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How to save money on your energy bill?
With Andrew Sykes, Chris Oates, Jacob Elkhishin and Young Han | S2 E9
Everyone needs energy. You need electricity to run your business, to run your household or just to participate in the modern world. In this episode of talkBIG, hosts Andrew, Chris and Young dive into the world of energy efficiency. They share practical strategies that can put some money back in your pocket while giving the planet a little love too.
In this episode, the talkBIG crew chat to Jacob Elkhishin, RSM's National Leader for Resources, Mining, Energy & Sustainability. Jacob has more than 18 years of experience helping his clients manage risks and stay compliant. He is also an accredited greenhouse and energy auditor.
During their talk, they look at the global factors that affect how much you pay on your energy bill. They also explore ways to cut down your daily energy use, like upgrading appliances or installing triple-glazed windows. They also shed light on what ESG is and how it can help businesses improve their bottom line. Get ready for some energy-saving tricks that will not only save you money but also boost your long-term resilience.
If you’re tired of paying sky-high energy prices and desperate to find ways to shrink your bills then tune in now.
Highlights from the episode:
What is energy efficiency, and how do we measure it?
Why are energy bills so high right now?
How does war in Ukraine cause energy prices to rise in Australia?
Is Australia doing enough to meet our energy efficiency goals?
Practical strategies to reduce your energy bill
Are energy-efficient upgrades worth the cost?
What is ESG and why should a business owner care?
How do ESG factors impact a business?
EPISODE TRANSCRIPT
00:00:01:04 - 00:00:18:10
Introduction
Welcome to the RSM talkBIG podcast. Helping you invest well, understand money and achieve the best tax outcomes. Your hosts today, Andrew Sykes, Chris Oates and Young Han.
00:00:18:10 - 00:00:28:23
Andrew Sykes
Hello everyone, and welcome to the RSM Team talkBIG podcast. My name is Andrew Sykes and I'll be your host today and I'm joined here in the studio with Chris Oates-
00:00:28:23 - 00:00:30:06
Chris Oates
G’day Everyone
00:00:30:11 - 00:00:31:16
Andrew Sykes
and Young Han.
00:00:31:21 - 00:00:32:20
Young Han
Hi, everyone.
00:00:32:22 - 00:00:44:04
Andrew Sykes
Okay, guys. Everyone's favourite topic: energy and energy prices today. Who hasn't felt the pinch of energy prices? What are your clients saying about it?
00:00:44:06 - 00:00:54:21
Chris Oates
It comes with the general cost of living, everything going up. But the big thing has been you get your electricity bills, you get your gas bills, everything's expensive.
00:00:55:01 - 00:01:17:19
Andrew Sykes
Everything is expensive. And we're going to talk about that today. And we're fortunate to be joined by our awesome partner in the Brisbane office, Jacob Elkhishin. He's our national leader for resource mining, energy and sustainability. Jacob has got a stack of experience, somewhere-18 years, is it?
00:01:17:21 - 00:01:20:01
Jacob Elkhishin
Yes, that's correct.
00:01:20:03 - 00:01:32:13
Andrew Sykes
That's a long time providing advice on ESG and risk and energy. So, Jacob, you're going to talk us through a little bit on energy prices and a few other issues around energy today.
00:01:32:14 - 00:01:43:20
Jacob Elkhishin
Yeah, thanks. Thanks very much, Andrew, and thanks for having me on this podcast. And it's great to be here and talk about this topical issue that's actually impacting everyone at the moment.
What is energy efficiency, and how do we measure it?
00:01:43:22 - 00:02:14:22
Andrew Sykes
Well, it's hugely topical and it opens up a whole world of energy efficiency and I think we'd love to have a closer look at things. You know, every day, energy issues and explore some of those government grants and taxes and incentives and hopefully give us a bit of a way forward on energy sustainability. So, if we start with that, Jacob, what exactly is energy efficiency and how can we measure it?
00:02:15:03 - 00:03:18:17
Jacob Elkhishin
Yeah, so energy efficiency is actually nothing new. I think we all remember or still know with appliances, there's energy ratings on those and you may have noticed them. But that's been going around for as long as I can remember. But I guess it's picking up a bit more of a focus now with new technologies and new possibilities around becoming more efficient.
And also, as you mentioned earlier, with respect to the rising energy prices, there is more drive around investment and research and development. The other driver is climate change, which energy is a contributor to scope two emissions, but also potentially scope one emissions. These are all the factors and at the moment a lot of businesses are being forced to look at that as a cost reduction strategy. And also, its contribution to Australia's net zero commitments of 43% in 2030 and zero in 2050.
00:03:18:19 - 00:03:40:18
Andrew Sykes
Yeah, I always thought that energy efficiency was Mum coming in and saying, “Turn the lights off!”
And mum still does it. So how does energy efficiency impact on household and businesses? Or how do energy prices… So, if you're not efficient, we pay more. How does that impact on households and businesses?
00:03:40:19 - 00:05:05:16
Jacob Elkhishin
You joke about the turning of the lights, but when we sort of get under the hood of businesses and assess the energy usage, the energy behaviour, it can be as simple as watching how you use energy in certain areas by understanding that profile.
So yeah, it is actually true that that is a component of being energy efficient. But in terms of impact on households and businesses, I think it's important to, I guess, understand that combined with inflation, with interest rates, it is impacting businesses at that bottom line in terms of having to maintain cash flows and whatnot.
Why are energy bills so high right now?
I think it's also important to understand a bit of context around what's sort of driving these prices. And it all comes back to supply and demand. There are compensating factors that impact both curves in supply and demand. So, the Russian war, the sanctions with Russia (mainly impacting gas and coal supply), a combination of increasing intermittent renewable energy generation and reducing supply of dispatchable generation.
So dispatchable generation of the traditional coal fired gas fired power plants, ultimately decreasing supply, increasing extreme weather events, ultimately increasing demand. So rising temperature-
00:05:05:18 - 00:05:06:17
Young Han
Canberra winter.
00:05:06:17 - 00:05:07:16
Jacob Elkhishin
Yes. Correct!
00:05:07:18 - 00:05:08:12
Chris Oates
Yes.
00:05:08:14 - 00:06:02:15
Jacob Elkhishin
So that's impacting the demand profile and then we're transitioning away from fossil fuels. We are transitioning away from large coal fired power plants that are being decommissioned and not maintained. There is going to be a need for dispatchable renewable generation in the networks. This is around electricity, so that would include hydro and battery. During this transition period, we are going to feel a lot of the impact of rising prices or fluctuating prices.
The onus is on businesses to manage that risk and look at how they can be more resilient in the face of changing energy prices. And there are simple steps that I think we can talk about today that businesses can look into. And the most simple is just understanding your usage and your energy usage behaviour.
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How does war in Ukraine cause energy prices to rise in Australia?
00:06:02:15 - 00:06:36:20
Andrew Sykes
Before we jump into that, I'd like to get back to something you said there about the war in Ukraine. I mean, it's very easy as someone sitting here over in Australia to say, ‘Well they're fighting over there…If we've got a war in Ukraine, as somebody here in Australia why are my gas and energy prices going up?’ What's the connection between that war and the Australian price of things?
00:06:36:20 - 00:07:35:05
Jacob Elkhishin
Yep, that's a great question. Andrew. So, it goes back to that supply. So that war in Ukraine has an impact on the global supply of fossil fuels. Russia did supply coal and gas in the market and Australia does also produce gas, but 80% of that gas is sent overseas. So, it ultimately impacts that supply of gas globally and also impacts Australia with coal. As you've noticed, coal prices are extremely high or were extremely high.
Again, it's just more demand for that coal in the market. And I think this year was sort of the first year or last year was the first year ever where thermal coal was more expensive than coal.
And then the energy networks still need fossil fuels at the moment as we're going through this transition. That all impacts on the prices.
00:07:35:05 - 00:07:45:19
Andrew Sykes
So, it's a worldwide pricing market. If a producer here in Australia can sell it overseas for four or five times the price they will. So, we have to pay world prices.
00:07:46:00 - 00:07:47:17
Chris Oates
All right. Supply and demand economics.
00:07:47:23 - 00:07:49:09
Andrew Sykes
Supply and demand economics.
00:07:49:12 - 00:08:07:14
Jacob Elkhishin
Basically. And these contracts Australia’s gas companies have -they are longer term contracts, so there’s nothing that can be done with those. They may have been around before the war started. It's the perfect storm of things happening to result in these record prices.
00:08:07:14 - 00:08:14:07
Andrew Sykes
Yeah, and it's really easy to say, well, why don't we change the contracts? But if their long-term contracts made economic sense at the time.
00:08:14:07 - 00:08:15:09
Young Han
Country to country.
00:08:15:11 - 00:08:17:16
Andrew Sykes
Country to country is pretty hard to do, isn't it?
00:08:17:16 - 00:08:18:13
Jacob Elkhishin
Yeah, that's correct.
Is Australia doing enough to meet our energy efficiency goals?
00:08:18:13 - 00:08:39:06
Andrew Sykes
So, we were exploring energy efficiency and you mentioned climate change. There's a lot of discussion around not mining coal and the use of coal, the use of gas. That's one side of the equation. But the other one that you've highlighted before is our actual usage. Are we doing enough on the efficiency side?
00:08:39:07 - 00:09:51:15
Jacob Elkhishin
The short answer to that question is no, and that's nationally within Australia. But you can even extend that to globally.
And when I say no, it's relative to the commitments that have been made on a global scale. As I mentioned, 43% in Australia nationally is our reduction target for 2030 and then net zero in 2050. Those net zero commitments are in other major countries as well.
Relative to that, we aren't doing enough. Those are the two driving pressures, as I mentioned earlier around this drive for being more efficient with energy. One is cost savings around prices. And the other is climate change.
Overall, no is the answer. But there are some limitations around what you can do given the cost of that investment and the availability of the right technologies. There are a few things to consider and it's not as simple as doing everything now.
I can tell you a bit about what some of the first steps would be as you start to look at becoming more efficient with energy and ultimately reducing greenhouse gas emissions.
Practical strategies to reduce your energy bill
00:09:51:15 - 00:10:04:02
Chris Oates
So big picture, energy prices looking at the cost, but on a day-to-day basis, whether it's individuals, whether it's businesses, everybody being impacted, what are some of the strategies or practical tips that you've got for people?
00:10:04:02 - 00:11:20:19
Jacob Elkhishin
Yeah, great question. Firstly, it's important to understand your baseline profile – so early energy behaviour and usage. Data is king with most energy decisions these days. And there is so much data available about your consumption. Some of the strategies, as I mentioned before, there have been appliance energy ratings available for the past 30 years. Six-star rating system around air conditioners, fridges, washing machines, dryers, dishwashers, TVs and in also around control systems. Looking at how you can control energy usage within a building or within a household. Renewable energy is sort of the big one around using solar within residential homes and considering purchasing renewable energy from the grid.
And the quick win is optimizing lighting, using LEDs or compact fluorescent lamps. Just installing that can result in immediate efficiency gains on consumption. And I can talk about some of the tools that are out there around that.
00:11:20:19 - 00:11:40:13
Andrew Sykes
So, Jacob, when mum comes in next time and says, turn the light off, we can say, Hey, it's an LED and it costs almost nothing to run. So just turn the old-fashioned ones off. I was reading an article a week or two ago which spoke about triple glazing, and they're actually saying that with triple glazing, you don't need a heater in the house.
00:11:40:18 - 00:11:43:04
Young Han
That's true. I've done it in my house.
00:11:43:06 - 00:11:43:21
Andrew Sykes
You've done it?
00:11:43:22 - 00:12:01:04
Young Han
Yeah. So, we had the single glaze, just plain old windows. And the first thing we did was change that to triple-glaze windows. And I was thinking, there's a host of other work that we need to do for the house. Why are you changing window as a first thing? And I just thought, like, this is a waste of money.
00:12:01:06 - 00:12:14:13
Young Han
But in Canberra, in winter time. I didn't even put the heater on because I was getting the sunlight during the day and it kept it warm. It stays inside our house like I don't lose it until later, 8:00pm at night.
00:12:14:14 - 00:12:19:15
Andrew Sykes
Jacob Any other tips on using our heaters and just reducing our consumption?
00:12:19:15 - 00:12:56:22
Jacob Elkhishin
Yeah, obviously triple glazing is the big one at the moment. It can result in in lowering your energy costs and better than doubling savings around that.
And then in terms of understanding again, how much of your daily use is in which different rooms. By having that data and that information, you can optimise usage at the right times of the day in the right rooms and all of that information is becoming very accessible now through technological advances.
00:12:56:22 - 00:13:48:07
Young Han
Some tips for me was to have a look at all the appliances that you have and if their energy rating is really bad, you're better off buying a new one because you're actually going to save on your energy bill in the long term. Just review your appliances and then if you’ve got appliances that are really old with the really low energy efficiency rate, just replace it with a new one that has got an energy rating high enough so that you are going to save on your energy bill in the long term.
Another thing was about changing from gas to electricity. According to the Climate Council data, you can actually save 500 to 1900 per year if you change from the gas to electricity.
And new dwellings at the moment, you actually cannot have gas.
00:13:48:09 - 00:13:52:07
Andrew Sykes
Not in Canberra. It's banned in Canberra, new gas.
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Are energy-efficient upgrades worth the cost?
00:13:52:09 - 00:14:00:13
Andrew Sykes
So, Jacob, if I can ask you, we're talking about making some changes. Are energy efficient upgrades expensive?
00:14:00:13 - 00:15:09:02
Jacob Elkhishin
Yes, they are expensive. But as this more provider supplies, it'll bring the cost down and new technology advances it'll bring the cost down as well. But we're moving to the point where there isn't going to be much choice. So, the early adopting puts you ahead of the game. And the other thing to consider is there are incentives out there that potentially could help with that cost. And then yeah, whilst the initial investment may be high, the return on investment could be greater over the longer term as Young mentioned by investing in these things. It's important to consider the full buy back period and whatnot when you're making these decisions.
But as I initially stated, it's also important to consider the data because you may invest in something that results in being more efficient for energy in a particular appliance that you don't really use or the particular area that you don't really use. You won't get that that high return on investment or that longer term buyback.
00:15:09:02 - 00:15:38:13
Chris Oates
And that's where we we've talked before about the power of compound interest. If you're going to make the change, you use solar panels and batteries. Storage is the example. A lot of people waited because they thought the batteries were expensive. But if you've started saving and you've started those energy savings, it's a matter of doing it and making the most of it so that you sort of think if you wait five years because if the batteries seem too expensive, the savings you could have made over that time, you're probably losing out with.
00:15:38:15 - 00:15:40:21
Chris Oates
Yeah, down the right path there. Jake Yeah, that's correct.
00:15:40:23 - 00:16:03:02
Jacob Elkhishin
And, and when I say yes, it's more for the larger such as renewables but the easy quick wins that Young mentioned there around switching to electrical appliances, looking at the energy Star rating;
those are easy wins that potentially don't cost as much and then can provide a quicker return on investment and break-even point.
00:16:03:02 - 00:16:30:20
Young Han
And speaking about the solar panel, I think there's a lot of properties actually open to that. And they always give you a call and say, Oh, there's a government grant available, it won't cost you anything, just get it set up. I think the tip and this is from my experience, he said, don't look at the upfront cost, look at how much they're going to pay you and they buy back your energy because in long term that's what's going to save you money and make the investment worthwhile.
00:16:30:22 - 00:16:44:15
Young Han
Looking at different providers, looking at how much they're going to buy back for your electricity, and that's how you can make the decision. If you don't have that lump sum money available in your bank account, you can look into different incentives as well.
What is ESG and why should a business owner consider it?
00:16:44:17 - 00:17:12:10
Andrew Sykes
It's so Jacob, a lot of this and we've spoken about obviously it's very important in an inflationary environment. Everyone's focused on costs and savings and why is everything go up. But we've also spoken about other things which is around climate change and renewable energy and that leads us into that ESG or environmental, social and governance considerations.
00:17:12:12 - 00:17:19:01
Andrew Sykes
What is ESG and how important is that in making these kinds of decisions in today's business landscape?
00:17:19:01 - 00:19:07:00
Jacob Elkhishin
Yeah. From a business standpoint, ESG is probably one of the hottest topics that I am speaking to boards about. And it does relate back to risk management 101. This is nothing really new. It originated from the financial markets. It sort of relates to corporate social responsibility. It relates to triple bottom line reporting. So, it's not a new concept, but it is really a catch all to enable businesses to provide transparency to stakeholders on non-financial components of their business.
The term ESG is really these three pillars around environmental, social and governance. And there are risks associated across each of those three pillars, and there are interdependencies between the three pillars too. Being environmentally conscious ultimately provides a social benefit. And then you need that right governance around that. There are interdependencies, but from a financial markets’ perspective, it provides stakeholders more transparency on what businesses are doing outside of the financial aspect of their business. Although financial reporting, especially for a listed public, so you can do a lot of analysis on the financial part of the business, it's more capturing what's the business doing in relation to the transition to net zero, what a business is doing around community social value, what a business is doing around governance. It provides a metric to understand that longer term sustainability of a business, that's where it all comes from.
And that's essentially, I guess what I believe is the intent behind it. It's purely around providing more transparency.
00:19:07:03 - 00:19:21:07
Andrew Sykes
That's measuring just not financial impacts, but social environmental impacts. It's almost like you saying how well it's measuring, doing the right thing and being a good corporate citizen. Is that yeah, is that a fair comment?
00:19:21:07 - 00:19:44:15
Jacob Elkhishin
And ultimately the stakeholders of a business being their customers, their shareholders, the financiers, their employees even; they all have a vested interest in these aspects of a business. And ESG is designed to make that more transparent to these stakeholders so that they can value a business over a longer-term sustainability point of view.
00:19:44:15 - 00:20:10:13
Young Han
I think easiest way to explain this just in day-to-day individuals is that we need to have the environment safe for our next generation. If we don't have the nature and the environment that we have now, what's going to future look like? We can't do business if we don't have that environment. If we can't do any more trade between countries and have a treble tourists happening if we don't have the environment to enjoy.
00:20:10:15 - 00:20:14:19
Young Han
I think it comes down to very basic things.
00:20:14:19 - 00:20:24:05
Young Han
Why is it important for us? Is it because of the financial requirement? Is that because it needs to be transparent? I think it's really simple as we need to take care of the environment now.
00:20:24:05 - 00:20:40:11
Chris Oates
I think it's a where a lot of people in the past, it's always been about the bottom line and the dollar getting the best outcome, whereas now there's a lot more people and there's a lot more emphasis on doing the right thing. That's where the as you said, the finance is just getting people to work for you. Yeah.
How do ESG factors impact businesses?
00:20:40:17 - 00:20:52:24
Andrew Sykes
So, Jacob, you mentioned that ESG is a hot topic. Are you saying that these ESG considerations are now becoming more and more important, making a bigger factor in major business decision?
00:20:52:24 - 00:21:32:12
Jacob Elkhishin
100%.
And it may not impact a business directly, but there is 100% an indirect impact because business customers may be making decisions based on an ESG rating of their supplier. So ultimately, it is influencing decisions from investors, with suppliers, customers, with banks and with employees. They're looking to these factors to influence their decision on who they work for, who they provide funding for and who they buy from.
So basically, yes is the answer to that question.
00:21:32:12 - 00:21:58:19
Andrew Sykes
Terrific. Thank you, Jacob. Thank you for your time today. Christine Young, thanks for your time. And everyone who's joined us on the RSM Talk Big podcast. We hope you found that discussion interesting and insightful. ESG environment, energy efficiency are all incredibly important and interesting topics. RSM is does a lot of work in this area and we have a lot of information available.
00:21:58:19 - 00:22:24:01
Andrew Sykes
If you want to go and read up more on these, just go to our website, RSM dot com dot au and you'll find a stack of information there on ESG and energy efficiency. And we have just released our think big report on sustainability, which is going to give you more insights and strategies and more in depth on this topic. Thank you once again for tuning in to the RSM talkBIG podcast.
00:22:24:01 - 00:22:35:16
Andrew Sykes
My name is Andrew Sykes. I've been your host for today and where you can subscribe, Share Leave a comment on your favourite podcast platform. We'll talk to you next time.
