The UK’s Clean Growth strategy published by the Department for Business, Energy Industrial Strategy (BEIS) in October 2017 set the ambition to improve UK productivity by helping businesses to be more energy efficient.

The aim is to improve energy efficiency by 20% by 2030. To succeed, energy use needs to fall by 20% and energy intensity by 45% by 2030, as compared to 2015 levels. As well as carbon savings the plan aims to help UK businesses save around £6bn in energy costs.

All in it together?

Achieving the Clean Growth objectives demands collective effort of businesses and organisations from all sectors and all sizes.

Broadly energy usage is split 50/50 between the larger and smaller SME organisations. So how are we doing?

Good and bad…

Since 2000 the UK’s energy usage has fallen but 90% of the improvement has been contributed by larger, often industrial, users. These users have clear financial motives to save and are more likely to hire the resources of Energy Managers. Large non-industrial users have made improvements too, in energy per square foot. Whilst not making absolute savings, the large non-industrial sectors are becoming more efficient as they grow.

What about the SME sector?

SMEs seem to have two major obstacles:

Firstly, sheer volume, a whopping 99% of all UK businesses are SMEs with up to 250 staff, with many viewing energy as not significant in terms of cost when compared to others such as salaries. Legislation cannot cover all businesses and will only target large and medium businesses.

The roll-out of Streamlined Energy Carbon Reporting will engage 12,000 businesses but this is just 1.2% of UK registered limited companies who employ staff. Legislation can influence behaviour but for 98.8% of the market they’re still out of reach.

The second challenge lies in property use. Around 50% of SMEs lease their property, many with utilities paid within the rental agreement. With energy cost hidden from users what motive do they have for becoming energy conscious?

Landlords will need to be in the forefront of change to help the tenant understand about energy usage better and help them save.

Doing the right thing

Despite the barriers, BEIS is rightly taking the initiative to tackle the problem head on.

Last week BEIS announced a competition to encourage new business models supporting the SME market. Whilst the government cannot legislate to force SMEs to save energy, they are trying to offer an incentive to kick start the market.

Only through the engagement of all businesses, can the UK’s Clean Growth plans be carried out.

Haydn Young