Guide: Business energy environmental schemes explained

We run through five different environmental energy schemes for your business, looking at how they can both reduce its carbon footprint and and amplify its growth.

In an effort to reduce greenhouse gas emissions by 80 per cent in 2050, the focus is on companies and organisations to be mindful of their own business activities, which are estimated to account for around half of all emissions. The overwhelming responsibility on businesses to address their own energy efficiency has seen the introduction of a range of business energy schemes that organisations can use to help them go green.

The benefits of such schemes are two-fold; not only could they help your business to become more environmentally friendly, they could also help to generate new business, forge stronger relationships with customers and your supply chain, and have a positive impact on your bottom line.

information for business energy schemes

Additionally, reducing your usage and increasing the on-site generation of energy lowers a business’ exposure to energy price hikes – reducing the long-term risks the business might face in the process

Our simple guide to the various environmental energy schemes can help you get a handle on the different initiatives available, how they work and what they offer.

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Contracts for Difference

What is it?

A new levy which is set to be placed on business electricity customers as part of the government’s continued move to abide by EU emission regulations. Currently, Contracts for Difference (CfD) will be an additional cost on electricity bills, but it will replace the Renewables Obligation in 2037 as the 20-year lifespan of RO is phased out.

business meeting

What are its aims?

CfD aims to provide clear, predictable and long-term prices for electricity generated from renewables in order to foster more investment in new, clean generation. By 2050, it intends to have reduced CO2 emissions by 80% and encourage the sourcing of 15% of energy from renewable sources by 2020. As its name implies, it’s a contract that guarantees a payment for any ‘difference’ experienced.

How much will it cost a business?

The CfD costs will be charged to all suppliers under the Levy Control Framework, which will be recovered from customers directly through their electricity invoice.

The projected costs are estimated at being anywhere between £0.79/MWh - £1.90/MWh.

Feed-in Tariff (FIT)

What is it?

Put simply, the FIT is a charge on all business electricity customers to reward, compensate and benefit those who generate their own energy, taking pressure and reliance off the grid.

The money collected from electricity bills are recycled by energy suppliers, which are then used to reward businesses with what is known as “embedded generation”.

The Feed-In Tariff is to close to new registrations in April 2019. There is still time to take advantage of the scheme, but you will have to act quickly. 

What are its aims?

Part of a number of protocols, initiatives and policies brought in by successive governments to meet criteria laid out by over-arching EU environmental legislation, it was launched in 2010 to “encourage the uptake of small-scale renewable electricity generation”

business energy scheme

How much will it cost a business?

Effectively, business electricity customers pay for the FIT scheme through their energy bills, equal to a charge of between 0.30p/kWh and 0.35/kWh, something which all energy suppliers are obliged to charge regardless of whether they’re a FIT licensee or not.

Renewable Heat Incentive

What is it?

Related to FIT, the Renewable Heat Incentive is designed to increase the use of renewable heat technologies among businesses. It offers payments to businesses for each kWh of heat generated using low-carbon heating technologies.

What are its aims?

It is hoped that, through these payments, the adoption of such technologies – solar thermal, solid biomass and Combined Heat and Power, for example – will increase, and allow businesses the ability to offset the cost of installing and running a renewable heating system. These heating systems use energy sources which can help your business reduce carbon emissions and help the country meet its renewable energy targets.

How much will it cost a business?

The cost of installing a renewable heating system in your business will depend on which technology is selected as well as the size you opt for.

The CRC Energy Efficiency Scheme

What is it?

Launched on 1 April 2010, the CRC Energy Efficiency Scheme is designed to improve energy efficiency and reduce emissions in large public and private sector organisations. It is currently only focused on those businesses responsible for an estimated 10% of the UK’s greenhouse emissions; so, only the largest of public and private sector organisations in the UK are currently subject to the scheme

presenting options to team

What are its aims?

The scheme aims to reduce ‘non-traded’ carbon emissions by 17 million tonnes by 2027 as part of the Government’s target of reducing carbon emissions by 80% by 2050.

How much will it cost a business?

The scheme requires participants to buy allowances for every tonne of carbon they emit as reported under the scheme. During phase 2 (which started in April 2014), there are two sales of allowances for each compliance year. The first sale at the start of a compliance year is based on predicted emissions at a lower price. The second is a ‘buy to comply’ sale after the end of the compliance year at an expected higher price.


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Energy Savings Opportunity Scheme

What is it?

In operation since 26 June 2014, the Energy Savings Opportunity Scheme is mandatory for large organisations in the UK with more than 250 employees, a turnover in excess of €50m (£44m), and an annual balance sheet total of €43m (£38m). As part of the scheme, businesses are required to make mandatory measurements of their total energy consumption, conduct energy audits to identify cost-effective energy efficiency recommendations, and report compliance to the Environment Agency.

What are its aims?

To help large businesses recognise the financial benefits of implementing energy saving measures. It is an opportunity to reduce risks while improving efficiency and profitability by implementing energy-saving improvements.

How much will it cost a business?

Though the measurements are mandatory, businesses are not required to install any energy-saving equipment; this is only at their own discretion.

We hope this guide has been helpful, providing an insight into the environmental schemes which may impact your business, and the opportunities you may be able to use to your business’ advantage.

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