Coal, gas and oil won’t be around forever and it’s estimated that global supplies of all three could well be gone by 2060 – which means bills will only get bigger as resources become scarcer.
Green energy used to have a reputation for being slightly pricier, but that’s changing all the time with improvements in technology and in just a couple of years, experts believe that alternative sources will actually be cheaper than traditional fossil fuels.
The very nature of renewable energy ensures long-term stability – not just in terms of price, but in availability too. Taking the opportunity to invest now can future-proof your business and if you invest in producing your own, then you can enjoy consistently low energy costs for the lifetime of the equipment you install.
Producing your own energy can also mean exemption from government taxes such as the Climate Change Levy which commercial energy suppliers pass on to their customers. As well as being exempt from levies, you could receive subsidies through the feed-in-tariff scheme (FIT), the renewables heat incentive (RHI) and the renewables obligation (RO). The government is also launching a new programme (contracts for difference, CFD) which aims to stabilise the cost of producing low carbon energy.
One of the beneficial side effects of producing your own energy, is the PR boost you’re likely to get. As customers become increasingly interested in carbon footprints, green values and sustainability, the ability to say you sustainably generate your own energy is a priceless marketing tool.
If you’re not keen on the idea of producing your own energy, then you can opt for a provider that only supplies green energy instead. But if you do want to explore energy self-sufficiency, solar panels and wind turbines are just two of the most common forms of production.
Despite the British weather, solar (PV) panels are still one of the most common and popular ways of self-generating energy although it’s unlikely that you’ll harvest enough to meet all your business needs. One of the big advantages of solar panels is that you don’t need planning permission and they can be fitted to your existing building on the roof or even side walls. In terms of cost, you could spend anything between £5,000 and £10,000 on installation depending on the size of the system you choose. You should expect to earn your money back within six to ten years.
Alternatively, you can install a solar powered hot water system – like panels, they are relatively easy to install and cost between £3,000 and £5,000. You can recoup your investment within about five years. Also available are combined heat and power systems which use the heat you generate to power your hot water. Although these systems do use small amounts of fossil fuels to start the process, they are considered low carbon. Returns on your investment vary between five and ten years.
Wind energy is another popular choice and it can be one of the most long-term, cost-effective ways to generate your own energy. The disadvantage is that you’ll need planning permission for turbines and a decent amount of land in order to really maximise the full potential. Initial set up costs can also be prohibitive with small turbines (2.5-6KW) costing around £10,000 and large turbines setting you back an eye-watering £3.3 million. You can expect to recoup costs from a small turbine between eight to 15 years and large turbines within five.
Hydroelectric power systems produce electricity by passing water through a turbine or waterwheel and it can take up to seven years to earn back your initial investment – which can depend on several factors such as your location and the equipment needed.
Slightly less common energy alternatives include biomass and anaerobic systems. Biomass is essentially burning organic matter (like wood or straw) so you’ll need to be aware of any clean air initiatives in your area if you’re considering this form of energy production. You’ll need a specialist boiler installed and it can take anything between five and 12 years to recoup what you initially paid; although if you supply your own organic materials, you can dramatically reduce this.
Anaerobic systems also use organic matter but breaks it down using bacteria which creates a natural gas that can then be burned to produce energy. You’ll need a special permit to install this type of system, as well as a lot of space.
To take advantage of geothermal or ground source heat pumps, you’ll need to make sure your building and location is suitable – for example you’ll need a good amount of outdoor space and a fairly well insulated property to achieve maximum value for money. They can cost up to £15,000 to install and take up to 15 years to get a return on investment.
Needless to say, you’ll need to make sure you’ve got appropriate permissions and that your installer is approved under the microgeneration certification scheme (MCS).
The FIT is a scheme that gives you money back for the energy you’ve produced using your own alternative source. Money will be paid back to you by your FIT licensee (your energy provider) at least every three months.
You could be eligible if you have (or are thinking about installing) any of these systems, up to a capacity of 5MW (or 2kW for combined heat and power systems):
- Solar (PV) panels
- Wind turbines
- Micro-combined heat and power system
- Hydro energy
- Anaerobic systems
Unfortunately, the FIT scheme closed for new applications on March 31, 2019.
If you already have an eligible system installed and have had an application for FITs payments approved, you'll not be affected by the closure of the scheme.
If you installed an eligible system with an MCS certificate dated on or before March 31, 2019, you have until March 31, 2020 to apply to the scheme.
If you installed an eligible system on or after April 1, 2019, you won't be eligible for FITs payment. If this is the case it’s worth contacting your business energy supplier, to find out if they offer an alternative incentive.