Small business energy use is as diverse as businesses themselves. A restaurant will use energy in a very different way than a shoe store. But in general in Colorado, a lot of commercial energy is devoted to space heating and lighting. Space cooling and water heating are also common to small businesses, and specialty uses such as refrigeration, cooking, and office equipment are more a function of business type.
Financial incentives for business energy efficiency can change from year to year. Check with your local utility(ies) for incentives. Currently, federal government business tax credits are generally only applicable to renewable energy.
Because small business energy use can be so diverse, the best way to get started is with an energy audit. Commercial energy audits may be available for free or for a reduced cost through your local utility. Commercial energy audits may also be available through local energy programs or through energy auditors in the private sector.
A commercial energy audit is a thorough inspection of a business intended to identify areas of energy consumption, options for saving energy, and costs and benefits of energy upgrades. Options for savings energy are usually listed in order of priority and are considered recommendations for the business. Certain types of energy audits are more thorough than others. Level 1 audits are simple walk-through assessments that are sometimes conducted by utility companies.
Level 2 audits involve a more thorough inspection and often employ equipment such as a blower door to test for air leaks and an infrared camera to test for areas of significant heat gain/loss. Tests for combustion safety can also be run by qualified professionals. Level 2 audits typically include potential costs and savings associated with making efficiency upgrades. Auditors certified by professional organizations such as BPI have been trained in the most effective techniques for conducting Level 2 audits.
Level 3, or “investment-grade” audits, include detailed financial analyses for capital-intensive investments in energy efficiency based on in-depth engineering analysis.
A “demand charge” is typically determined by the maximum amount of power called for across any 15-minute period. Some utilities will use this ‘peak demand’ as your demand charge for the month, while others will use peak demand as your demand charge for an entire year. Businesses that pay for demand can save money by reducing the power they call for at any one time. To reduce peak demand, you must first identify when your peak demand is occurring and what is using electricity at that time. Then you can:
- stagger times in which electricity is used
- put large appliances or machines on timers
- use large appliances or machines on lower settings
- use more efficient appliances and machines
Common charges include:
Energy (kWh): the base rate per kilowatt-hour
Demand (kW): the base rate per kilowatt of peak demand
Service: the fixed charge for supplying power to your business
Some utilities also add adjustments to the energy or demand rates as detailed below:
Capacity Adjustment: an adjustment to the base rate based on the generation and transmission capacity purchased from other entities
Commodity Adjustment: an adjustment to the base rate based on the current cost of fuel (i.e. coal or gas)
Demand Side Management Adjustment: an adjustment to the base rate based on the cost of running energy efficiency and conservation programs
Franchise Fee: a percentage fee applied to the total rate to cover charges the utility incurs from your municipality
General Rate Schedule Adjustment: an adjustment to the total rate based on overall utility costs
Renewable Energy Standard Adjustment: an adjustment to the total rate for the purchase of renewable energy to meet legislative standards (2% maximum)
Transmission Adjustment: an adjustment to the base rate based on the capital costs of transmission not covered in the base rate
Some small businesses pay only for the energy they consume as measured in kilowatt-hours. For these businesses, reducing energy use will save money. Other businesses pay for both energy and power demand as measured in kilowatts. This “demand charge” is typically determined by the maximum amount of power called for across any 15-minute period. Some utilities will use this ‘peak demand’ as your demand charge for the month, while others will use peak demand as your demand charge for an entire year.
You can tell what you are charged for by looking at your electric bill and sometimes just by the name of your rate. For businesses that only pay for energy, subtract any fixed charges (such as a service fee) from your bill’s total. Then divide that by your energy use (kWh) to get a cost per kilowatt-hour. For businesses that pay for both energy and demand, you must calculate these rates separately. It is common for adjustments to your base rates to apply to your demand rate rather than your energy rate. If this is the case, subtract both the energy charges and your fixed charges from your total cost. Then divide the remainder by your demand (kW) to get a cost per kilowatt.
To reduce your energy use and save money, start by following this checklist.
• Set the thermostat as low as comfortable (68 degrees F is suggested).
• After hours, set the thermostat to 60 degrees F.
• Install a programmable thermostat to automatically provide these varying temperatures.
• Replace furnace filters once a month during the heating season.
• Regularly clean heating registers and make sure they are not blocked.
• Have your furnace checked annually by a trained professional.
• In forced air furnaces, seal all joints in sheet metal ducts with mastic.
• Insulate ducts and pipes passing through unheated spaces.
• Install insulating gaskets behind electrical outlets and switch plates on exterior walls.
• Caulk and weather strip doors and windows as needed.
• Caulk and seal leaks where plumbing, ducting, or electrical wiring penetrates through exterior walls, floors, and ceilings.
• Use a door sweep to reduce air leakage under exterior doors.
• Keep exterior doors closed during business hours.
• Upgrade attic insulation to R-38 or higher.
• Insulate floors over unheated areas to R-19.
• Open south-facing blinds and shades on sunny winter days, and close them at night.
• Install storm windows over single pane windows or use plastic film window kits.
• Replace single pane windows with energy efficient double or triple pane windows mounted in non-conducting window frames.
• Replace an aging furnace or water heater with an efficient model, such as one with an Energy Star or Most Efficient label.
There is a wide variety of heating options on the market today. Factors to consider when selecting a heating system include your type of heating fuel, upfront cost, operating cost, size, and comfort. Reducing the need for heat as much as possible through conservation and thermostat control prior to investing in a new heating system can reduce the size (and cost) of the new heating system you’ll need. Contractors should perform a “Manual J” calculation to determine the proper size of new heating equipment. Combustion safety concerns should be addressed when installing or replacing heating equipment.
Options for heating with natural gas or propane include:
Boilers used to heat water can distribute that heat through a baseboard, radiant floor, radiant wall, or other hydronic system.
Options for heating with electricity include:
- air source heat pumps
- ground source heat pumps
- electric resistance heat
Alternative options to heating with natural gas, propane, or electricity include:
- wood stoves
- pellet stoves
- solar hot water
- solar space heaters (typically for a single room)
Small businesses can use a variety of lighting technologies and styles. Fluorescent tube lighting is perhaps the most common of these technologies and types. Fluorescent tubes can vary in efficiency according to both the tube itself and the ballast that runs the tube. Tubes can be categorized by their diameter as follows:
- T12: 12/8” (or 1.5 inches) in diameter
- T8: 8/8” (or 1 inch) in diameter
- T5: 5/8” in diameter
T12s are the least efficient of these tube types and T5s are the most efficient. These tubes can come in a variety of lengths. They can also come in varieties identified on the tube’s label, such as ‘high output’ or ‘energy saver’.
Ballasts than run the fluorescent tubes are either magnetic or electronic. Magnetic ballasts are less efficient than electronic ballasts. While there are tools such as flicker checkers and ballast checkers to help you identify your ballast type without having to access the ballast, you can also read the label of your ballast to identify whether it is magnetic or electronic.
Common 4-ft. fluorescent tube/ballast combinations and their system wattages include:
- 4-lamp 40W T12 with magnetic ballast: 172 watts
- 4-lamp 34W T12 with magnetic ballast: 144 watts
- 4-lamp 32W T8 with electronic ballast: 113 watts
- 4-lamp 28W T8 with electronic ballast: 99 watts
Depending on the fluorescent tube and ballast type, fixtures with (4) 4ft. fluorescent tubes have system wattages ranging from ~100-175 watts. By contrast, fixtures with (4) 4ft. LED T8 tubes can use about 60 watts. In addition to using less energy than fluorescents, LEDs contrast with fluorescent tubes in other ways:
- More direct light
- Longer life than most fluorescents
- No mercury
- Tubes are more expensive
- Different tubes can be run on electronic ballasts, with an LED driver, or without a ballast entirely
- No warm up time until full brightness
The answer: it depends.
In informal testing in 2016, CSU found some surprising results when comparing various 4’ linear LED tube lamps (T8s) to one another and to 4’ linear fluorescent T8 and T12 lamps. Fluorescent T8 lamps are commonly found in commercial settings such as offices and are usually run with electronic ballasts. Fluorescent T12 lamps are older, less efficient, and are often run with magnetic ballasts. LED T8 lamps are now being used to replace fluorescent T8 and T12 lamps.
Key takeaways from our testing include:
- LEDs run with fluorescent electronic ballasts drew less power than LEDs run with LED drivers.
- LEDs run with fluorescent magnetic ballasts drew significantly more power and put out significantly more light than T12 fluorescents run with the same ballasts.
- There was significant variance in power drawn between LED T8 brands run with fluorescent electronic ballasts, even though nameplate wattages suggest otherwise.