Here’s a saying I’m sure many of you have heard; “The best time to plant a tree was 20 years ago, the second best is today.” While the proverb might have been intended literally at first, it’s gained a new lease of life in the 21st century as a metaphor for acting on a good idea, rather than toying with it for years to come.
It’s a saying that rings true when considering green energy investment. The year on year benefit of “greening” your energy usage accumulates not just for your business finances, but also for the planet, as businesses accounted for 18% of all UK greenhouse gas emissions in 2020.
Also to consider are the multitude of grants, schemes and reliefs that are available for businesses that utilises green energy. As far as business rates are considered, we’re not just talking a reduced bill, in some cases we’re talking no bill at all.
Taking the benefits into account, it’s no surprise that green energy investment is a seriously growing trend. 38% of businesses in the UK have committed to taking at least one action to reduce their greenhouse gas emissions within the next 12 months. And over a quarter of businesses in october 2021 reported producing absolutely no emissions at all.
The percentage falls when businesses are asked if they have a strategy in place to achieve “net zero” where scope 1, 2, and 3 GHG emissions are reduced to zero or a residual number in-line with the Paris agreement's goal of keeping an increase in global temperature rise to below 1.5℃. But although only 29% of businesses are actively striving to achieve net zero emissions, over 80% are confident in their pathway to achieve the goal.
So what's stopping businesses from making significant changes? Well the biggest factor is unsurprisingly cost of investment. While there is a broad spectrum of changes a business can make, from practically negligible in investment to something more significant. The idea of green energy investment is a financially daunting one for many.
The government supports any Small-to-medium enterprise (SME) in a journey towards halving their GHGs by 2030, and achieving net-zero by 2050, through the climate change business hub. The incentive aims to give businesses the tools they need to reduce their carbon emissions with advice on a variety of actions that a business can take. These range from implementing a cycle to work scheme to installing your own renewable energy source or heating (which would have the added effect of significantly reducing your business rates bills too!).
As we’ve mentioned, making the transition to green energy for your business can yield significant financial benefits in the long run. Especially given the tumultuous economic state of energy prices in the UK currently, if your business is able to offset prices through low energy consumption alternatives, then your bills could be protected from the damage of soaring energy costs.
This is of course accumulative, but working out the balance between initial investment and long term financial gain will be important to your unique business model. Many businesses start out with installing low energy light bulbs for example, which use around 75% less energy than conventional bulbs. Additionally, they can last for up to 15 years longer than your normal old bulbs!
If this is a change you’re intending to make, consider looking into whether you’d qualify for Enhanced Capital Allowances (ECA’s). As long as you install eligible light bulbs, 100% of your first-year capital allowances expenditure could be mitigated.
For more substantial investments in business energy efficiency, the long term benefits can be greater. Investing in eligible plant and machinery used in onsite renewable energy generation and storage comes with a hefty 100% exemption from paying business rates until 31st March 2035.
What’s more, low carbon heat networks that have their own rates can also qualify for 100% relief.
Again, when planning to invest heavily into greening your energy usage, it’s important to ensure you invest in eligible materials that qualify for these government schemes. The scope for qualifying Energy-Saving Materials (ESMs) has been widened to include thermal insulation and solar panels, so make sure you shop around first to save yourself from trouble when applying for relief.
But it's not just direct savings that your business can benefit from when making a switch to low-carbon energies. It also gives your clients or customers something additional to consider when browsing other businesses that offer your product or service.
In a market that has never before been so environmentally conscious, showing your green stripes can give your company's profile a massive public relations boost. It’s another reason to choose you over your competitors and if branded correctly, can potentially help get you in front of new audiences.
Oh, and do need we mention the benefits that your change will contribute to the environment? Business plays a pivotal role in climate change as large amounts of CO2 emissions come from business-centred activity. Investing in green energy can help businesses become part of the solution instead of the problem through investment in sustainable energy usage.
So yes, moving to reduce your businesses energy consumption doesn’t come without heavy points of consideration, and it's important to work within your own financial perimeters when deciding on your first steps. But there are accessible choices that can be made for all businesses that can have a direct impact on your energy bill right off the bat, not to mention public relations and of course the environment!
Industry specialists are always at hand to guide you through the more particular pieces of legislation to make sure you're maximising your investment. And our team of experts are happy to offer free advice on how best to implement your changes to mitigate your business rates bill.
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