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Creating energy for your future

It makes sound sense for businesses to generate their own energy, says Leigh Naylor, managing director for Loryan Renewable Engineering

Energy costs are a key concern for businesses following the recent price rise announcements from the 'big six' energy providers. As Britain flirts with an energy crisis, price increases continue to hit small businesses the hardest.

To remain competitive, most businesses constantly review their cost lines. Increasingly for many, expenditure on energy has become or is fast becoming a critical factor in overall business profitability with energy being one of the biggest costs after wages.

Investing in renewables to power your business can reduce energy costs and increases energy-efficiency, which is both a good environmental and financial target. At Loryan, we speak to many business owners who are surprised to hear the good news about renewables, which many believe to be too good to be true.

So where's the catch? Well, to benefit from the Government-backed Feed-in-Tariff and Renewable Heat Incentive (RHI) schemes, businesses need to own the land or property from where they operate or have a long-term lease with permission in place to make the investment worthwhile. Other than that, and having the required capital to invest, there isn't one.

Lets look at a simple scenario. Say your business had £20,000 of capital in the bank which was earning virtually nothing (as interest rates are so low), you could invest in a roof-mounted 10 kWh solar system for approximately £16,000 which would generate around £2,300 in energy savings and income per year – guaranteed for a 20 year period. When you combine that with the major utility providers own prediction that energy prices will have doubled by the year 2020 – it becomes a no-brainer.

A business investing in renewables gets paid for every kilowatt hour (kWh) of energy it generates, even if it uses that energy. Every kWh produced through a renewable source equates to a saving of approximately half a tonne of greenhouse gases every year.

For electricity, you'll get paid 13p for every kWh of solar energy you produce, even if you use it. So you save at least that again on energy you're not buying from your provider. Then, say it's the weekend or a bank holiday, and you're producing but not using any, you can get just under 5p per kWh you export back from the national grid.

It is a similar arrangement with biomass boilers which create heat through burning pellets of wood taken from responsibly managed woodland. Through the Renewable Heat Incentive companies get paid just under 9p for every KwH of heat energy they produce for the first 1,314 hours of each year, and thereafter around 2p.

David Brown, a farmer from Derbyshire who runs an eco-friendly self-catering holiday business, is a shining example of a small business owner who invested in renewable energy. A Loryan customer, he installed a wind turbine and solar PV system on his land and is already reaping the financial benefits. David estimates he has reduced his overall energy bill by about 60-70% which allows him to put a handle on his long-term operational costs.

For biomass and solar power, there are two main financing options available to businesses. They can either use their own capital and get a far better return, as well as a boost to their eco creditials, or they can borrow the money. Several banks now offer loans for renewables and there is also the Carbon Trust's Energy Efficiency Financial Scheme which offers a low interest alternative.

Wind power shares the same advantages of being both green and earning a subsidy but options for businesses are li¬mited. Planning permission is required and turbines need to be sited in windy areas, a good distance away from buildings. Therefore, it is only a viable option for businesses with many acres to spare and so, among SMEs, this is typically the agricultural sector.

If you invest in solar, wind or biomass to generate your own energy from a purely environmental standpoint then great. However, from the perspective of the bottom line, though, it's the simplest decision going.

There are very few questions facing a business that could be considered 'no brainers', but investment in renewables is one.

For more information on the renewable technologies offered by Loryan, click on the links for Solar PV, Solar Thermal, Wind Turbines, Biomass Boilers, Heat Pumps, Ground Source Water Pumps and Rainwater Harvesting.

Alternatively, email us at info@loryan.org or call us on 01785 719118.