Business Energy

What is micro generation?


man using drill at workbench

Microgeneration is the term used to describe the small-scale production of energy. The most common form of micro generation centres around businesses who use renewable energy systems to create their own energy and avoid the cost of buying from a supplier.

But it’s not only about creating energy for your business - you can often sell back excess energy to the national grid. Put simply, this means you can both save money and make money, all via one microgeneration system.

Why consider business micro generation?

Microgeneration offers businesses of all sizes many wide-ranging benefits. Most importantly, it can help a business save on their energy costs. Micro generation can also help you to promote your business as a forward-thinking, socially conscious enterprise - allowing for alternative marketing angles and helping to attract new customers.

Now that most countries have signed up to the Paris Agreement - a global treaty aimed at lowering greenhouse gases - many governments have created incentives for businesses looking to go green. For example, in the UK, microgeneration can allow your business to skip certain taxes, such as the Climate Change Levy, receive subsidies on your energy bills and access a range of funding schemes for installing renewable energy technology. This funding is mostly available under the Non-Domestic Renewable Heat Incentive (RHI).

Finally, energy prices are set to increase, with demand increasing and supplies harder and harder to come by. So, by choosing microgeneration, you can avoid this rise in cost by producing your own energy instead. What’s more, you’ll be able to sell any excess electricity back to the national grid. And in some cases, you’ll even receive payments for the energy you produce yet use yourself.

What is the business Feed-In Tariff scheme?

Feed-In Tariffs (FiT) for business are a form of government subsidy for those ventures who produce their own business electricity via a renewable or low-carbon energy source. Put simply, it reverses the usual relationship between you and your energy company. With a Feed-In Tariff, you’ll be the one producing electricity, while your supplier will pay a set fee per every kWh of energy which isn’t part of your own usage. On a generation FiT, you’ll even receive payments for all generated electricity, whether you use it yourself or sell it back to your supplier.

Feed-In Tariff rates will vary dependent on your supplier and will also consider some other key information. This includes:

  • What size renewable energy system you use
  • The microgeneration technology you use
  • The date you install or installed your microgeneration system
  • Who installed your system - you’ll need to use a certified installer which we can help you with.

Remember, rates will differ based on the equipment you use and when your system was installed. For more information and advice about the best Feed-In Tariffs, contact our expert team now on 0800 088 6986.

Unfortunately, the FIT scheme closed for new applications on March 31, 2019.

If you already have an eligible system installed and you have already successfully applied for FITs payments you'll not be affected by the scheme closure.

If you installed an eligible system with an MCS certificate dated on or before March 31, 2019, you have until March 31, 2020 to apply to the scheme.

If you never installed an eligible system on or before March 31 2019, you won't be eligible for FITs payment, but it’s worth keeping an eye out for alternative deals offered by your business energy supplier.

What is the Renewable Heat Incentive?

The Renewable Heat Incentive (RHI) is a governmental initiative that looks to incentivise home-owners, communities and businesses to invest in renewable heat technology.

The UK government have a target of 12% of all heating being achieved via renewable energy sources by 2020. The RHI was designed to help achieve this target and involves cash payments made over 7 years to those who fit the requirements.

The exact amounts of RHI cash incentives will vary from business to business. They will be based on a variety of factors, such as:

  • The technology you use
  • The latest available tariffs
  • The metering system used to record your generation

Despite the fact it’s a little difficult to provide exact figures for what you will earn via the Renewable Heat Incentive, you can get a general idea by using the RHI payment calculator.
H2 – What methods of business micro generation are available?

There are plenty of methods for microgeneration, however, not all will be suitable. Instead, it’s worth considering which you type of renewable energy system will be most beneficial to your business. This is usually centred around your location and forms of power you have access to – for example, solar or wind.

Small Scale Wind Power

It’ll come as no surprise that the UK is one of the leading nations for wind power. That said, wind power is only really suitable for businesses located in exposed areas where the average wind speed is 6mph or more. As turbines are usually large and noisy, they can cause complaints from those in the local area. Despite their size, there are certain turbines ready for installation without planning permission – just be aware, these are subject to very stringent conditions.

Hydro Power

To access a hydro powered renewable energy system, you’ll obviously need access to a water source powerful enough to create electricity. What’s more, you’ll most likely need planning permission before installation.

Solar PV

Probably the type of renewable energy system you first think of, solar panels are incredibly popular all around the world. Clearly, they work best in full sun conditions, however, don’t think you can only use them in areas where sunny weather is common. For example, 50% of all UK solar PV energy is sent back to the national grid. This means you could be making money on 50% of your electricity production, while the rest is used for your own needs. Solar panels will be installed on your roof or installed as arrays, depending on which direction your building faces.

Solar Thermal

Solar Thermal involves capturing solar energy and using it to heat water. It is usually complemented by a conventional boiler. The majority of solar systems create steam which is then turned into mechanical energy, ultimately creating electricity to be used or sold back to your supplier.

Biomass

Biomass, or Anaerobic Digestion, centres around the burning of organic materials such as food scraps, animal manures, fats, oils and more. The end product is biogas which, when combusted, can generate heat and electricity. The downside of biomass microgeneration is the cost involved for installation. However, as with all renewable energy systems, there are different options for funding, such as the Green Investment Bank.

What are the pros and cons of business micro generation?

The advantages of micro generation

Despite the initial outlay, new microgeneration is widely considered a low-risk investment. With funding schemes, FiT payments and lower future bills, they offer businesses of all sizes the chance to save money by producing their own electricity. But the advantages don’t just stop there.

Since the turn of the century, and especially of late, customers are now increasingly drawn to companies who advocate for a greener world. By choosing business micro generation, you can tap into these demographics, potentially gaining a wider custom-base than you currently have.

Another advantage is the fact business microgeneration helps make the grid more reliable and secure, with energy coming from various locations.

The disadvantages of micro generation

While the advantages of micro generation are clear to see, you’ll also want to know about the drawbacks.

The biggest concern is the current state of the national grid. Some researchers do worry that the grid will not be able to manage a massive upscale in distributed energy. If new microgeneration sees a real rise in uptake, distribution network operators would have to create mini-grids with a focus on balancing supply and demand.

That said, Ofgem is actively encouraging DNO’s to take a role in energy management. It’s also important to note that the national grid will need renovating soon, regardless of whether micro-generation takes off or not.

To make things a little more complicated, solar power has now reached the point where it is popular enough that government subsidies are not required. So, even though non-domestic solar panels are currently immune from rate changes, this is set to change in April 2019, with tax increases looking likely.

Finally, as this is a relatively new venture for businesses to take, it’s not without problems. There have been cases where providers have sold microgeneration systems which weren’t viable for the businesses to whom they were sold. There have also been cases of misleading claims, usually centred around the potential savings.

How to set up new micro generation for your business

When considering business micro generation, your first step is to decide which energy generation system will have the greatest impact. Then, you’ll need to certify your system through the Microgreneartion Certification Scheme (MCS) and also have it installed by a certified installer. Visit the MCS website for more information.

Another useful website is microgeneration.com, which lists some other considerations for businesses looking at new micro generation. If you’re still asking what is micro generation? Or need some further advice on how you can invest, consider doing the following first:

  1. Analyse your energy consumption and start considering how you can lower your energy usage.
  2. Research the types of outputs your preferred source of green energy can produce. This will help you understand what savings can be made and whether or not you’ll be able to sell any excess energy back to your supplier via FiT.
  3. Consider your location. Do you have spare land? What will your neighbours think about a microgeneration system being installed? Is your building old or new? Are there any small changes you could make to improve your efficiency?

Finally, if microgeneration does sound like something you want to invest in, you should be open to changing some of your energy habits. To get the greatest impact from business microgeneration, you will need to change your habits. This doesn’t involve any huge shifts, but little changes to your practice will enable you to maximise the output of your system, save money, and often make extra money too.

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