Renewable energy for business

Renewable energy sources are becoming an increasingly popular option for businesses in all sectors – not only does green energy offer a great way to cut the cost of your gas and electricity bills, it could also generate income for your business if you sell energy back to the National Grid via a feed-in tariff.

Turning to renewable energy sources could even open up your business to a whole new base of energy-conscious customers.

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"Don't switch" is good advice for households. But business energy is different and there's no price cap to protect you*. "Compare now" is good advice for businesses!

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*with no price cap in place for businesses, some out of contract rates are up between 15% and 120%

If you think your business could benefit from renewable energy, there are a few things you need to consider before you take the plunge:

  • Planning permission - to ensure you’re choosing the right renewable option for your environment.
  • Connection requirements - you may need to make alterations to your building to accommodate the sources.
  • Renewable energy site survey - to help you determine the best renewable solution for your business.
  • Regulatory and legal obligations - seek help and guidance from your supplier on legalities of installing clean energy systems.
  • Approved installation – make sure your installer is government-approved under the Microgeneration Certification Scheme (MCS). Help protect your investment by ensuring all renewable products are installed to a high standard.

It’s probably not worth considering investing in renewables energy for your business unless you own the property outright or at the very least renting your space long-term - the overall payoff from renewable energy will take a while, so the last thing you want to do is install the equipment only to move on later.

What renewable energy sources are available?

There are many renewable options, but the right one for your business will depend on your location and the amount of money you’re willing to invest. We’ve compiled some options below:

  • Wind power - Uses wind turbines to generate electricity. Suitable if you have acres of building-free land. A singular turbine doesn’t generate a lot of energy.
  • Solar PV panels - Uses sunlight to generate electricity. Solar installation is easy and can be fitted on the side of your building.
  • Solar thermal energy - Uses sunlight to heat the water stored in your hot water tank. These are easy to install and can be fitted on the side of your building.
  • Biomass systems - These generate electricity and heat by burning organic material, such as straw or wood pellets.
  • Anaerobic digestion - Generates heat and electricity by burning the methane produced from breaking down organic material, such as plant or animal waste. Suitable if you have a lot of space to store the fuels.
  • Geothermal and ground source heat pumps - Uses low-level heat naturally contained in the ground to provide both heating and cooling. These are fitted on the side of your building.
  • Combined heat and power - Uses a CHP system to capture the heat produced by your electricity to heat your water.
  • Hydroelectric power - Generates electricity from the water flowing through an immersed turbine or water wheel. These are site-specific, but can provide a reliable energy source.

How much does renewable energy installation cost?

There are varying costs to renewable energy, but the biggest outlay will be the initial installation costs. After that, there’s only basic maintenance costs going forward. We’ve brought together a list of costs for the most popular:

  • Wind power - £10,000 for microturbines (2.5-6kW), rising to £3.3 million for larger turbines. Small turbines (20-50kW) take eight to fifteen years to pay back, whilst large turbines (1MW-2.5MW) pay back within one to five years.
  • Solar PV panels - £5,000-£10,000 for small-scale systems. These take six to ten years to pay back.
  • Solar thermal energy - £3,000-£5,000. This takes five years to pay back.
  • Biomass systems - Cost varies depending on boiler size and type of fuel. These take five to 12 years to pay back - shorter if you use waste wood instead of having to wait for tree growth.
  • Anaerobic digestion - £8,750 per kWh.
  • Geothermal and ground source heat pumps - £11,000-£15,000. These take 15 years to pay back.
  • Combined heat and power - U£32,500. This takes 10.5 years to pay back.
  • Hydroelectric power - £4,000-£8,000 per kW of capacity installed. An 8kW hydroelectric power plant takes seven years to pay back.

What are the benefits of renewable energy for my business?

Financially, the benefits of renewable energy generation can take as long as ten years to show a significant return, but the benefits of renewable energy to businesses are more than just financial.

Although the environmental benefit is hard to quantify, your business can use its energy creation as a community and social pillar of the business, which can be attractive to customers, new and old.

Here are some of the advantages of renewable energy:

  • Stable energy costs - Renewable energy sources are not affected by price rises, which can earn you a positive gain if suppliers move to more expensive sources, and raise costs.
  • Sustainable energy - As fossil fuels are limited, you will be directly contributing to a cleaner environment.
  • Another income - you can sell electricity back to the grid at a premium, which will in turn reduce the time it takes to pay back the cost of the equipment.
  • More manageable - It’s easier to plan your energy usage and needs if you have complete control over your supply.
  • Reduces your emissions - This helps you to meet carbon reduction targets.
  • Improves your business reputation – Customers and stakeholders value commitment to sustainability.

There are clear benefits to being a clean energy company beyond simply helping the environment or saving money. If you can afford to invest initially in renewable business energy then it is absolutely worth it. It’s a small cost for a big effect.