Companies would be advised to run the sums again when looking at whether they should consider solar energy as a source of power for their business, according to national audit, tax, advisory and risk firm Crowe.
Chris Mould, Audit & Assurance Partner in Crowe’s Cheltenham office, said many companies had been put off in the past by the long payback periods that investing in solar panels seemed to indicate.
“With rising energy prices and the cost of solar panels, storage batteries and heat pumps gradually coming down, the gap has closed.
“In some cases, the sums now show that instead of, for example, a payback period of eight to 10 years, we could now be looking at as little as two to three years – which makes a very different case when considering the pros and cons of green investment,” he said.
He pointed out that many had already instituted a major review of their energy usage and many had found they could make significant savings.
“However, this probably does not mitigate the shock of coming to the end of a three-year deal, and finding your energy costs have risen by 100% – possibly as much as the net profitability of your business.”
But he urged business owners not to ignore the smaller savings while they were, at the same time, considering a considerable investment in green energy.
“There has long been the joke that, domestically, we could solve the energy crisis by removing the light bulb in every teenager’s bedroom, so they couldn’t leave them on when they were out.
“But the same applies to business. Are you heating public spaces unnecessarily? Do the warehouse roller shutters stay up all day in winter, when they could be shut? Should you consider movement sensor lighting for infrequently used corridors in your office?
“Is some of your older machinery power hungry, when newer plant uses far less power?
“There are a host of little steps you can take in tandem with major investment in green technologies that will, overall, help you make major inroads into your energy costs.”
But he said that more needed to be done by the government to incentivise businesses to go green.
“At present, the government has pledged almost £5 billion to help UK businesses become greener as part of the government’s commitment to reach net zero emissions by 2050. Funding is potentially available for businesses investing in green technologies to increase energy efficiency or reduce carbon emissions.
But Chris Mould warns that it is difficult to navigate your way through the maze of various options.
“Just as you think you have found a scheme that could apply to your business then you might find it has recently closed to new applicants – see https://www.gov.uk/guidance/find-funding-to-help-your-business-become-greener
“We need a much simpler system, and we could start with harnessing the natural resources that are already available.
“Much has been written about the acres of factory roofs that could be utlised for solar panels, but many are not structurally up to the job, so it is essential to check with a qualified surveyor to ensure you can safely fit solar panels.
“Then we need a specific green energy government scheme in place that provides more than the 100% available currently under the Annual Investment Allowance (AIA).
“The AIA has been temporarily increased to £1 million until 31 March 2023, so decisions need to be taken soon.
“There may be other reliefs the government could provide to encourage companies to commit to such major investments.”
He suggested that the information available to businesses assessing green energy innovation, its costs, and the financial support, had become even more complex since the UK left the EU, citing https://www.ofgem.gov.uk/information-consumers/energy-advice-businesses/find-business-energy-efficiency-grants-and-schemes as an example of the maze of schemes currently on tap.
He said that business owners struggling to survive often did not have the time or resources to embark on major research into what is available and then calculate the cost, capital and timing requirement, and most importantly, the payback timescale.
“We are talking to many of our clients on just these topics and they are seeing the benefit of seeking professional advice and guidance.
“Clear, cold-headed calculations on investment, coupled with a focused energy saving programme, can deliver significant results and help power your business forward.”
Chris Mould can be contacted on chris.mould@crowe.co.uk or on 01242 234421.
