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Renewable Energy For Businesses Guide

If you’re looking for ways to cut costs and make your business more eco-friendly, investing in a renewable energy source is an effective solution.

There continues to be a worldwide focus on sustainability and climate change. The UK has been set strict targets to reduce greenhouse gas emissions to net-zero by 2050. Businesses across the globe are being encouraged to become more environmentally-friendly, not only for the benefit of their business but also for the well-being of the environment.

In this guide, we’ll inform you of everything you need to know about renewable energy for businesses and highlight how renewable sources can help to reduce company overheads and also improve brand reputation.

What To Consider Before Installing A Renewable Energy Source At Your Business

Installing a renewable energy source can be a fruitful and beneficial solution for your business. However, there are a few things that you should bear in mind before moving ahead with any installations. These include:

  • Planning permission ­– You’ll need to decide on the most suitable renewable energy source for your business and apply for planning permission. You should consider your business’ needs, the building it operates from and the local area; ensuring you’re aware of any restrictions these may bring.

  • Connection requirements – Installing renewable energy sources can require changes to be made to your building. You should consider whether your business can accommodate these changes and the costs that will be incurred.
  • Business renewable energy site survey– You can consult a professional body such as the National Energy Foundation to conduct a renewable energy site survey. This will include a detailed examination of your business and you’ll be provided with a recommendation for the most suitable renewable energy source for your company.
  • Regulations and legal obligations – It’s essential that you select an installer who is government-approved under the Microgeneration Certification Scheme (MCS). This will protect your renewable energy investment and ensure that your installation is conducted in the most professional and effective manner.

What Renewable Energy Options Are Available For Businesses?

The UK continues to make significant investments in renewable energy. It remains a committed member of the Paris Agreement, a strategy founded at the United Nations Framework Convention of Climate Change (UNFCCC) which seeks to reduce worldwide greenhouse gas emissions. The UK has also been deemed one of the world’s top 10 most attractive national markets for renewable energy [1] and as of 2019, 33% of the nation’s energy output came from renewables. 

Renewable energy can be defined as energy generated from a source which doesn’t deplete after use. The renewable energy source best suited to your company will depend on your budget and where the business is located.

Below we list the renewable energy sources that may be available for your business:

 

  • Wind power – This is the most common renewable energy source in the UK. If you select this source, wind turbines would be used to generate your business electricity. This would be a suitable option for businesses that have acres of free land to build a wind farm.

  • Solar PV panels – These panels convert sunlight into electricity. They are typically easy to install and are available in forms such as cladding, roof tiles and custom glazing.

  • Combined heat and power ­– This form of renewable energy captures the heat that is produced as a by-product of electricity generation. CHP can help to lower carbon emissions by 30% [2].

  • Hydroelectric power – This option involves using water to propel a turbine which is connected to an electricity generator.

  • Biomass energy – With this source, electricity is generated by burning organic plant material such as straw and wood. Although some CO2 is emitted during this combustion, the amount is significantly less than with fossil fuels.

  • Geothermal energy – This involves harnessing the natural heat that exists below the earth’s surface to provide both heating and cooling. These are usually fitted to the side of buildings.

  • Anaerobic digestion – This generates both heat and electricity through the burning of methane which is produced by breaking down organic material.
  • Solar thermal energy – Sunlight is used to heat water which is stored in your building’s hot water tank.

 

How Much Does It Cost To Install Renewable Energy For Businesses?

You need to consider your business’ budget when investing in a renewable energy source. The right option will not only provide you with a means of cleaner energy, but it will also help you save and even generate profit.

Here’s a breakdown of the typical costs associated with each renewable energy option:

Renewable Energy Source

Typical Cost 

Typical time period for costs to be returned

Wind turbines

£10,000 for microturbines, up to £3.3 million for large turbines.

Small turbines - 8-15 years

Larger turbines - 1-5 years

Solar PV Panels

£5,000-10,000

6 -10 years

Combined heat and power

£32,500

10.5 years

Hydroelectric power

£4,000-£8,000 per kW

Example: 8kW usually takes 7 years to pay back

Biomass Energy

Costs can vary depending on the size and fuel of the boiler required. Renewable Energy Hub estimates pricing of £14,000-19,000[4].

Payback time can be between 5- 12 years; this can be reduced if you use waste wood as an alternative to waiting for tree growth.

 

Geothermal energy

£11,000-£15,000

15 years

Anaerobic digestion

 

£8,750 per kW

7-10 years [5]

Solar thermal energy

 

£3,000-£5,000

5 years

 

The Future Of Renewable Energy For Businesses

According to the Guardian, renewable energy could expand by 50% over the next 5 years [6]. This could eventually help to drive down costs and make renewable technologies cheaper for businesses. Also, as the renewable energy market becomes more competitive, both business and domestic green energy tariffs could lower in price.

As the renewable energy sector evolves, the range of energy sources will likely increase. The following energy sources have been identified as up and coming options for sustainable energy:

  • Wave generation
  • Solar power from space
  • Enhanced geothermal
  • Artificial photosynthesis

What Are The Pros and Cons Of Renewable Energy?

Prior to investing in a commercial renewable energy source, you should weigh up the potential benefits and drawbacks.

Below we outline the typical pros and cons of renewable energy for business:

Pros

  • Reduced carbon emissions
  • Lower and more stable energy costs
  • Improved reputation
  • Helps your business become carbon neutral – i.e. it removes the same amount of greenhouse gas it emits.
  • Sustainability (unlike fossil fuels, renewable energy will not run out)
  • Can provide another stream of income - Government schemes such as Feed-In-Tariffs and the Smart Export Guarantee pay you for the energy you provide to the national grid.
  • Enables your business to be exempt from the Climate Change Levy (CCL)
  • Businesses with reduced energy consumption often have access to energy subsidies (e.g. energy efficiency grants).
  • Renewable sources will eventually pay for themselves through the savings they provide.

Cons

  • High initial costs – Installation costs can be expensive; however, the savings should eventually outweigh the initial costs.

  • Intermittency – Some renewable sources won’t be readily available at all times. For example, sunlight isn’t always available for solar panels.

  • Space and geographical restrictions – Not all renewable energy sources will be suitable for your business. For example, wind turbines are best suited to locations with large open space rather than industrial locations surrounded by tall, wind-blocking buildings.

  • Storage costs can be high – You may have to store up some of the energy you generate in batteries, which can be a costly expense. It’s worth noting, however, that energy storage capacities are growing with technology advancements and energy storage could soon become more affordable.


As you can see, the benefits of renewable energy outweigh the drawbacks. If you select a suitable renewable energy source for your business, it can be advantageous for your company for years to come.

 

Renewables For Micro/Small Businesses


For you to reap the full benefits of installing a renewable energy source at your business, it is essential that you make the right selection for your company’s needs.

Below we provide a few measures that you should undertake prior to making a final decision about renewable energy for your micro/small business.

  • Appoint key stakeholders – You should identify key stakeholders within your business who will be chiefly involved in your renewable energy project.

  • Outline your reasons for investing in renewables – Although there are a plethora of advantages of investing in renewable energy, you should outline key focus areas for your business and establish ways of measuring performance.

  • Establish your budget – Consult with key stakeholders and account teams to outline a suitable budget for the investment.

  • Consider what’s available for your business – Engage with stakeholders and other members of your business to determine which renewable energy source would be best suited to your company; taking into consideration factors such as size, budget and location.

Funding Options For Business Renewable Energy

As aforementioned, renewable energy can come with high initial costs. However, several funding options may be available to your business to help cover the expenses.

Here’s a list of potential funding options for your company:

  • Renewable Heat Incentive  - This incentive offers financial support for the installation of renewable heat alternatives. 
  • Enhanced Capital Allowances  - Investments in selected energy-saving equipment can be written off the total cost of the equipment against your taxable profit as a 100% first-year capital allowance.
  • Salix Finance  - This initiative is government-funded and provides public sector companies with interest-free loans to carry out energy-efficiency improvements.
  • Power Purchase Agreement – This is where a private funder agrees to buy the generated energy at a set rate. They, therefore, own the renewable energy system and can claim subsidy rewards.
  • Lease-Purchase Agreement – With this agreement, your business rents the renewable technology and funds it using the income earned from government subsidies. Once the lease has been paid, you’ll take ownership.
  • Business loan - You’ll have ownership of the system and pay back the fees over an agreed time period.
  • Client funded – You’ll pay for the installation in full and claim from a government subsidy for 20 years.
  • The Green    - This government scheme ended in 2015. The Green Deal allowed businesses and households to pay for energy-saving technologies from the consequent savings on your energy bills.

 
If you’re a business owner looking to make your business more eco-friendly, you could switch to a green energy tariff. If you aim to reduce your business’ energy costs, switching suppliers to a cheaper deal could help you make huge savings and reduce your company overheads.

 

 

Sources: 

[1] https://www.ey.com/en_uk/recai

[2] https://www.gov.uk/guidance/combined-heat-and-power

[4] https://www.renewableenergyhub.co.uk/blog/the-cost-of-installing-biomass-heating-in-2019/

[5] https://core.ac.uk/download/pdf/5166145.pdf

[6] https://www.theguardian.com/environment/2019/oct/21/renewable-energy-to-expand-by-50-in-next-five-years-report