How UK government green policies will affect small businesses

By | February 21, 2012

Businesses have been offered support from government schemes for projects that make their operations greener for some time now, but what these schemes are and how they work haven’t always been made clear. The major ones that affect enterprises are the Feed-in Tariff (FiT), which allows organisations to make money by generating solar electricity, and the Green Deal, which is set to come into force later this year and will assist with the cost of improving energy efficiency.

The FiT system explained

Introduced in April 2010, the FiT initially offered businesses and homeowners the opportunity to sell electricity generated by their solar panel installations back to the grid at the very generous rate of 43.3p per kilowatt hour. However, this rate proved to be unsustainable and the government has since cut the rate to 21p from March 2012, with further cuts expected in the future.

Energy minister Greg Barker said the cuts were necessary to enable a greater number of people to take advantage of the scheme, while delivering a target of 22GW worth of solar panels overall. However, campaigners have argued that cuts to the subsidies will dissuade many people from using the FiT at all, potentially putting thousands of solar installation jobs at risk.

The new plan is to track the falling costs of solar technology and set future tariffs based on that, which the government says will lead to a more economically sustainable industry. “Never again must we have a fixed-price tariff that allows a bubble to grow,” said Mr Barker.

The Green Deal

From autumn this year, the government’s long-vaunted Green Deal will be implemented, with considerable implications for small businesses. Firms will be able to set up as Green Deal Providers and offer their customers the finance to carry out energy efficiency retrofits on properties, with repayment for the work ostensibly covered by the energy bill savings. Additionally, new legislation will tie the cost of the work to the building rather than to the customer, so people and businesses can stop making the repayments when they relocate.

It remains to be seen how well this will work in practice, particularly given the bumpy start FiTs have had, but overall the Green Deal seems to be a positive step for the UK’s burgeoning eco-friendly industry. The government expects the scheme to kick-start £14 billion in investment over the next decade, supporting at least 65,000 new jobs in insulation and construction by 2015.

Small business opportunities

Companies operating under the Green Deal banner will need to pass through an accreditation framework that aims to ensure high standards of work and consumer protection, while weeding out cowboys. In particular, start-up firms will be able to use the “Green Deal Quality Mark” to distinguish themselves from competitors.

Small contractors are also likely to see an improvement in local business, although concerns remain that some may be excluded from being Green Deal providers due to the costs involved.

About the Guest Post Author: Sam McCall – I’ve been writing web articles for more than three years, covering topics from computing and technology to finance and the environment, as well as blogging and contributing book and game reviews to local magazines. I have a degree in Creative Writing from the University of Leeds and in my spare time I watch far too many films.