Small businesses ‘doing the heavy lifting’ on energy
Energy minister Angus Taylor said small businesses struggling with energy costs need to look to innovative contracts.
"Entering into innovative contracts is increasingly important and the challenge is seeing risks managed," he said as he toured Melbourne manufacturer ANCA on Tuesday.
"That is why we are firming renewables which is what we are doing with Snowy Hydro and the Battery of the Nation [in Tasmania]. The risks have got to be managed."
Energy Minister Angus Taylor.Credit:Simon Schluter
ANCA switched last year to renewable power after receiving a quote for a 200 per cent increase in its power bill.
The precision tool manufacturer employs more than 1000 staff globally, with 480 in Australia, and turned over $250 million last year.
It uses 3.9 GW of power annually and signed a ten-year contract through provider Flow Power to source renewable energy from Ararat Wind Farm, allowing the manufacturer direct access to long-term energy at wholesale prices.
ANCA's power bill is now $700,000 a year which is still a 50 per cent increase on its previous costs.
ANCA co-founder Pat Boland.Credit:Wayne Taylor
ANCA co-founder Pat Boland said energy prices and reliability were a key input to the overall manufacturing cost and recently "reliability is atrocious".
“Incessant electrical power outages, with one lasting more than a day, have created havoc to our production," he said.
A recent power outage meant ANCA had to buy spot power for six hours at a cost of $50,000.
"Advanced manufacturing in Australia is a global race with product cost being a key factor," he said. "I am frustrated that governments, both state and federal, have ignored their responsibilities for managing cost and reliability of electricity supply.”
Mr Boland said the business switched suppliers as renewables came out as the cheaper option compared to traditional energy suppliers.
"The fact that renewables come out as the far more cost effective solution demonstrates to me the future solution for our energy needs in Australia," he said.
Mr Taylor said he understood the pain being felt by small and medium businesses on energy costs.
"We are seeing SMEs really struggling with rising power bills over many years now and that has been a big issue for a surprising number of businesses you go to a gym, cafe or restaurant," he said. "Most small businesses are so busy, they don't have time to become experts in getting good power contracts. We will make it simpler for them to get a fair deal and also simpler to get efficiencies."
The government has pledged $50 million in grants through its energy efficient communities program to eligible businesses and community organisations to help them lower energy costs by either installing new equipment or by reviewing and improving their energy management.
Eligible businesses will be able to claim grants of up to $20,000 with high-energy using businesses up to $25,000 which Mr Taylor said small businesses can match using the instant asset write off scheme.
"Importantly, these new programs will reduce emissions, helping Australia to meet our international climate obligations," he said. "It is reducing carbon emissions at about $1 a tonne wich is extraordinary in terms of energy efficiency this is the cheapest you will get. This is why we like energy efficiency so much and actually we have reached our Kyoto 2010 obligations and Kyoto 2020 obligations to a significant degree because of the hard work of small businesses. They are doing much of the heavy lifting."
Mr Taylor said the retail reliability obligation which will come into place on July 1 will help address issues with blackouts and reliability.
"It puts the obligation back to the retailers to make sure they are meeting their customers needs," he said. "If you are a retailer you have to make sure there is enough reliability for customer to keep their lights on. "
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