The government has confirmed that the Energy Relief Bill Scheme (ERBS), which ended on the 31st March 2023, won’t be extended.
From 1st April, the Energy Bills Discount Scheme (EBDS) will replace existing government support for energy bills.
As with the ERBS, the new scheme will offer a discount on wholesale business energy unit rates above a minimum threshold. However, this discount will be lower than before.
With less government help for energy bills, small businesses in the UK will face even more pressure to reduce costs. For many SMEs, the rising cost of living and global energy crisis means reassessing energy consumption and doubling down on greener alternatives.
We've designed this guide to help you navigate the upcoming changes and explore ways to reduce business energy costs for long-term savings:
Examples of energy-efficient technology:
- Smart Meters
- Energy Monitoring Systems
- Business Energy Management Systems (BEMS)
- LED Lighting Systems
- Heat Recovery Ventilation Systems (HRV)
- Micro Combined Heat and Power Boilers (micro-CHP)
- Renewable Energy Technology
What is the Energy Bills Discount Scheme?
The Energy Bills Discount Scheme is a new government scheme that will run for 12 months, from 1st April 2023 to 31st March 2024. Designed to continue to support business energy costs once ERBS ends, the EBDS will offer wholesale gas and utility rate discounts.
Like the EBRS, the new scheme will be available to businesses, charities, and public sector organizations on non-domestic energy contracts.
Maximum discounts have been set at:
- Electricity: £19.61 per MWh (price threshold of £302 per MWh)
- Gas: £6.97 per MWh (price threshold of £107 per MWh)
You don't need to apply for the reduction if your business is outside the Energy and Trade Intensive Industries (ETII). Suppliers will automatically apply discounts to your energy bills.
Note: ETTI energy customers are eligible for higher levels of support of up to 70% of their energy usage.
Why is energy efficiency important for businesses?
Finding ways to cut costs in business is becoming crucial for survival. The EBDS scheme plans to provide support for just one year, but by focusing on energy efficiency, small businesses can work towards reducing long-term spending on utility bills.
According to Aviva's 2023 Risk Insights Report, 58% of UK SMEs will struggle to survive the year if energy bills increase by 5 - 10 times the current rate.
The report also shows a significant trend across UK businesses to take steps to reduce energy costs in 2023. This is through:
- Implementing energy-saving initiatives (51%)
- Spending capital to improve energy efficiency (29%)
- Installing renewable energy generation capability (19%)
What are energy-efficient technologies?
Energy-efficient technologies for businesses are tools, systems, and methods that help companies save money while minimizing energy consumption. If you’re familiar with LED lighting or Smart Meters, these are some examples, but there are many others you might not know about.
Using energy-efficient technologies can help to promote sustainable development. They can reduce pollution, fossil fuel demand, and greenhouse gas emissions. By maintaining or improving energy performance, they can also cut costs for commercial operations.
Whatever your industry is, there are steps you can take to reduce business energy costs and operate more efficiently. Small changes can go a long way, but you must first analyze your current energy usage to understand where to make changes.
Installing a smart meter can make tracking your business energy costs easier.
By accurately monitoring gas and electricity usage, these meters can save time spent on providing readings by sending live data directly to your energy supplier.
The 2022 Smart Meters Statistics Report found that smart meters accounted for just under half (48%) of UK small business electricity meters in Q2.
Although non-domestic smart meter installations are increasing, around 50% of businesses have yet to switch.
Most energy suppliers in the UK offer free or low-cost installations that can be completed in under two hours. The latest models, known as second-generation smart meters, enable you to easily switch energy providers without experiencing disruption to your readings or energy bills.
Energy monitoring systems
A business energy monitor is a device that works with your electricity or gas meter to provide detailed data on specific areas of your energy usage. Some energy monitoring systems hook up to an app to show you where and when you’re using the most energy so that you can make intelligent decisions about your energy usage.
Unlike smart meters, energy monitoring systems do not send readings to suppliers or provide energy bill rates.
By installing this system, you can use the data to identify cost-saving opportunities and make better-informed decisions about where to make changes.
Sub-metering monitoring systems enable you to assess which areas of your energy usage significantly impact your total energy bill (machinery, heating, air conditioning, lighting etc.). If the data points to one particular time of day you’re using a lot of energy, you can make changes accordingly. For example, adding solar panels to power manufacturing equipment.
Business energy management systems
Larger SMEs that are highly energy-dependent can benefit from Business Energy Management Systems (BEMS).
Like other software products, BEMS provide real-time data that comprehensively view commercial energy usage via an online dashboard, where usage can be monitored and tracked.
These systems can be costly to install and maintain. Still, for businesses that use large amounts of energy and want a long-term approach to minimizing costs, they offer several benefits.
Some examples of businesses that can benefit from installing an energy management system include:
- Large franchises: Businesses with multiple locations can utilize an energy management system to monitor and control their energy usage across all sites.
- Manufacturing companies: For manufacturing firms that use significant energy, BEMS can be used to optimize manufacturing processes to cut operating costs and energy consumption.
- Commercial buildings: While small businesses operating from one shopfront or office space will benefit more from low-cost smart meter technology, larger companies operating from office buildings can better manage their equipment, lighting and heating costs through BEMS.
- Data centres: These facilities use large amounts of energy to power their IT hardware and supporting infrastructure for equipment cooling. BEMS can help data centres ensure optimum efficiency throughout their operations.
LED lighting systems
Switching to LED lighting is one of the easiest, low-cost changes you can make to reduce business energy costs. By moving to efficient lighting, LED users save between £2,000 - £3,000 over the lifetime of the bulbs (depending on the size of their home or business premises).
Window energy efficiency
Windows (on a building, not the PC operating system) can impact a building's energy efficiency.
If you’re planning to expand your business premises and can upgrade your windows, choosing energy-efficient materials can help improve insulation and reduce your reliance on heating and air conditioning systems.
Low-emissivity (Low-e) glass is a type of energy-efficient glass treated with a Low-E coating. This coating helps to prevent heat from escaping through the glass, which retains warmth indoors and improves energy efficiency levels.
Suppose you rent your building premises or want to avoid investing large amounts of money into replacement windows. In that case, Low-E window films are a cheaper alternative that can reflect 25% of interior heat back into buildings.
Micro combined heat and power (micro-CHP) boilers
Micro-CHP boiler technology is ideally suited to small businesses and office premises. Unlike standard boilers, micro-CHP systems can generate electricity and heat water at the same time.
As energy-efficient boilers are a similar size to traditional boilers, micro-CHP providers can easily install a new micro-CHP boiler in the same space. This makes it a straightforward swap for a small office where saving space is just as precious as saving money on energy bills.
Mechanical Heat Recovery Ventilation Systems (MHRV)
Heat recovery systems have been cleverly designed to recover up to 90% of wasted (stale) heat that would otherwise be expelled into the atmosphere.
Particularly useful during the UK's winter months, HRVs ensure a constant supply of fresh, filtered, warm air circulated through business premises.
Commercial MHRV providers can help you find the right ventilation solution for your business premise size, industry, and needs.
Renewable energy technology
If you own your business premises or have a lengthy lease, investing in renewable energy systems can further reduce your business's energy costs.
Many SMEs are put off by these technologies because they:
- Require costly installation and specific planning permissions
- Take several years to produce a return on investment
However, despite these factors, renewable energy sources offer several long-term benefits, including:
- Energy cost stability: Renewable energy sources are not impacted by energy price increases
- Reduced emissions: Helping to lower your business's environmental impact
- Low operating and maintenance costs: Using natural sources to run self-sufficiently without requiring too much upkeep
- Exemption from environmental tax: Businesses that use energy generated from renewable sources are exempt from The Climate Change Levy (a government-imposed tax applied to commercial energy bills)
Innovative renewable energy products continue to be brought to the market. Some key examples of renewable energy sources that companies can utilize include:
- Wind power through turbines (suitable for businesses with large amounts of land)
- Solar PV panels (use sunlight to generate electricity. More effective during the summer months when the days are longer)
- Heat pumps (ideal for new build offices that have insulation measures in place)
Taking steps towards a greener future
The energy crisis has highlighted the importance and value of energy efficiency from both a personal and commercial perspective.
Aside from offering financial benefits, energy-efficient technologies play a vital role in sustaining the environment and curbing climate change.
While this may not be your key focus, but rather a positive by-product, it's clear that governments and lawmakers worldwide will continue to place greater precedence on reducing carbon emissions moving forward.
Returns may take time, but the sooner you start investing in greener strategies, the sooner you’ll be able to protect your business from market volatility and benefit from significant, long-lasting savings in the years to come.