Go green? SME investment in energy efficiency

Energy bills are an unpredictable monthly cost for SMEs. The prospect of saving on utility bills will appeal, particularly when running large office suites or production facilities.

As part of its commitment to clean growth, the Government has this week opened a competition for SMEs to apply for funding to do just that. A strong initiative, but this project has multiple caveats attached to it, and there is only so much money allocated.

The reality is, installing green technology or energy efficient systems requires an investment of both time and money. SME leaders’ daily focus is on running their business; retaining staff, chasing invoice payments, managing stock, paying the bills and pursuing growth.

To spend time and money on a project offering seemingly only operational cost savings is often just an aspiration. 

The long term benefits

Many start-ups and SMEs focus on the short-term, but there are long term financial benefits to going green.

Energy efficient systems provide stable energy costs because renewable energy is not subject to price rises, allowing for accurate forecasting. A vital asset for SMEs. In addition, investing can provide small income streams. Some systems allow for electricity to be sold back to the national grid at a premium, and it permits exemption from the Climate Change Levy plus access to business energy subsidies.

Operationally, green energy systems are easier to manage to not only save money but save time. It’s also an investment in your business’ reputation. Increasingly, customers and suppliers value a commitment to sustainability. There can be strong PR associated with being a dynamic and forward-looking business that is ready to respond to customer expectations.

Making a choice

For SMEs looking to reduce their bills and demonstrate their social responsibility, investment will often mean dipping into capital reserves. Increasing pressure to get on board with the attitudinal shift toward growing green, can often jar with managing your cashflow efficiently.

Whilst the Government’s new scheme might be a step in the right direction for clean UK growth, Ultimate Finance understands that such initiatives don’t always account for the increasing demands on SMEs; to comply with regulations, respond to cultural shifts, and yet continue to prosper and grow.

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