By Hans Nieuwkerk, Senior Professional Services Surveyor & Registered Valuer
Skyrocketing energy prices are not just a concern for homeowners across the UK, but also a major worry for businesses operating from premises which could soon be soaking up plenty of their profits in running costs.
A recent study (by payments service NatWest Tyl) suggested that almost 65% of small to medium sized businesses are now spending up to a fifth of their total business costs on energy consumption. Eight per cent of SMEs are said to be spending a staggering 35-50% of their total business costs on energy.
Interestingly, the survey of 500 UK SME business owners also found that companies in Yorkshire and Humber pay the highest energy bills in the UK, at an estimated £5,000 a year.
Sadly, the reality is that many businesses, and commercial property landlords, have not done enough in terms of making their premises truly energy efficient in recent years.
It is why Government policies are increasingly focussed on improving energy efficiency in non-domestic premises, with suggestions in some quarters that by 2030 there could be a complete ban on letting buildings with an energy performance certificate (EPC) rating of less than B.
Given it is currently estimated that less than 12 per cent of EPCs lodged in the last 10 years were given a rating B or higher, there is clearly a lot of work to be done.
The combination of spiralling energy costs and a lack of investment from commercial property landlords into green energy has no doubt influenced major announcements from Chancellor Rishi Sunak.
He confirmed rates relief for companies investing in green technologies, such as solar panels and heat pumps, in his recent budget, and went further at the COP26 climate summit in Glasgow, announcing that most big UK firms and financial institutions will be forced to show how they intend to hit climate change targets and move to a low-carbon future.
The message is clear, if energy consumption and cost hasn’t been a focus at your business in the past – it must be so now.
How Garness Jones has reaped rewards of renewable energy
At Garness Jones, we were very fortunate with the building we occupy in Beverley Road, Hull, as it had been occupied by several businesses before we bought it, and each of these had their own electricity supplier.
This brought a rare opportunity for us, as it meant that when we took the decision to invest in renewable energy generation five years ago, we were able to install more solar panels, due to having a number of different electricity suppliers at the property.
This meant we were able to generate more electricity and save a greater amount than on a standard single installation, saving our business more money and also being better for the environment.
We also installed a ground source heat pump which brings us significant reductions on the amount of gas we use. In order to pump the heat out of the ground, we of course need to use more electricity, and this is where the benefit of the additional solar panels comes in.
The more power we generate, the less we have to buy from the grid, again saving resources and money, and on a cold but sunny winters day, we can generate a lot of power to extract the heat out of the ground.
The installation of our ground source heat pump was not simple, and in fact it was quite complicated.
Unlike most installations, which use a loop of pipework running under a large lawn, about one metre below the surface, ours had to use several loops going into the ground to a depth of about 90 metres, due to us not having a great deal of lawn space.
It was the kind of hurdle which I expect would have made many businesses walk away, but as a company of property advisors we felt that by doing our bit for the environment, we set the pace and a good example of what could be done.
I believe we were one of the first clients to have a vertical, rather than a horizontal loop installed, and for the local area and for the company installing the system, this was a bit of a pioneering project.
Now we are reaping the rewards investing in the future and looking longer term back in 2016, taking full advantage of the benefits offered under the Government’s Renewable Heat Incentive (RHI) scheme.
In some years since, we have used virtually no gas at all.
Not even taking into account inflation over the past five years and the soaring costs of energy, we have seen our gas and electricity costs fall by around £2,000 a year.
That saving is all the more significant when you consider that we have more rooms now, which each have air conditioning systems which is used in reverse during cold periods to boost the heating, and during the warm periods to keep us all cool.
Finally, given our office is not usually occupied at weekends, extra solar power generated is exported to the Grid, doing our extra bit for the environment as a business.
We’d be delighted to talk people through the advantages we’ve found from investing in making our premises more environmentally friendly – and the benefits having a more energy efficient, greener building can bring for every business.
