Electricity: a major cost factor for every business and a problem to be solved

Electricity: a major cost factor for every business and a problem to be solved

Electricity is one of the main cost factors businesses need to put up with. Thus the frantic search for reliable and affordable solutions is forever ongoing. We have looked at different aspects and at possible answers.


Running a business, whether small or large, is always a costly endeavour. Rent, personnel and marketing need to be covered, but electricity really is one of the major cost factors that often eats a big hole into the company’s budget. In the United States, commercial and industrial (C&I) customers make up two thirds of the overall electricity demand. In order to balance the costs out, new solutions are constantly sought and tested.


C&I customers facing large bills

Even though electricity prices are lower for corporate customers, they make up a big part of the business costs. On average, an office building in the U.S. produces an annual electricity bill of 30.000 USD. Big-box superstores and data centers alone made up 2% of America’s total energy consumption in 2014.


Renewables: a popular solution with falling and reliable costs

At the time being, solar and wind energy are the most affordable options on the energy market. Not only are the prices for these solutions comparatively low and stable, but they also promise to continue falling further in the future, which makes it easier for companies to draw up a realistic budget plan – unlike natural gas, which often exposes customers to unexpected price swings.

Apart from the price-related advantages, renewables also make for great PR, as they help enhance a company’s image, especially with environmentally conscious customers. It also helps deflect other criticism, for example regarding labor and market practices.


Various possibilities for going solar

For companies that wish to go solar, there is a variety of options to choose from. The most straight-forward solution is installing solar on-site and compensating the output through net metering. However, this solution is not ideal for every business, as some may not have the required and adequate space for such an installation. Also, in many cases it cannot be ensured that the produced energy will suffice to cover the company’s electricity demand. Furthermore, utilities constantly enforce new rate structures, which results in policy risk with net metering.

Another possibility are bilateral PPAs: power-purchase agreements that allow a consumer to buy and use power from a project developed by a third party. There are various aspects to this up-and-coming mechanism, which Milk the Sun has looked closely at just this week.

Electricity will always be required in every single business. With various options to choose from, luckily every company should be able to find a suitable solution.


Title image: Mik Lav/shutterstock