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Renewable energy for businesses

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08 February 2021
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hether you head up a multinational or run a small to medium-sized enterprise (SME) employing a handful of staff, energy is a necessary business expense whose cost ultimately affects your organisation’s bottom line.

At around 56%, businesses account for more than half of the UK’s overall energy consumption, with sectors such as manufacturing and construction in particular being major consumers.

The business of energy

According to the Federation of Small Businesses, two-thirds of microbusinesses (with 10 employees or fewer) describe energy as a “significant cost” to their operation.

Nowadays, the relationship between our energy use (both household and industrial) and issues to do with the environment is of greater concern than ever before. In December 2020, for example, the UK government published Powering Our Net Zero Future, an ambitious white paper setting out how the UK will clean up its energy system by 2050.

Given their dominant energy needs, there’s an onus on companies of all sizes to play their part if the government’s vision is to become a reality within 30 years. 

It makes sense, therefore, for organisations to explore renewable energy sources as a means of meeting their business needs while also doing their bit for the environment.

Commercial sense

Apart from supporting the government’s aspirations for clean energy, there are sound business reasons why a company should consider a switch to renewable energy sources.

To start with, reliance on fossil fuels is increasingly becoming a no-no, both in terms of their tainted image as well as their depleted availability.

Fossil fuels play a key role in the creation of greenhouse gases whose damaging toxic fall-out can play havoc with the environment. They are also disappearing from the Earth at a frightening rate of knots. Estimates suggest the gauge will be on the way to ‘empty’ well within the next century.

As their name suggests, there are no such issues with renewable sources of energy because they stem from natural resources or processes that are constantly being replenished.

Typical sources of renewable energy include:

  • wind power – harnessed via wind farms to drive turbines and generate electricity
     
  • solar panels/thermal energy – capturing the sun’s rays to produce electricity or heating up water stored in a tank
     
  • hydroelectric – producing electricity from water that flows through a water wheel or turbine
     
  • biomass – creating electricity and heat by burning or fermenting organic material such as straw
     
  • geothermal – deploying low-level heat found in the ground to provide both heating and cooling systems
     
  • anaerobic digestion – generating heat and electricity from animal or plant waste.

Nowadays, renewable energy sources are far from insignificant. According to the International Renewable Energy Agency (IRENA), renewables accounted for over a third (34.7%) of total global generation capacity in 2019, a figure that’s been steadily creeping upwards in recent times.  

Companies that switch to renewable energy sources not only help either to cut their carbon footprint, or make themselves carbon neutral, but can benefit from other advantages as well.

Give your green credentials a boost

For example, being a user of renewable energy can bolster a business’s green credentials.

This is an important consideration nowadays, where corporate social responsibility often has a key role to play on an organisation’s corporate CV.

A company that demonstrates tangible progress through its energy choices also has the potential to widen its customer base and attract new interest. Choosing to be powered by renewables therefore doesn’t just enhance good corporate citizenship, it can even contribute to sales growth.

Another advantage is that it can also be a boost to employee engagement, motivate a workforce and play a positive role in staff recruitment and retention.

Once again, the overall effect is to reinforce how a business is founded on sound, progressive principles. This in itself can appeal to a broader range of would-be backers and investors keen to support organisations who are able to meet their key sustainability criteria.

Switching to renewable sources of energy can also turn out to be more cost-effective for businesses. With less reliance on falling or rising oil prices, the cost of renewable sources of energy are less volatile enabling a company to plan better in the knowledge of more stabilised billing.

According to IRENA, renewable power is increasingly cheaper than any new electricity capacity based on fossil fuels. Government-backed incentives also exist to help businesses make the transition.

Other benefits include easier administration, a simple switching process, easy-to-understand tariffs, and improved levels of customer service from knowledgeable providers.

What are the choices?

Companies, both large and small, that are serious about heading down the renewable energy route will benefit from a business energy audit or assessment as this helps to crystallise the decision-making process. It usually leads to two options.

First, larger businesses with the requisite buy-in from stakeholders, as well as the scale, location, premises and land, may consider generating their own renewable energy supply.

Such a vision, however, may be beyond the scope of SMEs. But that’s not the end of the story. An alternative option for smaller companies to plug into the green socket is by switching to a supplier which specialises in renewable energy sources such as those described above to deliver a customer’s needs.

According to the UK energy regulator, Ofgem, micro and small businesses in particular are becoming increasingly engaged in the energy market. “Comparison of prices is increasing and more businesses are renegotiating contracts,” it points out.

This is encouraging to hear. While a business owner might readily compare his/her household gas and electricity costs, busy workloads can hamper the boss from doing the same for the company they run. When profit margins are thin, every saving a business makes helps boost its bottom line.

Fortunately, the energy market is a competitive one nowadays and this applies to the business arena as much as it does for home consumers. There is plenty of choice for organisations looking to make the switch to a renewable energy supply.

In addition to the ‘big six’ suppliers (British Gas, E.ON, Scottish and Southern Energy, RWE npower, EDF Energy and Scottish Power) which all generate at least some of their energy through renewable sources, there is also a range of specialist suppliers committed to providing green energy to businesses.

Players in this sphere include Bulb, Octopus Energy, Ecotricity and Green Energy UK.

As usual when choosing the most appropriate supplier, it’s a question of working through and comparing a number of key variables.

For example, for a business electricity supply, this will need to take into account a company’s typical consumption as well as the two main billing components, namely, the unit rate or tariff (expressed as a price in pence per Kilowatt Hour), plus the daily standing charge (priced in pence). Tariffs come in an array of formats from fixed rate, to ones specifically designed for the consumption of green energy.

Postcode also has some bearing as a business’s location will enter the equation along with billing period and discounts.

Regardless of size, no organisation wants to pay too much for its energy bills especially if it’s making the switch across to renewables. Using a comparison service can support a business with the necessary decision-making process while helping it to play its role in creating a greener environment for everyone.