What Clean Growth Strategy Means For SMEs

Back in October, amidst much fanfare, the Department for Business, Energy and the Industrial Strategy (BEIS) published its Clean Growth Strategy.
 
It was a much-anticipated document, not least because its publication had been the subject of several delays. But ministers were universal in their insistence that the strategy provided a step-change for the UK: an ambitious set of plans and initiatives to drive clean growth and lower carbon emissions. That latter is of course urgently needed. Business and industry are responsible for around a quarter of the UK’s carbon emissions. And let’s not forget that, at least in London, pollution is hitting levels that require public health warnings.
 
So, the strategy was much needed. But what does it actually mean for businesses, including SMEs?
 
The short version is that the Clean Growth Strategy (CGS) was a step in a government drive for ‘clean growth’ that was kicked off in January 2017 with the launch of the Industrial Strategy – with the CGS followed recently by an Industrial Strategy White Paper. Ministers are determined to push the UK down a path that involves decarbonising the economy. And the top-line for businesses is that includes expectations and initiatives to maximise energy efficiency and promote innovation of low carbon technologies.
 
Fundamentally for SMEs, the CGS included the commitment for a BEIS consultation on improving the energy efficiency of existing and new commercial buildings; raising minimum standards of energy efficiency for rented commercial buildings; and introducing a scheme (details of which are still to be published) that would support at least large companies (and perhaps in time SMEs, as measuring technology becomes more accessible and affordable) to measure and reduce energy use.
 
This probably won’t mean immediate changes for many SMEs. One of the comments about the CGS was that it was something of an aspirational document, albeit one now subject to public consultation with firmer policies and timescales likely in 2018. But in the longer term, the CGS is good news for small businesses – because it offers opportunities to maximise energy efficiency, cut energy usage, and to consequently reduce utilities costs.
 
This forms part of a broader government narrative to drive down consumer electricity costs. Indeed, the headline announcement of the CGS was plans for legislation to increase the powers of Ofgem, the energy regulator, and to get rid of ‘Standard Variable Tariffs’ that increase costs for domestic consumers. But, even then, SMEs will benefit from identifying the opportunities to benefit from the government push to reduce electricity bills.
 
Those opportunities take a number of forms, including greater use of renewable technologies to generate electricity for one’s own use. Some consumers, and indeed some businesses, have already capitalised on falling costs of the likes of solar panels – supported by small-scale battery storage for excess electricity (to be used at times of higher demand or breaks in renewable provision) to take themselves largely or entirely ‘off grid.’ Essentially making themselves their own energy supplier, which drives savings once the costs of installation have been met, while also reducing carbon footprints.
 
These types of small scale renewable and energy storage deployments are set to become more common. The Government committed more than £500 million, as part of the CGS, for investment in what it calls ‘demand response’ technologies that include battery technology. And this was a follow up to the creation of the ‘Faraday Challenge’ earlier in 2017 by ministers to make the UK a world leader in battery technology. The consequence of these initiatives is that there will be consistent innovation and development for battery technologies that are accessible to SMEs, and which can support their energy efficiency and usage, and can reduce their costs.
 
The CGS is out for public consultation until the end of 2017. SMEs will be well served by keeping track of what comes from that process. But, be under no illusion – ministers are pushing hard for clean growth. And, in 2018 that is going to involve encouraging more SMEs to think about their energy usage and energy efficiency.
 
Quentin Scott is a Director of Low Carbon, a privately-owned renewable energy investment company.