3 green energy incentives for your business
Renewable energy has become a global focus over the last decade. Around 100 countries have set renewable energy targets, including the UK.
The disadvantages of using fossil fuels have become more apparent over the past century. Not only are they a finite source of energy, but they’re also harming the environment, due to the release of greenhouse gases. The need for developing renewable energy sources is far greater now, as fossil fuels will be depleted in the next 50 to 60 years.
According to smallbusiness.co.uk, UK businesses consume 56% of the UK’s energy. If more businesses switch to renewables, a significant difference could be made to the environment. Plus for businesses green energy has other benefits. As well as being the quickest way to cut your carbon footprint and great in terms of your Corporate Social Responsibility (CSR), renewable energy can be a very cost-effective option – you can get paid for going green.
Over the last few years, the numbers of green incentives have reduced. The Feed-in Tariff scheme, for instance, closed to new applicants in March 2019 and the Carbon Trust is no longer accepting new applications for its Green Business Fund capital contribution grant.
However, there are still a few financial incentives out there and we outline three below.
1. Renewable Heat Incentive
The Renewable Heat Incentive (RHI) is a government scheme that has been set up to incentivise businesses to switch to renewable heat. An eligible system will entitle you to quarterly payments, over the course of 20 years from the date your business becomes eligible, for the electricity your installation has produced or exported, and are based on meter readings.
2. Green Deal
The Green Deal is a Government-led scheme that aims to improve the energy efficiency of Britain’s housing stock and business premises. Businesses may be able to make energy efficiency improvements to business premises with little or no upfront costs. With a Green Deal, you can arrange finance via a Green Deal Provider to pay for energy efficiency improvements to your property. The expected energy cost savings you will make by improving the energy efficiency of your property over the lifetime of the measure installed should be greater than the cost of the improvement – this is called the Golden Rule. These savings will then repay the finance via a charge on your electricity bill.
3. Carbon Trust Enhanced Capital Allowances Scheme
The Enhanced Capital Allowances (ECA) scheme is closing in April 2020, but until then this is a straightforward way for a business to improve its cash flow through accelerated tax relief. It encourages businesses to invest in energy-saving plant or machinery specified by The Energy Technology List (ETL) and write off 100% of the cost of those assets against taxable profits in the first year.
With increased awareness of renewables and discussions becoming more focused on climate change, it is no surprise that more businesses are considering energy as a strategic focus. Whether the aim is to cut your carbon footprint, to save money, or both, renewable energy is one of the key ways to help your business achieve its goals.