As we see the beginning of the Government’s Energy Bill Relief Scheme for businesses all over the UK, business owners and leaders will no doubt be breathing a sigh of relief as their energy bills will be discounted in order to cap the wholesale cost of electricity and gas.
This scheme will provide a welcome respite to all the businesses who have been experiencing astronomical energy price rises over recent months, but is currently only available for six months until March 31st 2023 and still represents an increase in costs that businesses were experiencing before this crisis hit.
To put things into context, the typical pre-crisis cost of wholesale electricity was 8.2p/kWh so the new rate of 21.1p/kWh is roughly 13p more expensive per unit. Although this represents a 40% discount on current prices, when you add in the network costs and different supplier operating costs, businesses are still looking at significant bills. (1)
After this scheme finishes, the government will replace universal support with targeted relief for vulnerable industries, so the majority of businesses should be looking at this as a temporary fix, not the complete solution to this crisis.
What’s the longer term answer?
Although these interventions will provide limited relief for businesses, the real answer lies in developing ways to become more self-reliant and accelerating renewable energy generation to protect businesses from the potential damage of future price rises. Without this, businesses will be left at the mercy of continually increasing wholesale energy prices, which are expected to stay at inflated levels for many months to come, which would have a severe impact on strategic planning.
The good news is that renewable energy systems, particularly solar PV and battery storage solutions, have never been more affordable. In addition, institutions such as NatWest and the Federation of Small Businesses are now offering additional support for SMEs looking to invest in sustainable energy solutions, making it more affordable and easier for them to apply for green loans or funding for climate and sustainable initiatives. (2)
Investing in solar and other renewable energy systems such as battery storage, heat pumps and electric vehicle charging can really help businesses to save money and reduce their climate impact. Importantly, producing your own electricity on-site reduces exposure to increasing energy prices, giving businesses much more certainty about their future.
What’s more, as prices continue to go up, the payback periods on renewable energy systems get shorter and shorter. For example, a large 500kWp solar PV system would have originally generated a return on investment of around 5-6 years when unit prices were c.20p. Once the discount scheme finishes, when you include the capital allowances available to businesses for solar PV installations, this payback is likely to reduce to around 18 months, with unit prices at closer to 60p/kWh.
Our advice - Use this time wisely
In addition to the current energy price crisis, there are many benefits to installing solar PV and other renewable energy systems, from robust financial returns, reduced tax liabilities, reduced risk and exposure to future price rises to the obvious environmental benefits of generating your own renewable electricity.
The clock is ticking and six months isn’t very long in business planning terms, so it’s important to take advantage of this short respite in energy prices to make the right decisions for your future.
If you’d like to learn more about securing your energy future with renewable technology, reach out to a well-established, accredited and experienced provider with a demonstrable track record of high customer satisfaction.
Herefordshire-based Caplor Energy have a five-star Trustpilot rating and are Solar Energy UK and MCS-certified members, with leading manufacturer approvals for solar PV and battery installations. As a family business in operation since 1923, with the core values of inspirational sustainable improvement at their heart, their friendly, enthusiastic team have a proven track record of successful installations across a wide range of commercial properties, and pride themselves on their professional approach to developments large and small.
(1) https://www.ofgem.gov.uk/information-consumers/energy-advice-households/costs-your-energy-bill
(2) https://www.current-news.co.uk/news/natwest-commits-to-supporting-smes-with-green-ambitions