2022 Energy Crisis

Unfortunately, energy bills have increased every year over the past decade meaning businesses are feeling the pressure, especially businesses reliant on high energy operations like manufacturers, the hospitality sector and premises with lots of lighting. Businesses don’t want to absorb the higher costs or pass them on their customers, huge price hikes could put businesses out of business.

Commercial electricity prices (in pence per Kilowatt Hour) for different business sizes based on their energy usage.

(Business size is based on energy usage, a factory with lots of machines would be large even with few employees. An office with lots of employees but low electricity usage would be a small business).

Business electricity prices – BEIS Data

Even before the Covid-19 pandemic and Russia-Ukraine war, electricity prices have blown up due to increased demand, cold winters, storage issues, environmental taxes and of coal-powered plants shutting down – and it’s not stopping anytime soon, the price is only going up.

With lot of issues contributing to high energy prices, the sanctions on Russian pushed electricity prices into crisis levels. In early September, the wholesale electricity price hit over £500 per MWh (50p/KWh) which doesn’t include the profit margin, VAT, storage, transportation and other costs included in the retail price businesses pay for their power from utilities companies.

Meaning the retail energy prices businesses could have been paying could force them out of business, which led to the Government stepping in with their temporary cap.

The Government’s price cap

In September 2022, the Government announced their support for businesses to tackle rising energy costs in September, the package introduced will cap wholesale energy prices for electricity at an expected £211 per MWh (21p/KWh).

It’s good news for businesses who were fearing for their future, however the measures are temporary and businesses will be hit by higher costs some point in the future.

With some relief provided by the cap, smart businesses are now looking at ways to reduce their energy bills to avoid being hit by price spikes in the future. Lighting costs, on average, make up 17% of a business’ total energy cost, the single largest part.

Reducing a businesses’ lighting costs is arguably the best – and easiest – way to keep your electricity bills as low as possible over years to come.

How LEDs can save your business money

 In short, LEDs are ultra-energy efficient compared to traditional lighting, like fluorescent, incandescent and halogen lights.

Fluorescent, halogen and incandescent lights only convert a tiny amount of the energy they draw on into light. If you’ve ever touched a traditional style light bulb, you’ll have noticed how hot they get.

Energy can’t be created or destroyed; it can only be transferred. Most traditional lights are inefficient, losing most of the energy supplied by converting it into heat instead – as much as 90% of the total energy use.

Which is why LED lights are different, they’re much more energy efficient as approximately 70% of energy is converted to light, compared to as low as 10% for some fluorescent lights.

Comparing one comparable LED panel light to a fluorescent tube running for:

10 hours a day

5 days a week

Priced at 40p/KWh

A single 36 Watt LED panel costs £37.44 a year to run producing 120 lumens (the measuring unit for brightness) per watt

VS

A single 58 Watt fluorescent tube costs £60.32 a year to run producing 95.5 lumens per watt

Which is a saving of £22.88 a year, meaning the LED panel is 37% cheaper to run annually.

The savings made scale with the number of lights too, so the greater the number of lights replaced will result in a bigger saving.

For recruitment agency Optima UK’s Leicester office, we upgraded their lighting system by installing LEDs, reducing their lighting cost by 26.3% a year, making a saving of £2,837.

The benefits of LED’s efficiency don’t stop at the running costs, it extends to the lifespan too, different sources list various lifespans but the consensus is up to 60,000 hours in comparison to 10,000 for fluorescent lights which further increases the financial incentives.

The benefits of LEDs

Besides the obvious money saving capabilities LEDs bring a whole host of other benefits to your business. Including other financial advantages, workplace, environmental and operational

LED lighting financial benefits

• Lower energy bills – save money
• Longer lifespan – fewer replacements, save on installation costs
• Lower maintenance costs – LEDs dim over time rather than breaking
• Brighter per watt – consistent light from less power compared to fluorescents
• Better energy rating

LED lighting workplace benefits

• LEDs are better for employee’s health – Fluorescents often cause migraines due to flickering
• Quieter – LEDs don’t produce any noise
• Increased productivity – LEDs provide truer, more natural light than fluorescents which is better for circadian rhythms
• LEDs don’t produce UV light – which is damaging for skin
• The lighting is instant – no waiting around

LED lighting environmental benefits

• Reduced energy usage – fewer emissions produced to power the lighting
• No mercury used in the production – unlike fluorescent lights
• Less heat produced – unlike traditional lighting

LED lighting operational benefits

• More options – LEDs are customisable with direction, colours and they’re dimmable
• Smart LEDs can improve lighting utility – with schedules, lighting intensity and other programming options
• LEDs perform better in colder environments than other types of light, perfect for external use, storage or refrigerated areas
• Better durability – operations aren’t interrupted when traditional lights are broken
• Easy to dispose of unlike fluorescents

On the whole LEDs are almost always the most suitable lights for commercial use with the benefits they bring to the table. Most fluorescent and halogen lights are no longer in production due to changes in the law, meaning LEDS upgrades are essentially mandatory.

However, there are a few disadvantages associated with LEDs namely the upfront cost. It’s true that LED lights are typically more expensive that fluorescent lights, but the longer lifespan and lower running costs ensure they’re excellent value for money.

What does an LED upgrade cost?

We wish we could give a straightforward answer, but naturally the cost of an LED lighting upgrade depends on the location, number, type and how long it takes to install. LED panel lights can range from £20-£100 each.

For Optima UK, we upgraded 131 lights over the course of 5 days for £9,340 as an example.

On behalf of SDL Surveying, we fitted 179 lights for £10,419 over 4 days.

LED Affordability

Although there’s a greater upfront cost of purchasing LEDs and having new fittings installed, thankfully there a few options to improve the affordability of LED upgrade to tackle rising energy costs like grants or LED leasing.

LED lighting funding and grants, get financial help to save

There are several grants and loans available to help fund energy saving projects.

Energy for Business – Leicestershire, Derbyshire and Nottinghamshire SMEs can claim up to 40% of the project’s outlay to a maximum of £24,999.

Business Energy Efficiency Programme – Worcestershire, Herefordshire, Telford & Wrekin, Shropshire SMEs can claim between £2000 – £20000 for projects dedicated to reducing energy cost

Coventry and Warwickshire Green Business Programme – Warwickshire SMEs can access grants, no cost energy audits and low carbon development support between £1000 and £50,000 up to 40% of the project cost.

LED Leasing – save straight away with no upfront cost

 Leasing is an effective way to avoid an upfront cost for the purchase and installation of LEDs, spreading the cost over a longer term – particularly useful when a business can make higher savings in a month than the lease payments.

Choosing to lease can be better for cashflow as most grants only partially fund a project, keeping cash in the bank for the day-to-day running of your business instead.

There are also tax advantages with leasing too, as lease rental agreements can be corporation tax deductible.

How do I get LEDs installed?

Contacting an electrical contractor or lighting specialist for a free quote and site survey is the best course of action to take, they’ll asses your lighting needs and calculate your lighting requirements are and exactly what you can save.

To contact us for a free site survey and free quotation call us today on 0116 478 3679.