BNZ offers tips to small and medium-sized enterprises: How to go electric
Electrification is good for business. It means lower energy costs, greater business resilience and energy independence, and it’s good for environmental and human health.
If your business decides to flick the switch, BNZ’s Head of Sustainable Finance, Alex West, has some tips for making the transition and powering the change with renewable energy.
How an SME can make it work as an enterprise
“A business should start by mapping out all the considerations for switching to electric, and then do a cost-benefit analysis,” says West. This includes looking at what can be electrified, like transport, heating, ventilation and cooling or processing systems. It doesn’t have to be all at once but gives you a picture of where the most effective changes can be made.
“This will not only give certainty, economically, that you’re making the right decision but will also help you understand the process involved in the change. The more electricity that is generated from sources within your business’s control, the more certainty there is when managing operational expenses.”
Include an analysis of your electricity usage and costs, and then what alternatives there are to supplying that power.
Solar is the logical first step, says West, being particularly practical for businesses that use power during the day – and it’s also often able to be installed in a roof space. Costs for solar infrastructure continue to fall steadily and technology advances are making it more efficient and accessible.
West recommends that any business considering a solar installation takes advantage of the independent expertise from EECA – the Energy Efficiency Conservation Authority – or Rewiring Aotearoa.
Both have valuable tools to aid in decision-making, including how to assess your business’s suitability for rooftop solar, the potential for battery storage, what solar will cost to install and maintain and how much you will save in costs and carbon emissions.
Rewiring Aotearoa published a useful report this year on the benefits of electrification, and also covers many of the themes on its website, rewiring.nz.
Market trends
There are important market trends that a business must consider in the switch to electric and many that can be beneficial.
Energy independence: When you have control over your own energy resource and less reliance on the grid or fossil fuels, you can plan for what the costs will be long-term.
Business continuity and resilience: A renewable power source provides an invaluable back-up when the grid is compromised, and a solar solution with battery storage could help a business in a remote area become self-sufficient.
Emissions reporting: This is already a requirement for some businesses, including many exporters, and requirements will only increase in the future. Businesses that are already reporting voluntarily are ahead of the curve and are also meeting customer expectations around climate change mitigation.
Labour market and career opportunities: There is a significant opportunity for New Zealand to upskill and train a huge workforce in terms of electrification and renewable energy.
Price reductions over time: Lastly, if the cost of converting to electric is still out of reach, the price of solar infrastructure and battery storage is continuing to fall. You can plan to readdress the investment in converting to electric once it reaches a cost that suits your business. Don’t make the mistake of purchasing a fossil fuel machine that you’re stuck with for a decade or more without thinking about alternatives first.
Government funding opportunities
Although electrification is becoming cheaper, accessing capital for the upfront cost can still be a barrier in some instances. There are several open funds that are currently offered via EECA to support SMEs.
EECA funds include:
- The Technology Demonstration Fund, which offers up to 50% co-funding to support energy and carbon savings through the early adoption of proven technology or an innovative process improvement opportunity.
- The Low Emissions Heavy Vehicle Fund, which aims to increase the number of zero- and low-emissions heavy vehicles on New Zealand’s roads and provide market signals to manufacturers to encourage supply.
There is further guidance and support through the EECA Sector Decarbonisation Programme.
Banks also play an important role in supporting the development of renewables. Products such as BNZ’s Green Business Loans have incentivised interest rates to help with reducing the operational expenditure involved. They can cover the initial investment cost of the project, including requirements to stand the project up such as installation.
This content is sponsored by BNZ.
This article is solely for information purposes. It’s not financial or other professional advice. For help, please contact BNZ or your professional adviser. No party, including BNZ, is liable for direct or indirect loss or damage resulting from the content of this article. Any opinions in this article are not necessarily shared by BNZ or anyone else.