How Can I Assist My Clients with Their Green Ambitions?

James Clinghan, Director of TBP – Trusted Business Partner, gives you a crash course on how to help your clients achieve their green energy ambitions. With nearly two decades of experience in the Asset Finance industry, supporting numerous banks with bringing their green energy finance product to market and helping countless clients bring their green energy initiatives to life, it’s a specialist subject here at TBP and we hope some of our experience proves useful to you and your clients. 

Are My Clients Ready to Embrace Green Energy?

Many of my clients are increasingly focused on energy issues. Is it time to start talking about green energy? Here are some key considerations for businesses:

• Have they been impacted by rising energy costs?
• Do they have surety of supply or experienced blackouts?
• Do their customer base monitor their green credentials or carbon footprint?
• Do they operate in or near Clean Air Zones?

If the answer to one or more or more of these is yes, exploring green energy solutions could be highly beneficial.

Where Should They Begin?

Starting with an energy audit is essential. Numerous businesses offer energy audit services; a quick search on Google or TrustPilot will provide a list of reputable local and national providers. Additionally, free support is available via resources like Levelling Up in the North East. Here’s some handy links for local postcodes:

• NE postcodes
• SR postcodes
• There is not a current free service in DH, DL or TS.

The audit report will identify low-cost and no-cost improvements, along with technology investments such as solar, LED lighting, or biomass solutions. 

At TBP we have access to technology that allows us to check a number of business energy statistics – Genuinely amazing technology! 

Moving Forward After Proving the Need – What Are The Next Steps?

Once the client has received their report and identified their needs, the next step is to gather quotes to assess cost-efficiency.

• Speak to a few different suppliers, get a couple of quotes and project examples.
  • Check accreditations – Solar installers should be MCS accredited as an example. 
  • Ask others who have installations about their experiences and the suppliers they have worked with.
• Do some research on the supplier – Ensure you’re working with a financially sound supplier.
  • Check Companies House
  • Check Google and TrustPilot reviews.
• Do a cost benefit analysis
  • Look at the cost of the project, the installation costs and the CO2 benefits.
  • Building your system to your businesses requires consideration of your future growth aspirations knowing you can export any excess energy to the grid or self-store it in batteries.

You’ve Selected The Technology And Found a Supplier – When Can This Be Installed?

Sadly, that’s the “How long is a piece of string?” question. Typically it takes 4 to 6 months; the longest part of the process is grid connection and planning permissions.

So, How Do They Fund It?

Determining funding options is pivotal. While cash is an option for some, larger projects often benefit from financing terms extending up to 7 or 10 years. 

Funders can offer terms up to 7 years on most assets, larger projects they will push to 10 years and typically funded on hire purchase. Something to bear in mind – Finance Leases can be contentious legally if they are funding something with a Government tariff attached to it.

Funders may offer preferential rates for green technology investments, and staged payments can potentially be financed, depending on the supplier and client risk profile.

Are there any tax benefits?

There are several tax benefits associated with investing in green energy projects. These incentives can vary based on your location and the specific technologies you adopt, but here are some common examples:

• Capital Allowances
  • The UK government offers capital allowances for investments in energy-efficient equipment and renewable energy technologies. These allowances enable businesses to write off the cost of qualifying equipment against their taxable profits.
• Enhanced Capital Allowances (ECAs)
  • Under the ECA scheme, businesses can claim 100% first-year allowances on investments in certain energy-saving plants and machinery. This means the full cost of the equipment can be deducted from the company’s taxable profits in the year of purchase.
• Annual Investment Allowance (AIA)
  • The AIA allows businesses to claim 100% of the cost of qualifying plant and machinery, including energy-efficient and renewable energy equipment, up to a certain limit each year. The current limit is £1 million until 31 December 2023.
• Super-deduction
  • From April 1, 2021, to March 31, 2023, the super-deduction allows companies to claim 130% capital allowances on qualifying plant and machinery investments. This incentive is designed to encourage businesses to invest in new equipment, including energy-efficient technologies.
• Green Finance
  • The UK government and various financial institutions offer green finance initiatives, including loans with favourable terms for green energy projects. While not a direct tax benefit, these initiatives can significantly reduce the financial burden of investing in renewable energy.
• Climate Change Levy (CCL) Exemption
  • Businesses that use renewable energy sources might be eligible for CCL exemptions, which reduce the overall energy tax burden.
• Renewable Heat Incentive (RHI)
  • Although not a tax benefit, the RHI provides financial incentives for businesses that install renewable heating systems. This scheme helps to offset the costs of green energy investments.

Additional Considerations

Beyond direct energy solutions, businesses can explore:

• Transitioning to a green vehicle fleet
• Evaluating the environmental impact of their IT infrastructure
• Optimising energy use in industrial processes through technologies like voltage optimization or motor downgrading
• Considering carbon offsetting initiatives

 

If you need more help or advice on supporting your clients with their green energy ambitions, please don’t hesitate to get in touch. Our team of experts are here to provide personalised guidance and support.