BEIS Calls for Evidence on New Ways to Improve Energy Efficiency for SMEs

           Energy Efficiency

On 13 March, the Department for Business, Energy and Industrial Strategy (BEIS) launched a call for evidence on how to improve energy efficiency in small-to-medium-sized enterprises (SMEs). BEIS has three suggested policy options. The first is an auctioning process that would see energy service companies competitively tender for the provision of energy efficiency measures, funded through levies on suppliers or co-funded by businesses. The second is a business energy efficiency obligation that would extend the domestic Energy Company Obligation scheme to require energy suppliers to deliver energy efficiency measures to businesses. It would be funded through energy bills, which would fall over time through improved energy efficiency. The third is through the development of new finance options for energy efficiency by financial institutions or energy service companies. BEIS has called for feedback on these proposals and included specific questions related to each one. The deadline for submitting feedback is 8 May.

SMEs account for over 99% of the more than 5.7 million businesses in the UK. They are at the core of the UK economy and represent around half of business energy use. Efforts to improve the energy efficiency of SMEs could yield significant emissions reductions. However, successful energy policymaking for SMEs is elusive. SMEs, while an engine of growth and job creation, also see significant job destruction. Companies that close do not retain or spread the knowledge gains that capacity-building programmes (like drives for energy efficiency) deliver. Many SMEs are more concerned with the operation of their businesses than with developing in-house knowledge on energy efficiency. Knowledge that does make its way into a business can rarely get acted upon.

The International Energy Agency in 2015 developed recommendations for energy efficiency programmes directed towards SMEs. They should consider: (1) tailored information delivery to SMEs, (2) capacity-building for consultancies to improve service delivery to SMEs, and (3) improved access to finance for energy efficiency in SMEs.

Nick Fedson MEng MSc

Nick is an analyst with an interest in energy, climate, and sustainability. Nick maintains both technical and policy interest in these areas, with an undergraduate background in mechanical engineering from the University of Bristol and a recently completed Master’s degree in Global Energy and Climate Policy from SOAS, University of London. He has completed internships in a solar energy consultancy in Brighton, a not-for-profit independent think tank in New Delhi, and in data analysis at a software company in Cambridge.