Ever felt ripped off after being served up a beer with more head than you can shake a stick at? Then take a moment to consider how power wastage from your business’ equipment is as useless as the froth on your over-fizzed brew.
But what on earth has power factor got to do with beer I hear you say? And more importantly, what even is it?
Power factor in a nutshell… or a pint glass
Power factor is basically a measure of how efficiently your business sites use power supplied by your network distributor. Poor power factor = poor power efficiency and increased charges.
But for a more detailed, um, ‘scientific’ explanation, let’s get back to that beer:
Beer = active power (kW) – the useful power, or the liquid beer is the energy doing the good work.
Foam = reactive power (kVAR). This is wasted or lost power. It’s the energy being produced that isn’t doing any work and is annoyingly inefficient.
The mug = apparent power (kVA). This is the demand power, or the power being delivered by the utility.
So, the more ‘foam’ on your power factor, the more power wastage and the higher your inefficiency. Poor power factor is bad news for your business, your carbon footprint, and the environment.
Power factor is expressed as a percentage – the lower the percentage, the less efficient your power usage.
For example, equipment with a power factor of 1 is using all the power supplied to it. Big tick. Generally, a power factor of 0.8 or above is considered good.
However, if your power factor is lower than 0.8, it should be corrected to save on consumption and comply with the requirements of the electricity network operator.
Paying hand over fist for power
Total Utilities Director Chris Hargreaves explains, “Your power supplier provides electricity to meet your demands. Therefore, if your apparent power needs are high in order to compensate for poor power factor, you – the customer – will end up paying through the nose for it.
“For some larger customers, power suppliers might even take the largest peak and apply it across the full billing period. So you’re paying a very high price indeed for that froth on your beer!
“Poor power factor can also cost your business through direct penalty charges applied by many electricity distributors in New Zealand. This combined with charges for apparent rather than actual power can result in sky-high utility bills – particularly in this current climate where the cost of power is going through the roof.
“Conversely, by reducing the amount of energy your site requires at any one time, you reduce demand and the cost of supplying energy to your site.”
So, how do I get a handle on my business’ power factor?
Before you start to tackle a power factor problem, it’s important to get a measure of how efficient your current equipment actually is.
Total Utilities provides power factor audits – complete health checks of the overall quality of your electrical network. Our power factor audits identify problem areas and suggest opportunities for improvement in order to maximise your energy savings, mitigate faults and increase system reliability and efficiency.
Total Utilities can save you money with power factor correction
If a problem is identified during our audit, installing power factor correction is a great option to reduce your demand charges.
Total Utilities works with Rotorua based power factor correction specialists KVAr Correct, to provide complete, custom, and ready-to-go power factor correction solutions, plus ongoing monitoring and maintenance. These modular systems are custom designed to meet each customer’s need, ensuring the best return and no wasted capacity.
So, if you’re looking to reduce costs and increase energy efficiency (and let’s face it, who isn’t?), maybe now’s the time to look into your power factor? Use less. Pay less. Reduce your carbon footprint.
It’s a win-win for your business, your bottom line and the planet.
Contact Total Utilities to find out more about our power factor audits, services and solutions.
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With prevailing energy market conditions causing sharp price hikes that show no signs of abating – what can you do and who do you turn to for advice and viable solutions?
Since the beginning of 2021, negotiated contract pricing for large commercial customers has increased from 11c/kWh to 18c/kWh for a three year period. This means a customer using one million kWh per year is paying $70,000 more for electricity per year than 19 months ago.
Mass market customers have not been impacted to the same degree with pricing moving from 9c/kWh to 12.5c/kWh.
Rather than bore you with the (too numerous) details and interrelated factors that have caused this unwelcome turn of events, let’s explore the options open to businesses to mitigate sky high energy costs.
Time to turn to the experts? Many businesses are turning to energy management consultancies to help them navigate the challenging energy markets and provide services to assist them to get the very best deal on their utilities.
They are also hiring consultants to explore sustainable and renewable energy options to help them diversify their energy portfolio and give them maximum bang for their buck in terms of energy efficiency, pricing and carbon liabilities.
But according to Total Utilities Director Chris Hargreaves, it’s a case of ‘buyer beware,’ when it comes to hiring an energy management consultancy. He says the quality of service and outcomes vary dramatically.
“If it was my business, there are only a small handful of organisations I would consider using in New Zealand to obtain energy contracts on my behalf and to have the ability and insight required to properly explore efficiency and sustainable solutions.
“The consultancy industry for energy is not regulated, so effectively anyone can start up a business that offers procurement services,” he says.
Chris advises considering various factors before hiring a consultant, including how many procurements they conduct each year. The energy market is highly dynamic and energy retailers are entering and leaving the market at unprecedented rates and pricing models and practices are changing daily.
If the consultant or advisor you are using is not pricing in the market on a regular basis, then you are likely to get caught out by the market changes. Look for companies conducting over 100 procurement exercises per year (as an example, we average almost 350).
You should also establish whether your consultant reviews the entire market of energy retailers for pricing (we do), or just their favoured few companies (nope, not us).
Also, does your advisor or consultant gather detailed market intelligence to track wholesale pricing and industry developments? Do they warn you of potential ‘gotcha’ clauses to look out for in energy contracts as part of their procurement process? Needless to say, Total Utilities ticks all these boxes.
Aside from engaging a reputable energy management consultancy to help you traverse choppy utility waters, Chris explains there are various ways to hedge against rising costs, to minimise budgetary risk and ensure you comply with regulatory requirements.
Cost saving starts with sustainability & efficiency He says that first and foremost, now is the time to explore efficiency, sustainability, and low carbon solutions to increase resiliency.
“By exploring sustainable solutions such as LEDs, Renewable Energy Certificates, solar and energy conservation methods, you can achieve short term wins and relief from volatile energy prices, whilst also unlocking long term sustainability benefits and future proofing your business.
“Sustainability not only saves money by creating energy efficiencies, it also decreases your reliance on the grid, so you are no longer at the mercy of volatile energy prices,” he adds.
Keeping the lights on One of the trends we’re seeing in the industry is a move away from centralised, utility based generation – to so called ‘distributed generation.’ This is a shift from a single source to many sources to allow for increased resiliency and reduced reliance on the grid.
For example, traditionally if the grid goes down, you have no real option to keep your business going. But if you have solar with battery storage, you might be able to keep the lights on until the grid comes back online.
Additionally, you avoid the full impact of market volatility if your energy sources are distributed – it goes back to the wisdom of the old proverb, ‘don’t put all your eggs in one basket.’
Talk to us A great place to start when it comes to navigating the ever-changing energy markets is to talk to our team at Total Utilities. Our data-driven approach, born out of comprehensive investigations and analysis, allows us to carefully tailor energy services and solutions to your business.
With our proven 20 plus years in the energy business, we negotiate over $400 million worth of energy contracts for our clients every year. We can leverage relationships to get you better prices.
Our detailed pricing analysis and tendering services help save time and money by pinpointing the best possible energy contracts and ensuring the most favourable terms and prices.
We put sustainability, cost saving and energy efficiency at the heart of our clients’ businesses, so that they can be both sustainable and highly profitable.
And in this environment, setting sustainability and carbon reduction targets isn’t just about reducing your environmental impact – it simply makes good business sense.
Contact us to find out more about our energy management consultancy services.
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A recent Microsoft report on New Zealand’s sustainability performance shows that more than three quarters of NZ businesses now have carbon reduction plans and policies. But that’s where the green wave crashes into a wall – and uncertainty about costs is a major factor.
According to Microsoft’s ‘Accelerating the Journey to Net Zero’ report, two related reasons stand out as to why businesses are failing to meet their targets. One is that businesses are unsure how to monitor their emissions, giving them no clear baseline or way to chart their progress. The other is cost. But as Total Utilities Sustainability Director, David Spratt, argues in a recent Microsoft article outlining the report findings, you have to consider the cost to your business of not transforming and the opportunity to increase market share if you do. While the report found that only 43 percent of NZ organisations have the financial resources needed to execute their carbon reduction policies – that’s assuming they’ve made accurate calculations. It’s hard to make a clear business case and create a roadmap for change without the right facts and figures. There are also significant disparities between sectors when it comes to making these estimates.
Decarbonisation – cost vs value
David points out that businesses need to look past simple upfront investments as many calculations relating to sustainable ‘costs’ ignore the significant efficiency gains that can be made. He referenced a manufacturing customer of Total Utilities who was looking to purchase a new transformer worth $1 million. Yet by placing IoT sensors in its factories to measure the actual demand on the system, Total Utilities demonstrated that significant efficiencies could be made that meant the transformer wasn’t needed. As David observed, implementing a well-researched sustainability plan can actually save on both utilities and capex costs. “We had another client, a construction firm, who put in bids for five major projects. Every single one of their clients wanted to know their sustainability credentials, and when they visited other builders’ websites, those credentials were on the home page. Sustainability, and communicating what actions you’ve taken to achieve this, have become essential to doing business in the sector.” He explains that businesses also have to consider their employer brand, in view of today’s skills shortages. People are looking for employers whose values align with theirs, and in many cases, who are actively demonstrating their progress on sustainability and decarbonisation. “When we talk about investing in sustainability, we’re not just talking about environmental sustainability but business sustainability – your ability to retain staff and customers, and their perception that your business is viable into the future,” says David.
Get with the programme
Another major reason that businesses predict they’ll fail to meet their decarbonisation targets is that they are unsure how to monitor their emissions, giving them no clear baseline or way to chart their progress. At Total Utilities, we have dramatically pivoted our business model over the past few years from supporting businesses to monitor and reduce their utility overheads from gas, water, electricity and cloud consumption – to using that data to measure your carbon footprint and support a sustainable transition. Our evolution reflects the fact that in recent years decarbonisation has moved from something just a few, ‘eco-conscious’ businesses or big emitters have focused on, to being embraced by the majority of NZ businesses. The government’s Climate Change Response Act enshrining the net zero carbon by 2050 target in law, as well as a raft of other legislation and consumer demand, have added further pressure to address climate change. The message to NZ business is clear – get with the programme or get left behind. There’s no doubt achieving net zero carbon will require significant investment and commitment right across the board. But turning New Zealand’s poor performance around relies on rapidly turning the tide on our mindset about cost vs value of decarbonisation.
Need help calculating and reducing your carbon footprint? We’re here to help! Contact us at Total Utilities.
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Staying ahead in business is often about being the first, being the best or doing something that no-one else has thought about.
But being the best demands an ability to gather accurate, independent and reliable information in an increasingly complex world.
Total Utilities Market Commentary will help provide you with all the insights and tools you need to take immediate steps to get the very best deal on your utility prices, while simultaneously leading the way with sustainability best practice. We collate market research and trends to help you navigate volatile energy markets and make better, more informed decisions.
As an independent voice in the market, we strive to deliver holistic insights and advice so that you are better equipped to deal with the changing environment in which we operate.
‘The purpose of information is not knowledge. It is being able to take the right actions.’
Peter F. Drucker
So says founding father of modern business, Peter F. Drucker. Total Utilities Market Commentary helps ensure you have the right information to support the right actions now. We continuously track utility prices in relation to prevailing market conditions so that armed with this knowledge, you can take immediate action to optimise your energy procurement strategy.
No vested interests
As an independent voice in the market, we have no vested interests other than to strive to deliver comprehensive insights and advice. We have been tracking price trends in the energy market since deregulation began and have a comprehensive understanding of the various drivers in the market. We also keep fully abreast of policy and regulation changes to ensure we pass on all the strategic advantages from our independent analysis
As with all things in life, the right actions are not necessarily the easiest or the most straightforward. But we are passionate about providing you with the knowledge to not only leverage the best deals with your utilities, but also to take action now to assist you with decarbonisation and reducing greenhouse gas emissions.
Cleaner, greener business
Paritutu Rock in New Plymouth, New Zealand
At the COP26 summit in 2021, NZ signed up to an agreement to reduce emissions by 50% at 2030 compared to 2005 levels, meaning decarbonisation is no longer a ‘nice to have’ – but critical to future proofing your business.
Sustainable business is about more than just reducing your impact on the environment. Businesses who can create circular economies – i.e., those who save money by eliminating waste and reinvesting in further savings activities – can achieve deep sustainability and lay the foundations for long-term success.
With expertise and guidance provided by our Market Commentary, you can ensure you are reading the latest information regarding competitive energy pricing and make savings to help fund your decarbonisation journey.
And that is most certainly the right action.
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The COP26 summit brought governments together in Sept 2021 to discuss accelerated actions towards the goals of the Paris Agreement (2015), which is an international treaty signed by 196 participating member states at COP21 in Paris, 2015. It aims to keep the global average temperature at ‘well below’ 2 degrees above pre-industrial levels, ideally 1.5 degrees, to strengthen the ability to adapt to climate change, and build resilience; align all finance flows with, ‘a pathway towards low greenhouse gas emissions, and climate-resilient development’.
New Zealand has signed up to United Nations Framework Convention on Climate Change (UNFCCC) and as a signatory to the agreement we have to commit Nationally Determined Contributions (NDC) to climate action. Our first NDC saw us committed to reducing greenhouse gas emissions to 30% below 2005 levels by 2030. However this was refreshed at the summit to increase our commitment to reduce emissions by 50% at 2030, compared to 2005 levels.
One of COP26 objectives is to phase out coal. The current Government has already committed to removing coal as a fuel source from our economy. A ban on new coal boilers used in manufacturing and production will come into effect by 31st December 2021 and phasing out existing coal boilers by 2027.
A further option proposed is to prohibit other new fossil fuel boilers (gas, LPG) where suitable alternative technology exists and is economically viable.
The key instrument that will be used to foster a move to a low carbon economy will be the emissions trading scheme (ETS), and a series of changing emissions budgets. An emissions budget seeks to limit greenhouse gases that can be emitted over a period of time.These changing budgets are spread over three key periods: 2022-2025, 2026-2030 and 2031-2035. This will reduce the quantity of Government-issued New Zealand Carbon Units. As these quantities reduce, the cost of carbon will be increased.
When the emissions trading scheme (ETS) was first introduced, the price of carbon was fixed at $25 per tonne; however, there was a 2 for one surrender ratio meaning that for every tonne emitted, only half a tonne was surrendered, making the effective price $12.50/tonne.
Over time the market caps have been lifted, and emitters have moved to a one for one surrender ratio. In the last two years, the Government introduced a floor and ceiling in the market: $20 floor and $50 ceiling. This year, prices were raised to make the minimum price $30/tonne and ceiling price $70/tonne. The ceiling will be increased by 10% per year plus inflation.
The below table covers current carbon spot pricing and New Zealand Unit (NZU) future pricing with a view on where carbon prices could go out to in 2030. This is the cost that relates to the gas field producing natural gas or the electricity generator producing electricity. For gas customers who are Time of Use (TOU) metered, this cost is passed through as a line item on each invoice. For small commercial gas consumers and all electricity customers, the cost of the ETS is built into the energy tariff. You can see the change from 12 months ago where the carbon price has nearly doubled. In November 2018, it was priced at around $25/tonne.
Energy companies within NZ will have to look at their generational assets and search for alternative solutions in a fast and least disruptive way to avoid shortages and payment of increased ETS costs.
Transitioning the economy’s energy needs to electricity requires much more than just new generation, the national grid operator and local electricity network distributors will need to invest billions to get things moving.
Whatever is done, NZ needs to sort out its energy policy and fast to ensure the security of supply, the ability for manufacturing to thrive in NZ (by avoiding having to outsource our emissions), and keep prices as low as possible.
Total Utilities helped Forest Lodge save money, gain real-time data visibility, and prove their 100% electric claims to grant providers. All to drive sustainable growth and set an example for food producers around the world.
Why they needed us
Forest Lodge Orchard, a high-density cherry orchard in Cromwell, New Zealand, has gone fully electric with a hybrid solar and battery system tied to the grid. Owner-operator Mike Casey supports the national grid by exporting power at peak times. He also aims to provide an example of how an agricultural site can electrify everything.
Forest Lodge Orchard received a government grant to purchase 2 x 30kW electric frost fighting fans. A condition of the grant was to provide supporting data and reporting to show the source of the electricity powering the fans.
The site’s industrial electrician, Jase Lee, recommended Total Utilities and Centrica’s energy insights for the job. It’s been a great success – PowerRadar now provides new levels of visibility of the solar gains, loads, and the charging and discharging profiles onsite.
Dashboard example of solar curve and battery charging / discharging traces with Centrica Business Solution Pan-10 Wireless Sensor
NZ cherry orchard ripe for clean, optimised energy usage.
“I like to see the solar graph and then overlay the charging loads, and I can make sure that they sit within that solar curve. Sometimes we need to tap the grid for something, but we are just trying to optimise that energy usage as much as possible.”
Real-time energy intelligence delivers savings, shapes decisions, and provides new opportunities for sustainable growth.
Real-time data used to support claims for government grant
The electric frost fighting fans save Forest lodge up to $1,000 per evening compared to diesel-run fans. PowerRadar provides the usage data to substantiate these claims.
Complete oversight over battery charging and discharging
PowerRadar calculates and provides a real-time view of the battery charge and discharge traces. Effectively this was the missing piece for Mike Casey, who now has full visibility of the electrical flow on his site. He can also track how the operation affects the health and longevity of his batteries.
Solar insights inform operational and strategic decisions
By monitoring the real-time solar gain onsite, Forest Lodge can decide when they will perform operations such as irrigation, vehicle work and charging, therefore optimising their energy usage.
Calculating the running costs of their new electric tractor
Forest Lodge received another grant for a state-of-the art fully electric tractor. Energy insights will be used to determine the amount of kW drawn from solar and how much comes from the grid (and when), so the tractor’s operational running costs can be calculated.
Contributing to energy education and climate change advocacy.
Forest Lodge were invited to join EECA’s Gen Less campaign and become part of the climate change solution. The data collected by the energy insights system will play a significant part in the next chapter of their zero emission story.
