Electrification, Rising Demand, and The Impact on Commercial Energy Bills

The following article recently published in Facility Executive, an online publication for the quick-service restaurant industry. You can access the original article on the magazine's website here.

For more insights from IGS Energy, visit our Energy Resource Center.

How Electrification And Rising Demand Could Affect Commercial Energy Bills

In the last several years, there’s been a great deal of conversation related to electrification, the process of replacing fossil fuels with electrically powered alternatives, as industries and consumers look for ways to reduce their carbon impact while still powering their businesses and lives.

The residential sector is currently driving most emissions reductions from electrification as electric vehicles (EVs) become more accessible for the average consumer and more homeowners install heat pumps. However, recently, commercial customers have been more curious about options like on-site charging EVs to support their own customers’ EV use and their employees’ needs.

Commercial energy customers should be aware that electrification efforts in conjunction with the increasing adoption of AI and the rapid expansion of data centers across the U.S., are all driving a substantial rise in power demand. This rising demand will have wide-ranging impacts on energy markets and consumers alike.

So, what can businesses do to more effectively manage energy spending if prices rise? There are a couple of options: 

• Connect with your energy supplier to make sure your business has a true strategy in place, not simply a process for paying the bill.
• Focus on what you can control — the efficiency of your facilities and the reliability of your energy supply.

Why Your Energy Supplier Is An Important Business Partner

One critical operating expense often overlooked in your facility’s day-to-day operations is the energy required to keep it running. This area presents a significant opportunity for real-time optimization, and an experienced energy supplier can make all the difference.

An energy supplier should be able to help businesses navigate market volatility while minimizing risks and maximizing opportunities based on an organization’s unique risk tolerance and needs.

Efficiency And On-Site Generation

Efficiency efforts should be a top priority for every business, as they are highly effective in reducing energy consumption. Even organizations pursuing cleaner energy options should start with efficiency efforts. After all, energy usage that can be reduced through process and equipment upgrades doesn’t need to be ‘offset.’

On average, ENERGY STAR-certified buildings use  35% less energy than typical buildings nationwide, leading to significantly lower bills. Even if sustainability is the goal, the most effective first step is to improve efficiency wherever possible by replacing outdated equipment, retrofitting facilities with LED lighting, installing occupancy sensors, and more.

It may also be time for businesses to consider implementing a demand-side management product, which shifts energy use to off-peak times when electricity rates are lower. This approach can be particularly effective for businesses that operate 24/7. Automated systems can simplify the process by scheduling energy-intensive tasks for off-peak, cost-effective hours.

After establishing an energy efficiency strategy, businesses can investigate other sustainable technologies and options with their energy partner, whether that’s buying grid power with renewable energy credits (RECs), investing in hydropower, or exploring on-site or community solar. This decision ultimately depends on the business’s goals, whether it’s to operate more sustainably, reduce costs or achieve both.

The Benefits of On-Site Generation

Another way to save on energy bills is to invest in on-site energy generation, most often via solar panels. On-site power generation can cover a significant portion of an organization’s energy needs, and generating renewable energy on-site can protect a business from potential price fluctuations. On-site solar is the only energy source that allows customers to “lock in” their energy costs for up to 30 years; all other sources have varying costs that can typically be secured for up to five years.

On-site generation can also enhance reliability. By owning their own generation resources alongside grid connectivity, businesses may reduce the risk of outages. Pairing on-site wind or solar generation with a battery makes a system more resilient.

If your business is reporting carbon emissions, switching to a cleaner energy source may be a necessary financial decision. It could also earn the support of sustainability-minded consumers. Depending on where your business is located in the U.S., there may be financial incentives for greening up your energy consumption.

Preparing for What's Next

Although rising energy consumption and prices may be inevitable, businesses can manage costs and support growth by adopting a more strategic approach to energy use, including efficiency measures and demand management programs.

Whether a business’s goal is cost-cutting or running a facility more sustainably, these strategies benefit every business and are especially critical in the face of rising costs.