Why they matter
- Utilities have committed to invest more in renewable energy — from $135 billion in 2014 to $250 billion by 2030, according to the International Energy Agency — so these charges will only continue to rise.
- With more and more renewable energy coming online, there is a greater need to connect it to the grid so it can be distributed to end-users. The cost to bring these new energy sources to the masses is typically passed on to commercial and industrial companies, as well as individuals.
How to reduce costs
- Evaluate renewable options carefully. While green energy may be slightly more expensive now, it can lead to higher returns in the long term.
- Understand available tax exemptions. As governments push renewable energy, more and more incentives and subsidies exist for using green power and introducing renewables into the portfolio mix. For some companies, these subsidies can equal upwards of 7% of energy bills. Companies can even earn tax-exempt status for implementing co-generation, or changing manufacturing and heating processes.
- Know how to comply with renewable requirements. Countries such as Germany have strict conditions around green energy compliance that determine how much extra companies have to pay. But compliance often involves a deeper understanding of renewables than most energy managers possess. It gets especially complicated where fast-changing, local, and often-conflicting regional and national compliance regulations, interact. “It can be difficult to keep a broad eye across the board on all the changes in all the regions where you operate,” says Stuart Donnelly, Consultancy Director for Schneider Electric.
- Get creative. Companies have the ability to really change the game for their own energy consumption with renewables. For example, many companies can use their waste feed-stock to generate a portion of their energy to use when there is peak demand. By tapping into an alternative energy source when demand is high, these companies can reduce their costs. Onsite generation also acts as a hedge against both the increasing costs of energy and renewable-focused fees.
- Find strength in numbers. Group sites together within your own company or with other end-users to take advantage of solar, wind and hydro energy opportunities for stronger savings.
Of course, environmental and renewable energy charges are just one of several core components of a utility bill. Knowing each element in detail is the key to maximum savings. Download Understanding — and Managing — Hidden Energy Costs for a comprehensive guide. And check out this infographic for a quick snapshot of the average invoice.