RENEWABLE TECHNOLOGY - 09.07.2010

Renewable energy funding

What’s renewable energy?

Renewable energy comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, all of which are renewable. Examples of renewable energy technology include solar heating systems and wind turbines.

What financial help is available?

Enhanced capital allowances. These enable businesses to claim 100% first-year capital allowances on their spending on qualifying plant and machinery. There are currently three schemes: (1) energy-saving plant and machinery; (2) low carbon dioxide emission cars and natural gas and hydrogen refuelling infrastructure; and (3) water conservation plant and machinery.

Will you qualify? The scheme is open to all businesses that pay UK Corporation or income tax. However, there are certain qualifying criteria - money must only be spent on new and unused energy-saving equipment, and the equipment must meet published energy-saving standards.

Interest-free loans. Companies can also apply for an unsecured interest-free energy efficiency loan of between £3,000 and £100,000 (£200,000 in Northern Ireland) obtainable through the Carbon Trust. The loans are available for businesses that are replacing or upgrading existing equipment with more energy-efficient versions and to fund projects such as lighting, boilers or insulation. The loans are government funded and unsecured and can be repaid over a period of up to four years. Anticipated energy savings offset the loan repayments, so the new equipment should pay for itself and your business should continue to make savings year on year. Details of the scheme and an online application form can be found at http://www.carbontrust.co.uk/energy/takingaction/loans.htm.

Will you qualify? The company must be based in England or Wales and have less than 250 full-time employees, less than £35 million turnover, less than £30 million assets and no controlling interest of more than 25% by a non-SME.

And the new Feed in Tariff scheme?

The Feed in Tariff was introduced on April 1 2010 and provides financial incentives for businesses to install renewable electricity-generating technologies. It does this by guaranteeing a minimum payment for electricity generated as well as any that’s exported to the national grid. So if you have solar electricity (photovoltaic or PV) panels installed on the roof of your building, you’ll get 41.3p for every unit of electricity generated - even if you use it yourself. The tariff is index linked, so if electricity prices soar, your rate of return will rise accordingly. You also get a bonus 3p for every unused unit of electricity you export back to the grid. A typical system costing between £10,000 and £12,000 should give you around a £1,000 return every year and reduced electricity bills.

What you’ll save

This example is based on a typical 2kWp photovoltaic panel system and assumes that half of the electricity generated is exported to the grid.