Tom Melhuish 6 min read

Renewable Energy Generation For Business

In 2022 business energy costs rose to unprecedented levels. Business owners are increasingly seeking options to reduce their reliance on expensive electricity and gas supplies.

As a solution, more and more businesses are choosing to generate their own renewable electricity locally. It’s not only a lot cheaper, but it’s also much better for the planet.

Key takeaway: In the context of sky-high electricity and gas rates, it’s never been a better time to generate renewable energy. Simple investments like solar panels can quickly pay for themselves, especially when you can sell any excess generation through the smart export guarantee

Here’s our ultimate guide to Renewable Energy Generation for business:

What is renewable energy?

Renewable energy is a sustainable energy source. Unlike fossil fuels, sustainable energy sources are not going to run out. Here are the most widely used sources of energy available for renewable energy generation:

Solar energy – Energy extracted from light from the sun.
Wind energy – Energy extracted from the movement of the air on windy days.
Hydropower – Energy extracted from the flow of water.
Geothermal energy – Energy extracted from the heat of the earth.
Tidal energy – Energy extracted from the tidal forces of the moon’s orbit.
Anaerobic digestion – Extracting energy through the breakdown of organic material.

Check out our full guide to renewable energy.

What renewable energy options are available for my business?

Although the types of renewable energy are plentiful, only a few types of generation are realistic for commercial properties. It’s not going to be feasible to build a large hydroelectric dam or a geothermal power plant. But some great options work on a smaller scale.

Let’s compare Renewable Energy Generation options for business. For the comparison, we compare installations with 5kW of energy capacity. At the price of electricity in October 2022, this system would save a company approximately £1,500 in energy bills each year.

Solar panels

Renewable energy used: Photovoltaic panels convert solar energy from the sun into electricity.

Property requirements:
Requires an area which receives direct sunlight and isn’t impacted by shade at any time of the day. Installation on a roof is typically the best option, but other solutions, like floating solar panels, also work.

Area requirements: A single panel is small but doesn’t generate much electricity on its own; usually, an array of panels is used for solar generation. A 5kW solar panel array will need 36 square meters of roof space.

Initial investment required: A typical 5kW solar panel array currently costs £8,000.

Planning requirements: Typically, no planning permission is required as these are considered permitted developments.

Permitted under the Smart Energy Guarantee: Yes

Wind turbines:

Renewable energy used: A wind turbine uses the energy in the wind to spin a turbine and generate electricity.

Property requirements: Requires a free-standing turbine erected in a suitably exposed position, think coastal areas or high atop hills where there is lots of wind.

Area requirements: An erected wind turbine must be far from other buildings and trees. You’ll need at least an acre of empty land.

Initial investment required: A typical 5kW pole-mounted turbine currently costs £25,000

Planning requirements: Turbines are permitted developments only in particular circumstances; the most stringent requirement is for the turbine to be less than 11.1 meters in height.

Permitted under the Smart Energy Guarantee: Yes


Renewable energy used: A hydroelectric system uses the kinetic energy of fast-moving water to generate hydropower. This can include small hydropower installations like run of the river.

Property requirements: You’ll need to have a watercourse running through your business property with sufficient flow (the amount of water moving along) and head (how much height the water is losing within your property’s boundary).

Area requirements: A hydroelectric generation facility doesn’t take much room.

Initial investment required: A typical 5kW hydropelectricity installation currently costs £25,000

Planning requirements: All new hydroelectric systems require planning permission and an abstraction licence. You should contact your local authority early in considering a hydroelectric system.

Permitted under the Smart Energy Guarantee: Yes

Micro combined heat and power (micro-CHP)

Renewable energy used: A renewable micro-CHP system burns biofuel to generate heat and electricity. Note that many micro-CHP still use fossil fuels such as natural gas; while these can be considered ‘low-carbon’ due to their efficiencies, they are not renewable.

Property requirements: None

Area requirements: There’s very little size difference between a micro CHP installation and a traditional boiler.

Initial investment required: A typical 5kW commercial micro combined heat and power installation will cost in the region of £20,000. Many different systems are available, so the exact pricing will depend on the circumstances.

Planning requirements: Not applicable as a micro-CHP system will typically be indoors.

Permitted under the Smart Energy Guarantee: Yes

How much does renewable energy technology cost?

Generating renewable energy locally at your business always requires an initial investment. The investment size depends on how much renewable energy capacity you want and your chosen type.

In our above guide, we’ve compared the initial cost of a 5kW installation of the different types of renewable energy.

Solar panels, the cheapest form of renewable energy technology, will set you back approximately £8,000 to generate the same electricity output that an average home uses.

Why should businesses look to implement renewable energy solutions?

Here are the three top reasons why businesses are adopting renewable energy solutions:

It’s much better for the planet. The mains electricity supply in Britain still relies heavily on gas-fired power plants that produce huge volumes of greenhouse gases. There are two problems with this: i. Natural gas is a fossil fuel that is running out, and ii. Greenhouse gas emissions are causing global warming.

It’s a good investment. From a purely financial perspective investing in renewable energy solutions makes sense for businesses with surplus cash. The government supports investment in renewables by providing schemes like the smart export guarantee, which makes these investments economically feasible. With sufficient renewable energy generation, it’s totally unnecessary to pay any business electricity rates or business gas rates.

Protection against soaring energy prices. Business energy prices have soared in 2022 due to European natural gas shortages. In times of rising prices, the cost-free electricity you’ll receive from a renewable installation becomes ever more valuable. Installing renewable energy capacity can protect your business from future energy shocks.

Is there funding for renewable energy for businesses?

The most significant government support available for commercial renewable energy installations is the Smart Export Guarantee. The Smart Export Guarantee requires a business energy supplier to purchase any unused electricity generated from renewables. This means solar panels can feed into the local electricity distribution network on a sunny day over the weekend, earning your extra business income.

The support for the initial investment in renewable installations is more of a mixed bag. There are lots of local schemes and grants that will help with the initial investment. We recommend using the government’s grant finder here to search for what is available.

Which business energy suppliers offer renewable tariffs?

The biggest problem with Renewable Energy Generation for Business is that it requires an upfront investment. In challenging economic times, this is only realistic for some businesses.

Green energy has significant benefits, which can be obtained by signing up for a renewable business energy tariff. In this tariff, a business electricity supplier will commit to only supplying electricity generated from renewables.

Compare business electricity prices today to get green electricity quotes for your business.

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