Energy is one of the biggest overheads for small and medium-sized businesses, so SMEs have much to gain from investing in measures that ensure their enterprise is as lean and green as possible. Simple improvements such as insulating office buildings and producing their own energy could potentially save thousands on fuel bills.
Jae Mather, director of sustainability at chartered accountants HW Fisher & Company, says with all the financial incentives that are available, for many small businesses the decision to go green is as much about economics as the environment.
"One of our clients recently installed a biomass heating system - [at the time of going to press] it is delivering a return on investment of over 30%, while at the same time significantly reducing their carbon emissions," he says. "Currently things like PV panels are typically delivering payback periods of less than nine years, with a return on investment of over 11%."
While it needn't require massive capital investment, entrepreneurs squeezed for time and money may find the task of upgrading energy intensive equipment falls pretty low on their priority lists.
But with both energy suppliers and the government becoming increasingly aware of the UK's responsibility for meeting ambitious carbon emission targets, there is help and support available for SME owners wanting to streamline the way they power their companies.
Grants and loans
Economic austerity and the coalition government's commitment to reducing the public deficit mean there are fewer grants and funding available to help UK businesses. National agencies have either seen their public funding slashed, as in the case of Wrap, or completely disappear, as in the case of the Carbon Trust.
However, new funding sources have now been launched. The Green Deal Finance Company is a government sponsored loan programme that allows households, communities and workplaces to make energy saving improvements to their buildings. An assessor inspects the building and recommends what improvements can be made. The Green Deal Finance Company then funds these improvements and the building pays back the Green Deal loan using the difference of the money saved in the energy bill.
The £550m Energy Efficiency Financing scheme, run by Siemens Financial Services and the Carbon Trust, enables UK businesses to invest in cost effective energy efficiency equipment or other low carbon technologies, such as new lighting and biomass heating. Businesses offset the cost of the new equipment against the energy savings made.
The ReEnergise SmartEnergy Fund is solely aimed at SMEs and offers commercial loans – typically between £25,000 and £250,000 – to invest in energy efficiency measures and renewable energy systems. Standard interest rates do not apply and cost of financing will be based on a number of factors including the length of the borrowing period and the creditworthiness of the borrower.
The Renewable Heat Incentive (RHI) is a government-run scheme which pays small businesses based on the amount of renewable heat they generate. SME owners could use biomass boilers, for instance, which use wood-based fuels, such as pellets made from compressed sawdust. It provides heat for the building in much the same way as conventional gas-powered boilers.
Feed-in tariffs
Not only can they help reduce your electricity bills but you'll get paid for the electricity you generate and export to the grid thanks to the UK's feed-in tariffs (FiT) scheme.
Introduced in April 2010, the scheme pays homes and businesses for the electricity they generate through solar, wind turbines, hydro, anaerobic digesters or combined heat-and-power systems. The rate of generation subsidy - currently more than 14p per kilowatt hour for small schemes - is always under review and could be reduced.
And how much support you receive also depends on your property's Energy Performance Certificate rating, so it makes sense to have improved your firm's energy efficiency before applying.
Smart meters
Sometimes, the simplest steps can be the most effective and installing a smart meter can help small business owners cut bills by gaining a more accurate picture of their energy usage. All UK energy suppliers will be obliged to provide business customers with smart meters by 2020.
Iain Walker from E.ON says: "There are many benefits of having a smart meter fitted; at the most basic level they help ensure your bills are accurate and up-to-date, sending meter readings directly to your supplier so you don't have to. This helps businesses manage their cashflow because you only pay for what you've used. At E.ON our customers can request a free energy monitor which together with the smart meter can help businesses get a better understanding of how they use energy. By acting on the increased knowledge they provide, this in turn could help identify ways to save energy and money on your bills. "
While there are numerous schemes to incentivise small businesses to go green, information on available sources of funding for non-domestic users is currently difficult to find and often confusing.
John Allan, national chairman for the Federation of Small Businesses, says as energy prices remain high, it is critical that SMEs are as efficient as possible. To do this, they need information, guidance and incentives from government. At the moment, he claims, take up is low because the advice available for businesses is "fragmented, unclear and not available in one place".
Allan adds: "The government has announced a number of schemes recently designed to help consumers with their energy bills, including the rollout of smart meters. In contrast, the needs of small business users – rather than homeowners – are frequently not addressed by such schemes and are being largely ignored or sidelined in the process."
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This content has been paid for and produced to a brief agreed with E.ON, whose brand it displays
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