Energy efficiency for small business A guide for VET practitioners

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1 Energy efficiency for small business A guide for VET practitioners

2 Energy efficiency for small business A guide for VET practitioners

3 These materials were developed by Innovation & Business Skills Australia in association with the Commonwealth Government through the Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education (DIICCSRTE). Acknowledgement Innovation & Business Skills Australia (IBSA) would like to acknowledge Celeste Howden Consulting and Development Pty Ltd for their contribution to developing this resource. Writer: Celeste Howden Consulting and Development Pty Ltd. Copyright Statement 2013 Commonwealth of Australia This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Australia License. (http://creativecommons.org/licenses/by-nc-sa/3.0/au/) This licence lets you distribute, remix and build upon the work, but only if it is for noncommercial purposes, you credit the original creator/s (and any other nominated parties) and you license your derivative works under the same terms. The copyright of any adaptations and/or modifications to this material remains with the Commonwealth of Australia. Adapted and/or modified materials must have the Innovation and Business Skills Australia logo removed from the work, and the following attribution made: This is a modified document based on materials prepared by Innovation and Business Skills Australia Ltd, the original of which can be found on the IBSA website Disclaimer While care has been taken in the preparation of this material, DIICCSRTE and the original developer do not warrant that any licensing or registration requirements specified here are either complete or up-to-date for your State or Territory. DIICCSRTE and the original developer do not accept any liability for any damage or loss (including indirect and consequential loss) incurred by any person as a result of relying on the information contained in this material. The Commonwealth, through the Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education, does not accept any liability to any person for the information or advice (or the use of such information or advice) which is provided in this material or incorporated into it by reference. The information is provided on the basis that all persons accessing this material undertake responsibility for assessing the relevance and accuracy of its content. No liability is accepted for any information or services which may appear in any other format. No responsibility is taken for any information or services which may appear on any linked websites. Published by: Innovation & Business Skills Australia Ltd Level 11, 176 Wellington Parade East Melbourne VIC 3002 Phone: Fax: First published: July 2013 Stock Code: CP-EEGUIDE1 ISBN: Print Version No: 1 Release Date: July 2013

4 Table of Contents Introduction 1 Who is this guide for? 1 What is in the guide? 2 Icons used in this guide 2 1: Energy Efficiency and Small Business 3 Who or what are small businesses? 3 What is energy efficiency for a small business? 7 2: Supporting Small Business Energy Efficiency 13 Understanding the business 14 Identifying the skill gaps 18 Responding to the business skill needs 19 3: Skills for Energy Efficiency 21 Cross cutting skills for energy efficiency 21 Technical skills for energy efficiency 29 4: Applying Energy Efficiency Skills in a Business 33 Collecting information 33 Applying units of competency to collecting information 40 Deciding what to do 43 Applying units of competency to deciding what to do 45 Making changes 48 Applying units of competency to making changes Checklist for VET Practitioners 53 6: Where to Find More Information 55 7: Case studies 59 Boutique hotel 59 Intellectual property firm 62 Real estate office 67 Retail butcher 70 Retail sustainability products 72 8: Glossary 75

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6 Introduction Energy efficiency is becoming a higher priority for most small businesses, especially in an era of regular price increases. Not all price rises are for energy consumption some increases are for infrastructure and supplier charges. But reducing consumption will help to offset the unavoidable increases. Energy efficiency improvements in a small business might be low cost changes such as installing timers, automating computer shutdowns and getting employees to change their behaviour. Other improvements may require a bigger investment of time and money and this can be a struggle for small and micro businesses. Typically, they have many day-to-day commitments to keep their core business going. Investment is often seen only in terms of the cost rather than balancing the cost with long-term benefits. Despite these commonalities, each small business will present a unique combination of core products and services, priorities, values, staffing levels, business models and methods of operation. As a Vocational Education and Training (VET) practitioner, it s important to recognise, understand and work with these to engage with the business and deliver useful services. The VET system is now recognised as playing a leadership role with industry in areas such as energy efficiency 1. So in addition to understanding and responding to the skill needs of the business, a VET practitioner may need to help motivate the business towards energy efficiency. To meet these challenges, a VET practitioner needs to be able to: understand the energy efficiency challenges and improvement options that are relevant to small and micro businesses provide energy efficiency skills, whether embedded in existing programs or through specific energy efficiency programs show how energy efficiency can benefit businesses respond to small businesses on their own terms to help them engage with training and skills development and energy efficiency. Who is this guide for? This guide provides information that will assist VET practitioners to work with small businesses to improve energy efficiency skills. The term VET practitioners is used to cover a range of roles in VET, including trainers, assessors, training managers, VET consultants, learning and assessment materials developers, instructional designers and business development managers. Industry bodies, associations and other consultants working with small business may also find the guide useful. The guide takes a business consultancy approach to working with small and micro business, so different aspects of the guide might be helpful to these diverse practitioners. 1 Drivers of energy efficiency in VET include the Green Skills Agreement (2009) and the National VET Sector Sustainability Policy and Action Plan ( ), which articulates a leadership role for VET and the education for sustainability principles (EfS) Commonwealth of Australia Page 1 of 77

7 What is in the guide? The guide covers several aspects of providing energy efficiency skills for small business by: explaining some of the key concepts in energy efficiency outlining the skills needed to support energy efficiency providing ideas about how to engage with small and micro businesses on energy efficiency and energy efficiency skills providing examples of how to integrate energy efficiency into delivery and assessment providing case study examples of small businesses that have made energy improvements more detail is available in Section 7 and in video snippets on the Innovation and Business Skills Australia (IBSA) website. Icons used in this guide Tip, energy efficiency ideas Case study to provide more detail Videos of each case study can be found at the IBSA website <http://www.ibsa.org.au>. Training application ideas More information Page 2 of 77 1st edition version:1

8 1: Energy Efficiency and Small Business Who or what are small businesses? This guide uses the Australian Bureau of Statistics classification, which rates: small business fewer than 20 employees (although some sectors consider up to 50 employees to be a small business) micro business fewer than five employees. Each small or micro business has a unique set of characteristics that affects how they approach energy efficiency and skills. Working with small and micro businesses, practitioners will find a range of: business structures and ownership models decision-making processes business management skills management styles attitudes, values and personal commitments knowledge and experience in the core business awareness of energy efficiency understanding of energy efficiency concepts and improvements types of energy being used amount of energy used and its significance to the business understanding of how skills can support the business systems and procedures commitment and capacity to work on the business vs in the business. While each business is unique, there are some commonalities. Typically, a small business owner s focus will be on the day-to-day requirements of their core business. Investing in the business whether for equipment, skills or business planning is often seen only as a cost, with the benefits not acknowledged. Small and micro businesses are often set up by one or two key people who are passionate about the business. They may have very informal processes for making decisions and changes. Decisions might be made on the hop by the owner, based on gut feel, personal values or intrinsic knowledge of the business. Small business owners may have a trade or other technical background that might give them an aptitude for energy efficiency, or they might be absolute beginners with no technical know-how to draw on Commonwealth of Australia Page 3 of 77

9 For some small and micro businesses, residential energy efficiency issues and solutions will be most relevant. Turning off lights, appliances and computers might be the biggest savings or fuel economy may be the most pressing issue. Others might be in a position to research and consider bigger budget projects such as equipment, lighting or facility upgrades. But even the most obvious areas for energy saving might have several options that can deliver an improvement. Skills and knowledge can help small and micro businesses to make good choices and get the most from their investment. Examples of small businesses The following examples are drawn from interviews with small and micro businesses that have made energy efficiency improvements. They show some of the differences in how these businesses operate and their primary energy use. Further information about these businesses is included at relevant points through this guide. The individual case studies are provided in Section 7. Boutique hotel (Board of Directors, 2 managers, 22 FTE positions) About the business The boutique hotel is four-star rated and located in inner city Melbourne. It was set up six years ago with the goal of being the best hotel it can be and, within that, being as energy efficient (and sustainable) as possible. There are 28 staff covering 22 full-time equivalent positions and a Board of Directors. The General Manager and Assistant Manager manage three teams front desk, housekeeping and food and beverage. Energy use The main energy used by the hotel is electricity for heating, cooling, lighting, washing and refrigeration. Background, skills and knowledge The owners had a background in tourism and were aware of what could be achieved for energy efficiency. Real estate office (1 owner, 2 sales agents, 1 receptionist) About the business The owner set up a new real estate office in rented premises in a regional town. The core business is property management and listing properties for sale, which involves visiting properties, meeting with clients, marketing, showing properties, negotiating contracts and managing repairs and services. The business has one owner and employs two sales agents and a receptionist. Energy use The main energy use is fuel for travelling to properties and meetings. Electricity is also used for computers and display screens in the office. Background and existing skills and knowledge The owner has experience in human resources management. Page 4 of 77 1st edition version:1

10 Intellectual property firm (90 partners and staff across 2 offices) About the business This business specialises in intellectual property protection, patents and trademarks for local and international clients. The company was established 60 years ago and now has offices in Melbourne and Sydney, with approximately 90 partners and staff. Management have been committed to sustainability and energy efficiency for the last five years and see it as closely aligned to the culture and values of the business. The business is a member of the Australian Legal Sector Alliance (AusLSA), which aims to develop best practice sustainability guidelines for the legal sector and helps firms achieve measurable environmental targets. Energy use The main types of energy use are electricity for office equipment, heating and cooling, and fuel for overseas and domestic travel. Background, skills and knowledge The Chief Operating Officer has a degree in ecology and environmental sciences. He has been the main driver of energy efficiency in the business, with strong support from the managing partners. Retail butcher (2 owners, 1 apprentice) About the business The business was set up by a brother and sister team, bringing together their experiences as a butcher and as a manager within a small business. They took over an existing butcher shop with equipment and don t yet have the budget to replace the old equipment or start full renovations. They butcher and prepare the meat for sale and must meet regulations for temperature control and hygiene. The business has two owners and employs one second-year apprentice. Energy use The main energy use is electricity for refrigeration and air conditioning. Background, skills and knowledge The owners have experience in: up-to-date technology and practices in retail butchery business planning and management systems Commonwealth of Australia Page 5 of 77

11 Retail sustainability products (2 owners, 2 casual staff) About the business This business provides sustainable options for everyday practical needs. Originally it focused on individual needs but office supplies, and catering and food packaging supplies are a now a big part of its operations. The business is run by a husband and wife team, with two casual staff. They chose to set up in the local area to be part of the community and have things in walking distance. They don t own the premises. Energy use The primary energy use is gas for heating and electricity for lighting and equipment in the shop. Background and existing skills and knowledge Both owners have a personal commitment to sustainability. One owner is active in sustainability beyond the shop, delivering workshops on sustainability and energy efficiency and providing residential energy assessments. Page 6 of 77 1st edition version:1

12 What is energy efficiency for a small business? Energy efficiency Energy efficiency isn t just the amount of energy a business uses. The amount of energy could be reduced while still wasting energy, for example, by operating for fewer hours. Energy efficiency is the ratio of energy used compared to a meaningful aspect of the business, usually the outputs or results achieved. This measure will vary between businesses and sectors so could be the number of products made, the hours of services provided, turnover, total costs, amount of raw material used or amount of floor space. Small and micro businesses will use different types of energy, and efficiency might be improved in any or all of them. They will include: electricity to run computers, fridges, equipment, tools, air conditioners, heaters, air compressors and other appliances mains gas or LPG to run heating, engines, compressors, ovens and other equipment diesel fuel for engines, boilers, ovens and compressors petrol or diesel fuel in vehicles for travel and deliveries aviation fuel for air travel. It s not one size fits all. And there s no fixed point that indicates efficiency has been achieved. So each business will need to decide, based on their own situation, what to target, what the benefits might be and how much to invest. Some will be able to improve energy efficiency through culture change and encouraging new behaviours. Others might make simple and affordable upgrades to equipment. Not everyone will need to (or be able to) do big budget technology improvements, facility redesign or upgrades for insulation, heating, cooling, solar or lighting systems. There may be options that are rated as more efficient which may not suit a certain business or work area. A good example is LED lighting, generally accepted as the most efficient. A business might need a particular light quality or level of light and LED lights might not be able to deliver to these requirements Commonwealth of Australia Page 7 of 77

13 Cost and efficiency Small and micro businesses are likely to focus on how energy efficiency can reduce waste and costs in their day-to-day operations, for example, by reducing leaks and minimising waste. Often there are direct cost benefits from energy efficiency, for example: energy costs are lower because less energy is used the effect of energy price rises is limited because less energy is used energy costs are stable (or lower) compared to improved outputs or revenue electricity is freed up and the business can avoid paying for extended supply infrastructure or additional fees peak demand might be reduced and may result in cheaper tariffs or reduction of peak charges. Businesses may also want to source cheaper energy by scheduling to use off-peak tariffs, negotiating better rates and reducing peak charges. These can deliver cost savings but don t improve the ratio of energy used to achieve the output. Sustainability and efficiency Energy efficiency is one aspect under the broader banner of sustainability. Sustainability encompasses the environmental, economic and social impact of a business, often referred to as the triple bottom line. Energy efficiency can contribute to the triple bottom line in various ways. Environmental more efficient use of energy generated from fossil fuels can help to minimise greenhouse gases. This could be through: o consuming less coal fired electricity because of efficient appliances or equipment o using gas instead of coal fired electricity to run equipment o capturing heat or energy from one process and using it for another purpose. Economic using less electricity will help minimise the business energy costs. It will also help to constrain the rising cost of electricity supply and transmission by easing the pressure to continually expand the infrastructure. Social a commitment to energy efficiency can help to meet consumer and employee expectations for being green and doing the right thing by the broader community. Page 8 of 77 1st edition version:1

14 The cost aspect of energy efficiency will be important to small and micro businesses. This may mean they are not as likely to focus on sustainability initiatives that are environmentally friendly but don t deliver a cost benefit. The following are some examples. Cleaner or renewable energy options refer to energy generation that produces fewer or no greenhouse gases, for example, wind power, solar, geothermal and other emerging technologies. They are generally considered to be more efficient in how they are produced, but more expensive. Cleaner technology is a malleable term that usually refers to products, services and processes that use or support renewable materials, renewable energy sources, recycling, energy efficiency and so on. These may require costly upgrades, new equipment or re-fits. Energy consumption contributes to the carbon footprint of a business and can be converted into CO2-e emissions. However, these are usually used as a measure of broader environmental performance. What might drive small business to be more energy efficient? Each business is likely to have different reasons for wanting to be more energy efficient. The motivation might be: rising electricity, gas and other fuel costs wanting to manage or reduce energy costs now and in the future wanting to find low cost efficiency improvements and avoid investing in new technology or infrastructure customer expectations for being green personal commitment to sustainability and environmental issues commitment to doing the right thing as a business, sometimes referred to as corporate social responsibility or being a good corporate citizen marketing and promotion of energy efficiency to gain a competitive advantage media coverage of low carbon economy, global warming and reducing CO2 emissions, environmental legislation and the carbon tax needing to comply with regulations or meet tender specifications wanting to participate in energy credits such as solar credits Commonwealth of Australia Page 9 of 77

15 Retail butcher We started on energy efficiency because of costs. We thought there must be a better way. So we looked around the shop and thought about what we could do to make it better. Our equipment was all quite old. We wanted to fully renovate and replace things, but couldn t afford it. There were some things we could do to improve the old equipment. They cost, but they were within our budget. And they made a difference immediately. We put strips on the fridge doors to reduce temperature loss, and blinds on the front windows for the morning sun. That reduced electricity use for the fridges and air conditioning. What benefits could a small business achieve? Small and micro businesses will need to see benefits to their business to commit to being more energy efficient. The benefits will depend on the situation of the business and the motivation for making changes, and might include: reduced energy costs stable energy costs despite increased rates from suppliers additional production from same energy consumption reduction of greenhouse gas emissions flow-on benefits such as product quality, improved shelf life and shorter processing cycles goodwill from customers marketing or competitive advantage opportunity to enact personal values demonstration of business values and corporate social responsibility improved engagement from employees a more sustainable and productive business avoiding or postponing big investments such as replacing or upgrading equipment or power supply infrastructure. Page 10 of 77 1st edition version:1

16 Boutique hotel Sustainability is a marketable aspect of our business. Using 100% green energy costs more but it helps set us apart from other hotels. IP firm Because we have a lot of international clients, we need to do quite a bit of overseas and interstate travel. We hold a lot of meetings with audio-visual set up, but you need to spend time with people and see people face to face as well. So we calculate the carbon emissions and buy carbon offsets to the same amount. Currently it's about $12,000 a year. Tip Some government agencies provide funding and structured programs for business energy efficiency and sustainability. Training providers might be able to help a business get involved in a program and provide the skills development (if that isn t covered in the funded program). Examples include the Victorian Energy Saver Incentive and the NSW Sustainability Advantage program Commonwealth of Australia Page 11 of 77

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18 2: Supporting Small Business Energy Efficiency This guide presents one model to assist VET practitioners to support small business energy efficiency. As outlined previously, small and micro businesses all have unique characteristics, but cost (in time and money) is a strong driver. VET practitioners will need to ask the right questions to engage with small business and develop a skills solution that responds to the current situation and skill needs. The following model shows one approach to working with small business on energy efficiency. The highlighted steps in Figure 1 are the focus of this guide because they relate closely to energy efficiency. Understanding the business goals, vision, culture energy profile capacity and capability Identifying the skills gaps generic skills* for energy efficiency technical skills* for energy efficiency business skills foundation skills Responding to the business skill needs contextualising the BSB 'energy efficiency' units contextualising other units skill sets qualifications Figure 1: Supporting small business energy efficiency *see Section 3: Skills for energy efficiency 2013 Commonwealth of Australia Page 13 of 77

19 Understanding the business Each small business will operate differently and will have different challenges and goals. Not every business will have energy as a major cost. For some, it might be as little as 4% of overall costs; for others it could be 30% or more. One business might have a clear idea of their energy use and how much they want to save. Others might want to cut costs but don t know where to start. Some business owners might be committed to sustainability while others might be climate change sceptics. There are several key aspects of a business that will have a direct bearing on their approach to energy efficiency and on skills needs, including: business goals, vision and culture energy profile current capacity and capability. Goals, vision and culture In a small business the goals, vision and culture might be a direct reflection of the owner s personal attitudes and commitments. Some owners might have a personal commitment to sustainability and doing the right thing for the environment, while others might be climate change sceptics. If a business has direct energy or sustainability goals, these will help to make the link with energy efficiency skills development. Other businesses might have goals such as increased revenue or global expansion; they may need help to see how energy efficiency and skills can assist them to reach these goals. The vision will also be unique to the business. It may not be clearly stated or it might be the personal passion of the owner. But the vision can provide insight and a lead in to engaging with energy efficiency and skills. If the vision is to remain viable in the long term, energy efficiency can provide support by helping to manage energy costs. If the vision is to be a leader in the sector, energy efficiency might be valued as part of doing the right thing and being ahead of competitors. The culture of the business can also be a critical factor in how the business owner approaches energy efficiency and skills. The culture might be reflected in whether the business: encourages suggestions and feedback from employees provides training, induction and guidance to employees on how to do their work walks the talk in areas such as health and safety, and workplace conditions. The culture will also affect how energy efficiency improvements are implemented and maintained by employees. For example, if employees receive mixed messages about changes they won t be motivated to apply the new practices and behaviours. Page 14 of 77 1st edition version:1

20 Real estate office I have a personal commitment to helping address global warming, having worked in the snowfields for several years and seeing the effects of climate change. We have the awareness now, and the facilities are there for recycling and saving energy, so how hard is it? We re a new business, so when I set up the office I could factor in some energy efficiency and recycling. First was low voltage lighting, then putting the computers and printers on timers. The business depends on driving around, it s our livelihood. So fuel consumption is the main issue for us. We re on the road a lot and distances are significant in a regional area. IP firm We wanted to do something positive for greenhouse gases and the environment. We also have a culture of helping others. For example, we sponsor one cochlear implant each year. We buy it and donate it for someone. Many of us were doing things at home, but you can make a bigger impact in the work environment. It's more part of the culture of the place than documented in a manual and procedures. Walking or cycling to work fits with the other initiatives we re doing for employee health and wellbeing, and that s also more energy-efficient so they re all interconnected. Retail sustainability products We chose to set up in our local area and we employ locals. We see that as saving fuel for travelling, but it s also about being part of the community. We share one vehicle for personal use and work, and we re-use all packaging and fillings it helps to reduce energy usage in the supply chain. Tip Different business needs might be identified through informal discussions or more formal processes. Businesses that are likely to focus on the basics for energy efficiency will typically be very small or micro businesses, may not be very energy intensive compared to big businesses and may have very limited budgets and expertise. They might identify with the following statements. I need to do it all myself (just me). I m not very technical/not good at maths. Energy isn t my biggest cost. I want to make some savings without investing much money. I want to be greener but within the current budget. There are some obvious things that I could implement now such as turning off the lights, opening the windows instead of turning on the air conditioner, and double sided printing Commonwealth of Australia Page 15 of 77

21 Businesses that are ready for more challenging energy efficiency activities might have more staff and budget, energy might be a big percentage of their costs, and they might have technical or trade expertise they can draw on. They might identify with the following statements. I can handle the maths and technical stuff OK. I want to implement equipment or technical optimisation or upgrades. I have capital expenditure budget for improvements. Energy is one of my biggest costs. Energy price rises in the future are a big risk to the viability of my business. I see energy efficiency and sustainability as a marketing advantage. I want to keep up or get ahead of my competitors. I m ready to get some specialist advice to assist with improvements. I have to report under the Energy Efficiency Opportunities program (only if they use more than 0.5 petajoules (PJ) of energy per year; unlikely for a small or micro business). I ve signed up to my industry sustainability covenant. Energy profile Understanding the energy profile of the business can help to identify the energy efficiency skills that a business might need. It can also help to build the relationship with the owners. An energy profile might capture the types of energy that the business uses, how much and where it s used. Depending on the business, it might be a simple list or a more thorough analysis. The following are questions to consider. Is energy a significant percentage of the business costs? If so, what type of energy and how is it used? How is energy usage measured and monitored, if at all? What are the biggest users of energy? Are there any anticipated changes in technology or processes in the business? What changes in the costs of energy are expected? For some small business owners, this might be their first step with energy efficiency. It could provide a mini-audit of their energy use and help them decide how to make improvements. For some businesses this process could be used to identify all energy use as a percentage of overall costs. For others it could compare electricity and fuel costs. Typical uses of energy in small business include: electricity for heating, cooling, hot water, lighting and running equipment gas for heating and cooking fuel for cars, transport, trucks and air travel. Page 16 of 77 1st edition version:1

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