The government’s upcoming Carbon Plan should include a specific strategy for promoting microgeneration, efficiency, storage and demand response across the UK small business community, according to the Federation of Small Businesses (FSB).
The association has claimed that without these measures, the UK will fail to meet it binding carbon reduction targets.
The calls to government follow two surveys of over 1,000 FSB members on energy efficiency and infrastructure investment which showed that ‘security of supply’ is the biggest energy concern for most small businesses (60%).
With the majority (86%) of those asked claiming the UK is too reliant on imported energy, the study’s findings argue the case for making it easier and more attractive for small firms to contribute to the generation of green energy.
This would reduce company risk to fluctuating energy prices and with improved incentives and fewer barriers, small firms can play a key role in closing the carbon gap.
Mike Cherry, national chairman of the FSB, said: “The UK energy sector is facing the greatest transformation since the Industrial Revolution. But the whole system for incentivising and subsidising infrastructure lacks transparency, consistency, direction and ambition. It needs a strategic overhaul.
“The government should produce urgently an updated carbon plan, looking specifically at small businesses as an audience. Without the input of an engaged and empowered small business community, the UK risks failing to meet its binding emissions targets.”
The country’s 5.4 million SMEs make up over 99% of all its businesses however currently only 12% of small businesses generate their own energy, mainly through the use of solar panels. The FSB claims most of this generation (61%) is attributed to those businesses which either work from home or operate from premises attached to their homes.
Following cuts to support for solar installations through the feed-in tariff scheme, as well as recently announced reforms to the Renewable Heat Incentive, concerns have emerged over the impact on renewable heat and energy uptake.
Anecdotal evidence from FSB members suggests that reductions to the RHI in particular will change the decision making process for some, with oil or diesel generation cited as a cheaper option than biofuel. Some members also raised concerns about the impact that reduced RHI will have on access to finance.
The organisation is therefore calling for a review of the effectiveness of subsidies and incentives to help small firms climb over the hurdles to energy investment, particularly in the context of recent alterations to FITs and the Non-Domestic RHI.
Cherry continued: “The UK’s massive investment in energy infrastructure will come at a heavy price to customers, so it’s important that the benefits are fair and accessible for small businesses. Poor investment planning could place the greatest cost burden on those that can least afford it and restrict new opportunities to a lucky few.”
The FSB’s research also shows three in five (58%) small firms have made changes to improve the energy efficiency of their business. However, it argues that many are disempowered or not given enough incentives to make further improvements.
“Many small businesses are willing and capable of becoming more energy efficient, and even generating energy. With the right support, they can play a critical role in helping the UK reach its green targets and shore up supply.
"I hope that these important points are not only taken on board in the Government's green energy programme, but also as part of its wider Industrial Strategy," Cherry added.