If you want your business to do its bit to tackle climate change and protect the planet, there are two main options open to you – switch to a green business energy tariff, and/or generate some or all of your own renewable business energy.
Here, we explain all you need to know about implementing an environmentally-friendly energy strategy for your business.
What are green business energy tariffs?
One of the easiest ways for your business to become ‘greener’ is to switch to a green or renewable business energy tariff. You could even save money on your energy bills in the process.
Many energy suppliers offer green business energy tariffs or contracts. This means that some or all of the electricity you use is matched with the amount the supplier buys from renewable energy generators.
You still get the same gas and electricity through the same pipes and wires as if you were on a standard tariff – you just know that your money is being spent on feeding ‘green’ electricity into the national supply.
The more businesses (and households) that sign up to green energy tariffs, the more renewable energy is fed back into the grid, and the country’s dependence on fossil fuels reduces.
The renewable energy you use could come from wind farms, solar farms, hydroelectric power stations and biomass plants.
Some suppliers, including Bulb, also offset carbon emissions from the gas they supply by supporting carbon reduction projects. Others, such as Good Energy, run their own wind and solar farms.
Which suppliers offer green business tariffs?
The Big Six energy suppliers – British Gas, EDF Energy, E.ON, npower, Scottish Power and SSE – offer green business contracts, but whether you qualify may depend on whether you run a small or large business.
There are also a number of smaller, independent suppliers that provide renewable business energy tariffs, such as Bulb, Ecotricity, Good Energy, Green Energy UK, Hudson Energy, Octopus Energy, Smartest Energy and Total Gas & Power.
The advantage of switching to a smaller supplier is that they often market cheaper tariffs, and they also regularly receive high ratings for their customer service. The downside is that in some cases they may be less financially stable than the Big Six and there is therefore a greater risk that they might go bust.
In the unlikely event that your energy supplier were to go out of business, you would be caught by the safety net put in place by the energy market regulator, Ofgem (similar arrangements apply for domestic consumers).
Following any supplier failure, there would be no interruption to your supply, and Ofgem would place you with a new supplier automatically. At that point, you could then decide whether to stick with the new supplier you’ve been moved to, or to make your own alternative arrangements by switching to a more competitive deal.
Some suppliers are ‘greener’ than others
Although there is a range of renewable energy contracts to choose from, be aware that some suppliers are greener than others when it comes to how they support renewable energy.
If you’re interested in comparing the stats, it is a legal requirement for energy suppliers to publish details of their fuel mix – that is, what percentage of the electricity they generate comes from renewable sources and what percentage comes from traditional sources such as coal, gas, and nuclear power.
This information should be readily available on each supplier’s website, and your own supplier should also state it on your energy bill.
How can my business generate renewable energy?
If you are particularly keen to reduce your business’ carbon footprint, you might also want to think about generating your own renewable energy.
The type of technology you choose to install is likely to depend on the size of your business, the location of your premises and how much you’re willing to spend.
Below are the main options to consider:
- Solar PV panels are one of the most common types of renewable energy for businesses. Solar panels are straightforward to install – usually on the roof or side of the building – and capture the sun’s energy using photovoltaic (PV) cells. This is then converted into electricity. Cost – £5,000 to £10,000 for small scale systems.
- Solar thermal energy uses sunlight to heat water stored in your hot water tank. Similar to solar panels, solar water heating collectors can be easy to install on the roof or the side of your building. Cost – £3,000 to £5,000.
- Wind power uses wind turbines to generate electricity. However, you’ll usually need a lot of land to have these installed and to ensure you are generating enough electricity for your business. Cost – £10,000 for smaller turbines, up to £3.3 million for larger turbines.
- Hydro-electric power captures the energy of flowing water through a wheel or turbine to generate electricity. Cost – £4,000 to £8,000 per kilowatt (kW) of capacity installed.
- Biomass systems generate energy by burning or fermenting organic material such as wood pellets with a combined heat and power plant. Cost – depends on boiler size and type of fuel.
- Anaerobic digestion is where organic material is broken down to produce a methane and carbon dioxide-rich gas which is burnt to produce energy. Cost – £8,750 per kilowatt thermal (kWth).
- Combined heat and power systems capture heat produced by your electricity to heat water. Cost – £32,500.
- Geothermal and ground source heat pumps are often fitted to the sides of buildings and use low-level heat naturally found in the ground to provide heating and cooling. Cost – £11,000 to £15,000.
All costs are taken from business energy service Bionic.
What else should I consider?
Before you install any type of renewable energy technology, there are a few other points to bear in mind.
For a start, you’ll need to consider whether installation will require any big alterations to your business premises and whether this will require planning permission.
The installation of solar panels, for example, may not be an issue, but larger instalments such as wind turbines may present more of a challenge, particularly if your business is in an urban location. It’s therefore worth contacting your local council at an early stage to find out where you stand.
You will also need to check that your chosen installer is government-approved under the Microgeneration Certification Scheme (MCS), which will ensure the technology is fitted to a high standard.
Finally, keep in mind that it can take several years – up to 15 years in some cases – to recoup the costs of having renewal technology installed.
What is the feed-in tariff scheme?
Businesses were previously able to benefit from thegovernment’s feed-in tariff (FiT) scheme, but this closed to new applicants on 31 March 2019. The scheme offered cash payments to businesses generating their own energy through renewable technology.
That said, if your business had installed an eligible system before this date and successfully applied for the scheme before 31 March 2020, you can still receive payments as normal.