As we have seen in the last few years, energy costs are on a steady rise. With so much volatility in the market, it makes it difficult for businesses to forecast and plan financially for the following year.
According to the U.S. Bureau of Labor Statistics, overall national energy prices have jumped from roughly $0.13 to $0.17 per kWh in the last four years. The Northeast and larger cities are seeing even higher price increases, jumping from $0.07 to $0.26 in the same time period.
With energy being one of the primary costs for business, it is important to know where your money is going and how this market volatility will affect you.
So what are your options to bring more predictability to your energy bills?
1. Do nothing:
To put it simply, you could do nothing when it comes to your energy bill. Costs will continue to rise and you can try to plan your finances accordingly, however we strongly recommend against this as these energy prices can increase exponentially at the drop of a dime.
Requires no action or change in behavior
Most volatile option meaning a higher chance for exponential price increases
No investment or upfront costs necessary
Makes forecasting and financial planning incredibly difficult
Introduces opportunity for crippling future state of energy costs, rising as much as 3-5 times what you are paying now
2. Energy supply contracts:
Intense energy price increases cause business owners to opt-in to energy supply contracts to preserve a predetermined price for power. This allows you to lock in a price for months or even years to come on your energy bill.
For example, say you are currently paying $0.20 per kWh on your monthly electricity bill. Depending on the area you are located, experts can predict that prices will jump to roughly $0.80 per kWh. With an energy supply contract, you are able to lock in at $0.50 per kWh for the next several years. This means paying more upfront but less than the expected price as time continues.With this option, you are ensuring predictability but at what cost?
Predictability in your energy costs
Still very expensive
No upfront investment required
No ability to capitalize or save long term on energy costs
Possibility of spending the same amount of money if you were to have done nothing at all.
3. Create your own energy with solar:
The third and most reliable option would be to install solar panels on your property. With the push to go green and utilize less fossil fuels, installing a solar system is not only encouraged, but rebated and incentivised by the government, meaning low upfront costs required from your pocket.
Utilizing solar energy will save your company from the volatile utility market and secure low power prices.
To understand more about the pros of solar installation and how this option saves your company money, read our blog Streamline your tax incentives and total savings when making the switch to solar. Here we walk through each benefit so that you are made aware of all of the saving opportunities involved with solar installation.
Low to zero electricity bill with energy credits from the grid
Initial capital investment, but again costs are typically recouped in full in the first 1-2 years after installation
Majority to all of upfront investment is recouped in tax refunds, rebates, and incentives, etc.
System is typically up and running in 6-8 months after the initial assessments. To learn more about this timeline, read our blog What you need to know about installing solar panels for your facility
Able to utilize cash you are saving in other productive ways for your company
Substantial savings for decades to come
Highly predictable energy prices
Convert your roof or unused land into a power-producing, money-making asset
Want to save the most on energy? Partner with Smart Roofs
This volatile market is only becoming increasingly harder to keep up with. Bypass the headache of wondering how much your energy bill will cost this month and look into your options for installing solar panels.
Smart Roofs walks each of our partners through the process in order to help you find every opportunity there is to keep money in your pockets. If you are ready to discuss your options, contact us today to start the process!