons), MAAT, ATT, Taxation Technician is a highly respected industry professional who has been working with and advising SMEs in areas including tax, pensions, insurance and marketing for over 25 years. She is a member of the Association of Accounting Technicians (AAT) and Association of Tax Technicians (AAT) and also has considerable experience as a residential landlord.