Business Microgeneration: UK Business Owners Guide

Microgeneration is the small-scale production of energy. Businesses utilise the most familiar type of micro generation through the use of renewable energy systems. This enables them to avoid expensive unit rates from suppliers as they will be creating their own energy through this process.

However, this doesn’t just cover producing energy for your business though. Any excess energy your company generates can be sold back to the National Grid. Through a microgeneration system, you’re able to save money on gas and electricity and access an additional revenue stream at the same time.

Why choose business micro generation?

Aside from saving money on business electricity prices, there are a whole range of benefits through microgeneration. You will be able to improve your company’s public image through its corporate social responsibility, which the marketing department can create a whole awareness campaign for, this will really appeal to new and existing customers.

The Paris Agreement, which most countries have signed up to, has meant that governments across the globe have incentivised businesses that take the necessary steps to become more sustainable. In the UK, businesses that utilise microgeneration can avoid taxes such as the Climate Change Levy, in addition to receiving government grants and subsidies on their commercial energy bills. Furthermore, the Non-Domestic Renewable Heat Incentive (RHI) can help your company get started in installing renewable energy technology.

Over time, energy prices will continue to soar as the demand for gas and electricity increases. Selecting microgeneration can certainly help your business avoid the rising cost as you will be producing your own energy. On top of this, you will be able to sell any excess electricity you generate back to the National Grid.

What is the business Feed-In Tariff scheme?

A Feed in Tariff (FiT) is a type of government subsidy aimed at those who generate their own business electricity through a low-carbon or renewable energy source. Roles are reversed here between you and the energy provider. You will be producing electricity with a Feed-in Tariff, and your supplier will be paying a set fee per kWh of energy. This does not form part of your usage.

Generation FiTs grant you payments for all electricity you produce, regardless of you using it or selling it back to the supplier. Rates for Feed-in Tariffs will differ from one provider to the next, and the following details must also be considered:

  • The size of the renewable energy system you use
  • The microgeneration technology your business uses
  • The date you install or installed your microgeneration system
  • Who installed the system – a certified installer must be used

Unfortunately, the FIT scheme is no longer available for new applicants as it was closed on March 31, 2019. Those that have a current eligible system installed and have applied successfully for these FIT payments will not be affected by the closure of the scheme. An MCS certificate is also a requirement. If you have missed out on this, do check for alternative deals that your business energy supplier may offer throughout the year.

What is the Renewable Heat Incentive?

The Renewable Heat Incentive (RHI) is a government backed initiative that was created to encourage communities, businesses and homeowners to invest in renewable heat technology. By 2020, there is a target of 12% of all heating being achieved through renewable energy generation, set by the UK Government. RHI includes cash payments over a seven-year period for anyone who meets these requirements. The amount payable through this scheme will vary from one business to the next. The following factors must also be taken into account.

  • The technology being used
  • Latest available tariffs on the market
  • The metering system used to record your generation

The RHI payment calculator can help you figure out how much you will be able to earn through the Renewable Heat Incentive.

What methods of business micro generation are available?

There are a variety of methods available for business microgeneration. Although, it is worth noting that not all of these will be suitable. For this reason, you must consider what type of renewable energy system will benefit your business the most. Your location will determine the forms of business renewable energy sources you have access to. Here are some of the most common sources of micro generation available to your business:

  • Small Scale Wind Power
  • Solar PV
  • Hydro Power
  • Solar Thermal
  • Biomass (Anaerobic Digestion)

Advantages and disadvantages of business micro generation

The advantages of micro generation

Although the initial costs may be high, new microgeneration is considered as a low-risk investment throughout the industry. Businesses of all types and sizes can save money on their commercial energy bills when generating their own electricity through various funding schemes and FiT payments.

Over the past decade, and especially in recent years, customers are now more than ever before, choosing companies that are committed to sustainability and are pushing forwards towards a cleaner future. By choosing business micro generation, your firm can take full advantage of this demographic, helping you expand your customer reach. Furthermore, business microgeneration improves the reliability and security of the National Grid too.

The disadvantages of micro generation

We have already highlighted the clear advantages of micro generation. Yet, it is also important to understand its drawbacks as well.

The existing state of the National Grid is perhaps one of the biggest concerns. Industry experts are fearful that the grid will not be able to handle a vast upscale in distributed energy. Should new microgeneration see an increase in adoption, distribution network operators would have to create mini grids with a focus on balancing supply and demand.

With this in mind, DNO’s have been encouraged by industry regulator Ofgem to take a role in energy management. In time, the National Grid will require an overhaul, regardless of whether or not micro-generation gains traction. Another challenge is that solar panels have reached the popularity stage where government subsidies are no longer required, although they are nowhere near reaching market saturation.

Micro-generation does not come without other challenges too, as it is a relatively new venture for businesses. Some providers, through misleading information, have in the past sold microgeneration systems that weren’t suitable for some business users. False claims have been made around potential savings.

How to set up new micro generation for your business

Before taking the first steps towards business micro generation, you must decide which energy system will have the greatest impact. Next, you will need to certify the system through the Microgeneration Certification Scheme (MCS). A certified technician must be used for the installation process.

Hopefully by now you have gained a deeper understanding as to what microgeneration is. We have outlined reasons on why your business should consider this, as well as the advantages and disadvantages micro generation offers.