The Implications of Energy Prices for Australian Wholesalers

November 12th, 2021

If you’re in business as a wholesaler in Australia, you’ll know that energy costs are crucial to your profitability. The wholesaling industry has high energy costs compared to other industries, particularly those involved with perishable foods that require high levels of refrigeration, heating or lighting.

If the experience in the UK is any guide, energy price hikes can be crippling for food wholesalers. Some UK wholesalers have found that their energy bills have doubled over the past year, placing an enormous strain on their already tight margins. 

One way that you may be able to avoid that potential scenario if the same thing was to happen in Australia is to invest in renewable energy options instead. ‘Going green’ could also give you a competitive advantage.

The business benefits of renewable energy options

Investing in renewable energy options such as solar, wind, hydrogen and hydro can provide businesses with two key benefits:

Benefit 1. Cost savings

Renewable energy sources can already deliver cheaper energy compared to conventional fossil fuel sources. 

Renewable energy costs are also coming down and are forecast to have a long-term downward trend as the capabilities of green technology and energy storage are enhanced.

Benefit 2. Improved public perception and goodwill

There is no doubt that there is growing public support for the renewable energy movement. Consumers are increasingly likely to support businesses that embrace a net zero philosophy to help protect the environment. A key way to achieve that is by embracing renewable energy options. 

A recent survey commissioned by the federal government’s renewable energy agency (ARENA) found that 76% of survey participants would choose a product made using renewable energy over one that wasn’t. Neary two-thirds of survey respondents would be prepared to pay a premium for products that are made with renewable energy.

According to the latest renewable energy usage statistics:

  • 24% of Australia’s electricity came from renewable energy sources last year, which was a 14% year-on-year increase.
  • 46% of Australian businesses are using at least some renewable energy sources in their operations. However, the majority are using renewable energy sources for less than 10% of their needs. 

One of the major obstacles cited by businesses who haven’t fully embraced renewable energy is the perceived upfront cost of transitioning. However, there are options to help you with the cost of purchasing and installing renewable energy systems and technology that will make your business cleaner and greener, and also save you money in the long run.

How can you finance the switch to renewable energy?

The federal government is encouraging Australian small businesses to make the switch to renewable energy via the Small-scale Renewable Energy Scheme. This Scheme can help to finance the purchase cost of renewable energy options such as:

  • solar panels
  • wind turbines
  • hydro systems
  • solar hot water systems, and
  • air-sources heat pumps.

Equipment Finance (aka Asset Finance)

You can also use equipment finance to help you fund the purchase cost of any of these renewable energy options. Equipment finance allows you to get the assets you need now to increase your productive capacity and efficiency, without eating into your working capital.

If you’d like to learn more about how Earlypay can help your business with invoice financing, asset finance or trade financing arrangements, please contact our friendly team on 1300 760 205 or [email protected]

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