Spotlight on energy saving in small businesses as bills rise

Small and micro businesses are being challenged to reduce energy use by London Mayor Boris Johnson as bills rise.

The Mayor has added a new category for companies with fewer than 50 employees in the Business Energy Challenge, which is one element in a programme to cut the capital’s carbon emissions by 60 per cent by 2025 based on 1990 levels.

The focus on small businesses comes at the same time as a new survey shows that smaller companies are paying more than they need to because of contractual changes.

Currently, about 75% of carbon emissions in London are generated through buildings and around half of these are workplaces.

Energy use

The Business Energy Challenge (BEC) was launched last year and rewards businesses that have adopted greener forms of power and heat generation while cutting energy consumption. Companies taking on the challenge track measure monitor their energy use and carbon intensity for each square metre of office space over a six-week period.

The BEC initiative is part of a broader strategy to cut emissions in the capital with the RE:FIT scheme helping 260 public buildings being retrofitted to reduce carbon dioxide emissions, saving more than 29,000 tonnes of CO2 a year.

The SME sector is one that struggles to find effective solutions, as the Department of Energy and Climate Change discovered in its meetings late last year with a range of businesses. The sector faces many issues, from who owns work space energy projects to understanding the business case for going green.

Every business wants to cut costs and would want to adopt sustainable energy and water consumption strategies but there is strong inertia in the SME sector, with little effective and proactive help from government.

We know that companies of all sizes will benefit from the adoption of solutions that cut costs and carbon. Our work with hotel groups and distribution companies, for example, shows the high levels of savings that can be achieved.

We have also made the business case for schools to cut costs and carbon emissions through LED lighting.

Commercial value

There is clear and sustainable commercial value in implementing and water saving schemes that extends over many years with initial investment repaid quickly through savings, from LED lighting to lighting controls, heating controls, smart pumps and water-saving products like eco taps and eco showers.

The BEC last year recognised the efforts of a range of larger companies in the capital with 27 firms, including HSBC, Boots and Marks & Spencer awarded either gold, silver or bronze ratings. The challenge winners together contributed reductions of 18% in carbon emissions while cutting energy consumption by 182,000 megawatt hours – around £12.5 million in savings.

Matthew Pencharz, London’s deputy mayor for environment and energy, said the awards were a great opportunity for London’s businesses to take the lead on green issues:

“London businesses have a real leadership role to play in the bigger battle to reduce the city’s emissions. But they also have a lot to gain from making an effort to green their energy use, including slashing their energy costs.”

After the BEC closes, all the data will be analysed by University College London to help produce more effective energy performance standards for more than 1,000 buildings in the capital.

Energy bills rocket

The welcome focus on green issues for smaller businesses comes as a new survey revealed this week that nearly a third of companies in the sector have seen energy bills rocket when slipping out of fixed deal contracts.

The survey by SwitchMyBusiness suggests that up to 1.3 million smaller firms are affected.

When a fixed deal ends, companies can be put into what is known as a deemed contract, effectively a catch-all when no negotiated deal is made and the costs are punitive, with firms paying 80% more for energy use.

The survey reports that around half of SMEs have problems understanding contracts with the utility companies and a quarter do not know the process for terminating current energy contracts. A further 18% have been locked into fixed-term deals without permission.

More than half (50.4%) of UK small and medium-sized businesses (SMEs) said they have had problems understanding their energy contracts and 25% don’t fully know how to end their current contracts.

Ivan McKeever, CEO of SwitchMyBusiness.com says:

“These findings prove that the UK’s SMEs are still getting a raw deal. Smaller to medium-sized businesses are in a uniquely challenging position: the business energy market lacks the transparency that consumers now have and smaller businesses do not have the resources to liaise with lots of suppliers and negotiate a good deal.”

All the more reason, we think, for SMEs to grasp the opportunity and take effective steps to reduce energy use and water consumption, so cutting bills and shrinking carbon footprint.