Companies looking at upgrading equipment should understand the support available in terms of energy costs under the government’s COVID-19 stimulus package.
By Energy and Carbon Solutions National Business Development Manager Mario Silvera
We’ve seen clients of all sizes scramble to make sense of the $189bn stimulus package delivered by the Morrison government. Businesses have paused on spending for upgrading equipment until they understand how the new support will subsidise any capital outlay. In the context of energy efficiency, this will turn out to be very important, as what better way to reduce operational spending than by minimising one of the largest culprits: the cost of electricity?
The three most relevant government grants available to businesses are:
Manufacturing efficiency scheme – compressed air and steam offer
Especially important for manufacturers and suppliers with air compressors greater than 30kW, the NSW government will fund a check-up on your compressed air and steam systems until April 30. The grant will cover a compressed air review to determine if there are better ways of undertaking pneumatic tasks ($5,000 per site), and a compressed air leak survey ($3,000 per site).
This will be followed by up to $70,000 of available funding in May for any equipment repairs that the air-leak audits identify. Only $5m has been allocated for these repairs and will be given to eligible businesses on a ‘first come, first served’ basis.
As one of only 10 approved service providers for this government audit, Energy and Carbon Solutions suggests any business with a >30kW air compressor take advantage of the air leak surveys available. With COVID-19 yet to reveal its full economic impact, the savings these audits can find range from the thousands to tens of thousands of dollars in energy costs: savings that could make all the difference to your business as EOFY approaches.
Solar panels and batteries
Is your company looking to solar power as an environmentally friendly alternative to traditional electricity? As of March 12, small businesses can buy eligible assets up to a value of $150,000 and claim them this financial year until June 30 (assets bought between April 2, 2019 and March 11, 2020 will qualify for an instant asset tax write-off of $30,000). To claim for either threshold, the business needs to make the purchase and use the asset in the same year that it claims the deduction before June 30.
This write-off is a great way for small businesses to make essential purchases without needing to wait to claim and has been expanded to include businesses with a turnover of up to $500m (up from $50m). This is good news for businesses with higher turnovers that require larger equipment purchases, such as those of solar photovoltaic (PV) systems, as it greatly reduces the payback period.
However, timing is critical. Energy and Carbon Solutions has identified that shortages of solar panels from China due to COVID-19 will lead to rising costs of components. Coupled with falling AUD exchange rates, we expect an estimated increase of 20 per cent for solar PV systems by the end of April. With the small business instant tax write-off set to revert to $1,000 from July 1, businesses must act now to lock in the best cost-effective solution.
Industrial and commercial lighting
NSW government energy saving certificate prices have hit a 12-month high of $29 per certificate, representing a 25 per cent increase since January. The value of this increase cannot be emphasised enough with relation to businesses looking to upgrade 200W or 400W metal halide lighting units. Not only do these older fixtures create poorer lit environments for staff, but upgrades to 150W LED fixtures with motion sensor and dimming technology can cut lighting costs by half. All with very little to no cost, courtesy of the NSW Energy Savings Scheme.
A recent lighting upgrade project for a large transport infrastructure company resulted in savings of $61,491 through replacing 299 metal halide units with LEDs. This meant a 65 per cent reduction of site electricity consumption and 191 tonnes of carbon emissions.
Energy and Carbon Solutions recommends industrial and commercial premises that have not looked at fixtures for more than five years should consider utilising the opportunity available now to reduce the impact to everyday cashflow that COVID-19 has created.
Mario Silvera is the National Business Development Manager for Sydney based Energy and Carbon Solutions. With a background in finance and marketing, he moved into the energy sector more than 12 months ago to put a fresh spin on the energy efficiency perspective.