There are very few questions facing an SME that could be considered 'no brainers', but investment in renewables is one.

A business investing in renewables gets paid for every kilowatt hour (kWh) of energy it generates, even if it uses that energy. According to renewables consultancy Dulas, every kWh produced through renewables is roughly equivalent to a saving of half a tonne of greenhouse gases every year.

James Cass, business development manager at Dulas, points out that most businesses are surprised to hear the good news about renewables, which makes them appear too good to be true.

"You can invest in solar or biomass to generate electricity or heat from a purely environmental standpoint because they're renewable and it's a great thing to do," he says.

"From the perspective of the bottom line, though, it's the simplest decision going. For electricity, you'll get paid 13p for every kWh of solar energy you produce, even if you use it. So you save at least that again on energy you're not buying from your provider. Then, say it's the weekend or a bank holiday, and you're producing but not using any, you can get just under 5p per kWh you export back from the national grid."

It is a similar arrangement with biomass burners which create heat through burning pellets of wood taken from responsibly managed woodland. Through the Renewable Heat Incentive companies get paid just under 9p for every KwH of heat energy they produce for the first 1,314 hours of each year, and thereafter around 2p.

Halving bills

Paul Williams, production manager at Y Lolfa printing company, was left scratching his head when he heard about the deals, which are guaranteed for 20 years with automatic annual inflation increases. The printing and publishing company is a heavy electricity user and was looking for a way to reduce bills and be greener.

"We had a few meetings where we were looking for the catch," he recalls. "We're very glad we went with it because we now produce about a quarter of our electricity needs from our solar panels. We get paid to produce it, even though we're using it, and we get the same saving again in power we're not having to buy. It's effectively halved our bills.

"The panels only need daylight to generate electricity, although the brighter the day, the more electricity they produce. They're forecasted to pay for themselves after seven years but we're guaranteed our feed-in tariff for 20. It's such a no brainer, we're having a biomass heating system put in as well."

The decision was made all the easier for the company having had the £70,000 required for a 27 kWh array in the bank where it was earning virtually no interest. Invested in the roof, the capital is making a positive impact of around £13,000 per year in energy savings and energy income.

Eco comfort

Biomass has made a huge positive impact at the Battlesteads Hotel in Hexham, Northumberland. It had been reliant on electricity but now a new biomass boiler has reduced consumption by half and ensured rooms are warm and showers have piping hot water all day.

"People sometimes think that going green is about putting on an extra jumper and grinning and bearing it, but we're proof it can actually mean extra comfort," says hotel owner Richard Slade.

"We investigated green electricity but couldn't find a supplier who could meet all our needs so we had to look at alternative methods to ensure we could provide extra comfort while being carbon neutral. The wood pellets we use come from just a couple of miles down the road and they're responsibly grown so there's virtually no carbon impact. It's a lot cheaper to produce heat this way than through electricity, and we're paid to produce it."

There are, of course, a couple of provisos to solar and biomass. SMEs need to own their building or have a long-term lease in place to get permission to put panels on the roof and to make the investment worthwhile. With biomass, companies need to be set up to receive deliveries of wood chips.

Wind power shares the same advantages of being both green and earning a subsidy but for most SMEs it is only a theoretical option. Getting planning permission can be problematic and turbines need to be sited in windy areas, a good distance away from buildings. Hence, it is only a real alternative for businesses with many acres to spare and so, among SMEs, is typically the preserve of farmers.

Gas power

For those who cannot get access to a roof, such as the Anne Veck hairdressing salon in Oxford, there is an alternative that still qualifies for the government's feed-in tariff. Salon co-owner Keith Mellen has installed a BlueGen ceramic fuel cell device that turns natural gas into electricity.

"For businesses that don't have direct roof access it's a great device which is about the size of a fridge," he says.

"It means we get a guaranteed supply of electricity from our gas connection, which is a lot cheaper than electricity and also has a far lower carbon footprint, particularly when we switch to green gas next spring.

"The BlueGen is really clever because the heat it generates when working is used to heat our water, so we get a tank full of hot water free each day. We've been able to virtually eliminate our electricity bill through gas, which has cut our overall energy bill by 70% and we also get to greatly reduce our CO2 emissions."

In fact, because the saloon has the fuel cell device on a lease, the financials are clear from day one and it is already proving cash positive to the tune of £2,300 per year.

For biomass and solar power SMEs, there are two main financing choices. They can either use money in the bank and get a far better return, as well as a boost to their eco creditials, or they can apply for loans. Several banks are now offering loans for renewables and there is the Carbon Trust's Energy Efficiency Financial Scheme which offers low interest (zero interest in Wales) loans.

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