The Economics of Installing a Backup Power System at Your Business

What is the cost of your business losing power? Not sure? Let’s break it down really quickly. Obviously it’s different for each type of business and no one wants to read an article that goes in depth about every single business type (or maybe you do?). I’m going to try to keep this short, and with just the essential meat needed (or plant based protein).

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I’ll use the example of a small family-owned manufacturing facility. This specific company has a strong online and phone order customer base and sells both direct to consumer, and B2B. They employ approximately 50 people, half of which work in the office taking, processing, and shipping orders. The other half work in the actual manufacturing plant, creating the products using state of the art equipment like robots, and some really, really expensive machinery. This is a niche market, with customers that place orders of parts up to $30,000 for one transaction (usually by phone or eCommerce storefront). Their annual sales are about $15 million which is about $41,000 a day in average sales. But are you ready for this?-

THEY HAVE NO BACKUP POWER

This facility has lost power 5 times in the last 12 months, for periods longer than 5 hours. Each time this happens:

  1. Manufacturing stops (lost productivity)

  2. The phones go down (no phone orders)

  3. The internet goes down (no eCommerce orders)

  4. The offices go dark (safety issues?)

If we just look at the lost revenue from sales in the last year alone, its 25 hours (but we will call it 3 days). Each day produces on an average: $41,000 in revenue. The outages equate to losses of sales $123,000 annually (average). This doesn’t even take into account all of the other costs like sending salaried people home and lost production. It’s safe to say that the annual losses amount to more than $123,000.

Intermittent outages can cause major issues too: loss of data, damage to sensitive equipment, and in some cases even an accident or injury.

THE SOLUTION: (A BREAKDOWN OF COSTS) A backup power system for this site will allow them to keep operations going to their office staff so they could continue to take, process, and ship orders. The system consists of a backup generator, an automatic transfer switch, and an Uninterruptible Power Supply (UPS). Other costs to include are the installation, and the first year of service. All in, this will cost them roughly $80,000. Their total maintenance cost over the life of the installed systems will also be another $40,000 +-. This gives them the grand total cost of $120,000 over the next 20 years.

If the facility loses 3 days of productivity over the next 20 years than the backup power system has paid for itself. Anyone would agree that this is a “NO- BRAINER!”

If you have invested money, sweat equity, and blood and tears into your company, why would you not want to protect everything with a backup power system?

What if I don’t own my facility?–

We have helped people design plans that allow them to have backup power such as a portable standby generator that require little or no alterations to a facility. We also suggest a larger battery backup system for extended run-times. This will allow you the convenience of having extra time to power down sensitive equipment or continue to finish tasks.