Why it still pays off for businesses to invest in renewable energy.
Guest blog by Frank Hartkopf from Mr Renewables
Small and medium sized businesses thinking about investing in renewable energy technology have encountered some uncertainties recently. With the government’s Feed-in Tariff scheme having been capped, is it still financially viable to invest in solar power or wind turbines? For many SMEs, the answer seems to be ‘yes’. At Mr Renewables, a Norfolk based renewable energy installation business, we have seen an increasing number of companies interested in installing a PV system.
Even with decreasing subsidies and rolled-back feed-in tariffs. incentives, there is a strong business case for investing in on-site renewable energy production. One of the reasons many business customers decide to start generating their own energy are rising energy bills. It doesn’t take a rocket scientist to predict fuel prices will go up in the coming years. The Carbon Trust estimated in 2010 that energy prices could grow by 37 per cent by 2020, and being midway through the decade, it looks as if they were right. Prices have risen and energy costs have become more volatile, making it harder to plan for.
So, even without the guaranteed income from Feed-in-Tariffs and Renewable Heat incentives, it could pay off for businesses sooner than later to invest in producing their own renewable energy. Thanks to the boost from government incentives, prices for PV systems have gone down in recent years too, making renewable energy more competitive and self-sufficiency more desirable.
Another reason that has sparked more interest in renewable energy investments is concern for energy security. Although the Prime Minister recently moved to reassure the public about this, there have been many warnings of blackouts recently. Experts claimed that the National Grid doesn’t hold enough reserves for emergencies. A power shortage can be troublesome for any households. But for businesses and especially local manufacturers or 24/7 facilities such as data centres, it can have severe consequences for business continuity and lead to delays in production, severe reputation damage and other significant costs for businesses. Whether businesses choose to install solar PV or biomass boiler systems on their premises – by generating their own energy, they could ensure their machines and computers are running even if they are cut off the grid.
The latest innovations in microgeneration could also see businesses investing in renewable energy reaching their break-even point faster. Businesses in rural areas could add a string to their bow by selling the energy they produce directly within their community. New services like Open Utility could make exactly this much easier using new technologies such as big data and real-time systems. Energy produced and sold locally would not only be cheaper and cleaner, it would also take away some power of the big six UK energy providers thereby democratising the market.
In the near future, local cafés could also offer green electricity charging of their customers’ electric cars on their menus, manufacturers could improve their image by selling affordable green heat to the neighbourhood, while high street shops could both add a new revenue stream and follow the lead of big retailers.
While feed-in tariffs have become less attractive, another government incentive could come just in time for many businesses to invest in a renewable energy system this year. To boost investments, the annual investment allowance (AIA) has been temporarily increased from £25,000 to £250,000. This could enable SMEs to accelerate renewable energy installation, because a 100% deduction against tax can be claimed on the expense of the installation.