Business Microgeneration

What is microgeneration?

Microgeneration is the term used to describe the production of electricity by a homeowner or business on their own site.^[1]

The power user decides to install a microgeneration system on their own premises and reduce their reliance on their energy supplier, allowing the business to become more self-reliant as far as their energy is concerned.

Microgeneration typically involves the generation of electricity or heat using renewable sources such as solar, wind, hydro, biomass, or geothermal energy.

Small-scale production of energy can help businesses cut costs and when they create excess power, they may be able to sell it to the national grid.^[2]

Additionally, installing a microgeneration system in your business premises will remove the need to spend time negotiating with gas and electricity suppliers and dealing with unnecessary administration.

However, relying on an energy supplier can feel like a safer bet, especially if you’re a small and medium-sized enterprise (SME). If you are wondering what business energy options are right for you, we can help you compare all the options on the market in seconds.

Should I consider microgeneration for my business?

Microgeneration provides your business with a ton of money saving benefits. Chief among these is the money-saving aspect on energy costs, as being self-reliant on producing energy cuts out the need for suppliers.

Adopting microgeneration technology would also increase your business’s reputation as an environmentally friendly and socially conscious business. This could boost its profile to an increasingly green-aware customer base, leading to new business.

Also, with the UK’s net zero target by 2050 and the ‘Paris Agreement’ in mind, governments are rewarding businesses for going green.^[3] In the UK, implementing microgeneration allows your business to avoid certain taxes, such as the climate change levy, access grants for the installation of renewable energy tech, and receive subsidies on energy bills.^[4][5] This funding is available under the Non-Domestic Renewable Heat Incentive (RHI), which will be discussed later in this article.

Energy prices are rapidly increasing and are a sore point for domestic customers and businesses alike. Becoming energy independent removes your business’ reliance on volatile energy markets and grid disruptions while also providing backup power during outages, ensuring you remain operational.

What is the business Smart Export Guarantee scheme?

The Smart Export Guarantee (SEG) for businesses is a government subsidy for businesses who produce their own renewable electricity on-site. It replaced the popular Feed-In Tariff (FIT) scheme back in 2020.^[6]

If you have installed solar PV panels or other eligible renewable electricity generation systems in your business site, you may be able to profit through the SEG.

Essentially, your business becomes the energy supplier, ‘feeding’ electricity to energy companies who pay you a set fee per kWh of surplus electricity you generate. You will not be paid for any electricity you use yourself.

Further details about SEG can be found in Ofgem’s guide here.

What is the Non-domestic Renewable Heat Incentive?

The Non-Domestic Renewable Heat Incentive (RHI) in the UK was a government scheme designed to encourage the uptake of renewable heat technologies among businesses. It closed to new applicants on 31 March 2021.^[8]

It provided financial incentives to eligible businesses, public sector organizations, and non-profit entities to install renewable heat systems such as biomass boilers, heat pumps, and solar thermal panels.

Under the Non-Domestic RHI, participants received quarterly payments over a period of up to 20 years for the renewable heat generated by their systems.

The amount of payment was based on the type of technology installed, its capacity, and the estimated amount of renewable heat produced.

What are the pros and cons of Business Microgeneration?

While there are a large number of positives that come with installing microgeneration technology at your business, there are some drawbacks. Not least, the initial outlay for equipment and installation, which can prove challenging, especially for an SME.

To assess whether microgeneration is the right choice for your business, here is a list of pros and cons:What types of microgeneration can my business use?

What types of microgeneration can my business use?

Due to advances in the world of renewable energy, your business can consider several types of microgeneration technologies to meet its energy needs sustainably. Here are some of the options:

Solar Panels

Among the most popular sources of renewable energy, solar panels could be a great choice of microgeneration system for your business. They are compact and sleek and fairly straightforward to install. As long as they are placed in an area with good exposure to sunlight, your business can expect to generate bountiful amounts of electricity.

Whilst you may expect them to only work during the summer months, technological advances have enhanced them as a year-round option. They could prove both a useful way of powering your business and a profitable way of selling energy back to the national grid.

Wind Turbines

Wind turbines could be the right solution for your business microgeneration system, especially if your site is on raised land.

One thing to bear in mind is that wind turbines can take up significant space. Though quite thin, they need to be very tall to be effective, so are a better choice for businesses with large amounts of open space. You will also require planning permission prior to installation of any wind turbines.

However, wind turbines require minimal maintenance and produce loads of energy in a short space of time, meaning your business can expect to quickly harness excess amounts of energy to export.

Micro Hydro Systems

These can be a savvy choice for your business microgeneration system if you live near a water source, such as a river or coastline. You will require planning permission before installing hydro turbines.

You can expect anywhere between 5kW and 100kW of electricity through your hydro turbines, depending on the water flow in the vicinity of your business.^[9] The more water that flows through the turbine, the more electricity is generated.

Biomass Boilers

Biomass refers to renewable organic material such as food scraps, natural oils, fats, or animal manures that can be used to generate biogas, a sustainable energy source.^[10] When combusted, biogas can produce heat and electricity. A drawback of biomass microgeneration is the significant expensive of installation.

Micro Combined Heat and Power

This system generates both heat and electricity from a single source. It’s powered by mains gas or liquid petroleum gas and is considered energy efficient due to its low carbon emissions. It’s a far more environmentally friendly alternative to burning fossil fuels.

How to set up a business microgeneration system

When considering setting up a business microgeneration system, the first step is to consider which system would be the best fit for your business, whether it’s solar, wind, hydro, otherwise.

Determine your business’s energy requirements and goals and select the appropriate microgeneration technology based on factors like location, space, budget, and regulations.

Then, you’ll need to have your business certified under the Microgeneration Certification Scheme (MCS) to verify that it meets the government’s quality assurance requirements. More information on the MCS can be found here.

Once you are certified, work with professionals to design the system and plan its installation. At this stage, explore government funding options that could save your business further money.

When you are satisfied with how you are going to fund the installation, source equipment required and hire experienced installers to set up the system according to design specifications.

Coordinate with utility providers to connect the system to the electrical grid or heating infrastructure.^[11] Also, set up how you are going to sell surplus electricity back to the national grid via the SEG.

Final thoughts

Renewable energy is the future of the energy market, and microgeneration empowers your business to create its own. With some keen research and a solid plan, a microgeneration system could keep your business powered for years to come while making you extra money on the side.