Small and medium-sized enterprises (SMEs) are a central part of economies worldwide, in the UK alone, there were 5.6 million SMEs in 2021, comprising 99% of all businesses. Although SMEs consume modest amounts of energy, collectively their energy demand is considerable, and as such, they have a huge role to play in the global drive to achieve a net zero economy.

Alongside the need to act more sustainably to hit net zero targets, SMEs will find that improving their energy efficiency can be an easy way to increase their profitability and competitiveness. With energy costs predicted to soar in 2022, an energy efficiency focus will lessen the blow for SMEs and future proof their business against volatility and uncertainties that might hamper growth. The money saved on bills can then be invested in improving other workstreams, such as quality and output, increasing resilience and enabling new business opportunities.

Almost a third of small firms highlight the cost of energy as a barrier to the growth and success of their business. Finding energy efficiency savings is the single best way of reducing these costs over the long-term. Small businesses need all the support and information they can get to help to make these savings wherever possible.

John Allan

National Chairman of the Federation of Small Businesses.


Road to energy efficiency: the benefits surpass the challenges

It’s not easy for SMEs though. There are ever-growing pressures coming from a number of sources; including consumers, government regulations and, more recently, the UK’s 2050 net zero target and 10 Point Plan. Furthermore, SMEs face various barriers that deter them from adopting energy efficiency measures. SMEs seldom have enough time and resources to explore energy efficiency options, and lack information about where and how energy is used in their companies. Moreover, energy efficiency usually doesn’t make the cut in SMEs priority lists, especially in the early stages. Access to financing for energy efficiency measures is another constraint, caused by insufficient capacity to develop bankable projects with financial institutions, which often remain reluctant to provide financial products due to perceived risks and a lack of suitable financial products.

Whilst the above all sounds daunting, it doesn’t have to be. Energy efficiency in businesses can come in several forms, from directly improving your business energy consumption, to producing your own energy. Improving energy efficiency doesn’t always require costly investments. It is often prudent to start with simple, no/low-cost actions which can help identify areas that will need greater investment to elevate energy efficiency to the next level. Below is a non-exhaustive list of energy efficiency measures that could be adopted by SMEs.

No/low cost energy efficiency measures Investment energy efficiency measures
Upgrading lighting to LED Install a heat pump
Adjusting A/C cooling set point Install solar PV
Turn off electrical equipment overnight Install biomass boiler
Virtualise computer servers Fully insulate SME unit (walls, roof)
Increase video conferencing rather than travel to face-to-face meetings Replace boilers with a more efficient model
Insulate hot water and radiator pipes Replace radiators
Install thermostatic radiator valves Replace radiant heaters with IR heaters
Add Endotherm to radiators Install destratification fans

Whilst energy efficiency measures are an excellent start for SMEs, there are options to produce your own energy, some of which have been highlighted above in investment measures. A popular investment seen by Avieco in their clients is solar PV, with some of them predicting a 9 years return on investment and a significant reduction in energy costs.

Funding energy efficiency improvements

What makes energy efficiency improvements so convenient for SMEs is that there often is funding available from the Government to help SMEs become more energy efficient. It should be said that funding has been fickle over the years and, as the uptake of available funding streams is increasing, taking advantage of funding early is recommended.

Whilst SMEs can apply for funding independently, there are a number of funding pots available that come with additional support from dedicated organisations. A couple of examples of these funding streams are:


  • Low Carbon across the South East (LoCASE) is a partnership between councils across the southeast with the aim to encourage uptake of low carbon solutions by SMEs.
  • Any SME can use available funding towards energy efficiency measures for their business.
  • LoCASE provides grants for businesses of up to £10,000 as well as training workshops and fully funded events.
  • Targeted business support is on offer for companies who offer “green” or low carbon goods and services.

More information on LoCASE can be found here.

Low Carbon Workspaces:

  • Offered to SMEs in Buckinghamshire, Bedfordshire, Berkshire, Hertfordshire, Northamptonshire and Milton Keynes.
  • Grants offered between £1,000 and £5,000 to cover up to a third of the cost of making energy improvements.
  • Eligible projects include lighting, renewable energy, equipment upgrades, heating/cooling upgrades, building fabric improvements.

More information on Low Carbon Workspaces can be found here.

Can you afford not to step up?

SMEs way of doing business is under the spotlight. From stakeholders demanding a switch to more sustainable business practices, to increasingly volatile energy costs and tightening regulations from the Government, the pressure to act is increasing.

Investing in energy efficiency presents some challenges but it is also the one step that could solve the double pressure SMEs are facing, allowing them to make their business more sustainable and keeping energy costs down.

BEIS estimate that all SMEs could save 18-25% on energy bills per year by installing energy-efficient measures throughout their business, and there are a range of grants and funding streams available which would further increase cost savings.

However, once these funding streams expire, they won’t be replaced, as it happened in the past with the Utilise Plus Programme or the Non-Domestic Renewable Heat Incentive (NDHRI).

In conclusion, tackling your business’ energy efficiency makes sense: for your pockets and for the planet.

Avieco is currently supporting businesses in the South East to apply to the LoCASE scheme to start improving their energy efficiency. Get in touch with our experts if you need help.

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