What should businesses do to mitigate electricity cost increases?
Irish Tourism businesses are suffering from a variety of increasing business costs and amongst these are electricity costs. Even though we have seen large reductions in the past 2 years businesses are still paying c. 70% more per unit of electricity than 2019 (vs 2024 data)
These cost increases include the cost of producing electricity, government mandated pass-through charges and the suppliers profit margin.
What will change over the next decade?
- Pass-through charges will increase as we build out our electricity grid to allow for decarbonisation and the increasing demand for electricity
- Margins will stay the same
- Cost of electricity will change depending on the energy source and international impacts.
What realistic actions can the tourism sector take to support tourism businesses?
- Lobby Government to change how Wind and Solar energy supply costs are charged for – at present they get the same price as if they were burning gas or oil
- Lobby Government to put in place a dedicated fund to support tourism businesses who commit to switching to 100% electricity by 2040
What actions can tourism businesses take to reduce/mitigate rising electricity costs?
It’s your money – spend it wisely
- Make sure you “Bid Out” or re-negotiate your electricity contract annually – use a broker if needs be but do not let your contract go out of date or you will be financially punished by your supplier
- Commission an Investment Grade Energy Audit – not a free quick and short one – that will identify the specific actions in a specific timeline that will make your business more energy efficient and plan for a move to 100% electricity by 2040
- Use the extensive grants available to upgrade your equipment, based on the audit timeline and your financial resources
- Note: There are government backed energy loans available
- Have a written energy management plan and ensure that all employees are aware of it and what they are required to do to minimise energy consumption
- Identify and provide the training required for employees to implement the energy management plan
- Make Electricity/Energy Management a core reporting requirement at management and departmental meetings and use relevant Key Performance Indices (KPIs) to show and track progress and set targets
- Monitor and Track electricity consumption in real time online and by major electricity using area (Less than 10% of large hotels have electricity sub-metering)
- For Monitor & Track read – Install your own electricity sub-meters and main fossil fuel users’ meters – do not rely on the utility meters
- If you do not measure and monitor consumption you are not managing energy
- Analyse this information regularly and use external experts if you do not have the skills
- Set consumption reduction targets with clear directions and required resources applied that can deliver lower consumption = lower costs
- Don’t set unrealistic targets without providing the resources
- Have a written plan to replace old machinery & equipment with modern, lower usage, equipment. (Variable Speed Drives can reduce electricity used in pumps by up to 50% and there are excellent grants available)
- Install as much Solar PV as possible while the PV grants are available (A typical installation delivers a 3.6-year payback now)
- Start looking at the economics of installing large battery systems to store cheaper off-peak electricity alongside PV
There are many more actions a business can take but it all comes back to that Investment Grade Energy Audit that will identify the upgrades and timeline and costs.
Every business must have a “Green/Energy Leader” whose job is to monitor and analyse and promote good practice, supported by the owner/general manager
Every department should know what equipment they have and how to use it properly so that they use the least amount of energy.
Energy Management is a leadership function – you will get out of it what you put into it. If you are expecting to reduce your costs with no resource input, then you are being unrealistic, and leaving your business open to the vagaries of the energy supply market.
Those who act and can demonstrate this are those who can have a voice.