How much will your business spend on electricity in 5, 10, 20 years?
Download Future Energy Costs – pdf version
- California businesses pay one of the highest rates in the US
- Most businesses can expect to pay at least $2,000,000 as electricity costs continue to rise over the next 20 years
- A business that averages $10,000 a month today can expect to pay over $156,000 in 2030
- Renewable energy technology like commercial solar are investments businesses can make to save significant money
Future energy costs will continue to rise, 95% of recently surveyed California business owners and operators agree. The question is how fast and how can businesses plan for this growing cost. Revel Energy traced back the average Commercial and Industrial energy costs back to 1990 and data shows an average of at least 3% year over year growth, this is a conservative estimate.
If you look at only IOU providers (i.e. SCE, SDG&E, and PG&E) the average is higher. For example, SDG&E commercial customers have suffered year over year growth of 4.7% recently. Considering our conservative average of 3% annual growth, businesses have a serious cost issue in need of attention.
Most California businesses will likely spend a total of $2,000,000 (cumulative) or higher on electricity costs over the next two decades. High costs of electricity bills lessen a business’ competitiveness and ability to reinvest.
How much will your business spend on electricity over the next 5, 10, 20 years? The table below offers an idea based on your average monthly electricity cost for 2019. Pick the column that is closest to your average monthly electricity bill for 2019. Keep in mind, summer months are much higher than winter months. For closest estimates use an average. If you have noticed increased electricity prices for your business, please take this short survey as we want to hear from you.
Click the link below that resembles your monthly electricity costs below for a table to show how your costs could increase.
The table below is based on an average electricity rate cost growth of 3% annually for California C&I businesses.
As the cost of electricity in California for businesses increases, many agricultural, commercial and industrial businesses are fighting these rising rates sustainably with commercial solar and energy storage.
For a majority of utility customers in California, businesses included, the average commercial retail price of electricity has increased on average by about 3.5% per year from 2001 to 2020. However, after global events in 2020 such as the coronavirus pandemic, rates through 2023 have risen much higher than previous averages. Some customers are paying annual increases as high as 23%.
This was revealed to us in a case study conducted by our team looking at customer utility data through the past few years.
Learn how 2023 electricity rates are increasing for businesses in different IOU territories such as San Diego Gas and Electric, Southern California Edison or Pacific Gas and Electric.
A Closer Look at Rising Electricity Costs
A business that spends an average of $10,000 a month in electricity today is projected to spend $135,061 in 2025, $156,573 in 2030 and $210,421 in 2040. These costs are substantial and will severely affect operating expenses which already run high for California businesses.
This business will spend over $3,000,000 in electricity from 2020 to 2040. Even with inflation, this expense will be tough to recover. The money lost could have either added to net profit or reinvested in the business. There are thousands of businesses like the one described above. How can California businesses manage these rising expenses?
Electricity Rates, Cause and Effect
Why are electricity rates increasing? There are several factors at play here. For California IOU’s, maintenance costs of an old, run-down grid continue to mount.
California’s electrical infrastructure recently received a D- grade from the American Society of Civil Engineers (ASCE). The cost of this work is passed through to customers. Read more here about ASCE’s report.
In 2018 California Governor Jerry Brown signed SB100 into effect. Under the bill, it mandates California energy must be at least 50% sourced through renewables by 2025. Further, the state must be 100% by 2045.
Some communities, like San Diego, have set higher goals of 100% in a much shorter time-frame. This is a large contributor to San Diego’s record-breaking energy rates, and future energy and electricity costs.
California not only has one of the highest electricity rates in the US, but it also has the most aggressive plan for going carbon natural.
This policy is in effect on both the state and local level. One of the ancillary effects is rising costs which force businesses to use less electricity, through energy saving technologies like LED Lights or supplementing with renewables.
Renegotiate your electricity rates.
Check with your electricity provider to make sure you are paying on the best rate plan that fits your business needs. If your business has high demand charges perhaps switch to a plan that accommodates those factors.
Contact a Revel Energy specialist to learn more about your electricity bill.
Upgrade to energy saving LED Lighting.
Upgrading your lighting to energy efficient LED bulbs is a fast and simple way to cut your electricity usage. Aside from the energy saving benefits, LED light bulbs last significantly longer than other types. This will greatly reduce your replacement frequency and costs.
Use Commercial Solar + Energy Storage to supplement your electricity usage, reducing future energy costs.
California is one of the most solar rich states in the US. This free source of electricity is being rapidly adopted by California businesses looking to lower their electricity costs and carbon footprint.
Businesses that use commercial solar and energy storage also gain a competitive advantage over their competitors by lowering operating costs, thus improving margins or lowering the pricing of their goods and services.
Commercial Solar and Energy Storage
Commercial solar + storage is more affordable than ever. With the Solar Investment Tax Credit (ITC), Bonus Depreciation and other local incentives, businesses can expect an ROI on their renewable technology as fast as 2 years (in some cases).
In most cases, commercial solar alone will drastically lower energy bills. If a business has drastic spikes in energy demand, energy storage systems can increase savings dramatically.
The graph illustrates a business that experiences a spike in energy usage each day. Energy storage can shave the demand ultimately lowering demand charges. A thorough energy audit by Revel Energy would uncover a business’s energy profile. Contact a Revel Energy professional today for your free energy audit.
Future Electricity Rates – Conclusion
Energy costs will continue to rise in the future. How California businesses adapt, will play heavily on their future success. Businesses that plan now for the future position themselves for greater savings creating higher profits.
For businesses that receive electricity from SDG&E, SCE or PG&E the need to act is much greater. These Investor Owned Utilities, or IOU’s, are expected to incur significant maintenance costs for their dilapidated grid. These costs will more than certain be passed on to their customers.
Businesses can take the first step towards lowering these costs by contacting a commercial energy expert, like Revel Energy. A brief consultation can unearth several options for lowing costs and usage.
About Revel Energy
Revel is on a mission. Dedicated to renewable energy solutions since 2009, Revel Energy was formed to provide Commercial, Industrial and Agricultural businesses with alternative energy beyond solar. Revel stands out from the competition by paying attention to what makes good business sense to each individual client, implementing a wider range of technologies to free up capital and make businesses sustainable and more profitable.
Commercial grade rooftop solar is ideal for: manufacturing, warehousing, logistics, industrial, retail, hospitality buildings and more with over 10,000 sq. ft. rooftops.
Free standing carport solar generates added solar power for properties with limited rooftop space. Added benefits include shading and protection for employees vehicles.
Crucial for reducing peak demand charges. Automated to supply electricity when your panels won’t. Energy storage is ideal for businesses that incur significant peak hour charges
LED LIGHTING RETROFIT
Generating independent solar power is one piece of the puzzle. Energy saving equipment like highly efficient LED Lighting completes the system. Significantly reduce energy usage.
Client Testimonial: Kelemen Company
Corporate Business Park in Irvine, CA has created significant electricity cost savings through commercial solar installed across the 5-building business park.
Client Testimonial: Tice Gardner & Fujimoto LLP
See how this CPA firm saved on electricity and gained valuable tax credits through commercial solar that they used to keep cash in the businesses.