A Guide to Green Energy Business Grants

In the context of the global climate crisis, many businesses are taking positive actions towards greater sustainability and lower carbon emissions in many different areas of what they do. Whether it’s making some changes to day-to-day operations or transport, altering the supply chain to prioritise sustainability or trying to save energy in the office, there are many potential steps for businesses of all sizes to take that can make a small difference quickly.

Alongside this, some businesses are also looking at their longer-term impact on the environment and how they can make investments in sustainable technology or greener energy now that will make a significant difference over time. Not only does this have a real impact on the planet, but it can also often mean that businesses save money in the long term, which makes it a real win-win. There are currently a number of different ways in which the UK government and local authorities are incentivising businesses to do just that.

In this guide, we look at the funding options and support available for businesses of all sizes to make greener choices.

Why Does the Government Offer Green Energy Business Grants?

The government has set aside almost £5 billion in funding to help UK businesses become greener as part of the country’s commitment to reach net-zero emissions by 2050. Reaching this target will be impossible without businesses of all types and sizes contributing to the goal. That is why this funding is designed to help incentivise some of the changes needed, with the government subsidising some green measures to encourage eligible businesses to take action now and reap the long-term benefits.

As with any government-backed scheme, green energy business grants are subject to specific eligibility criteria and can be changed or closed to applicants at certain points in time, so it’s important to research what is available to find the right solution for your specific business and circumstances.

Some business green energy grant schemes are run via local authorities rather than central government, and different schemes can often be available in England, Scotland, Wales and Northern Ireland, so there can be many variables for businesses to navigate to access green grants and funding. However, companies wanting to improve their sustainability and reduce their carbon footprint can potentially access thousands of pounds to help with that journey, so looking into the grants available can be worthwhile.

Green Energy Grants for Small Businesses

Green energy grants for small businesses are designed to help SMEs buy and install equipment or products that help reduce greenhouse gas emissions. A grant is usually able to cover a certain percentage of the costs (up to a cap) for purchase and installation, depending on the specifics of the scheme. In many cases, once a grant is awarded, the business will need to pay the up-front costs of the project, then the grant will be paid out once the work is completed, enabling the company to recoup some of the costs.

While this list isn’t exhaustive, some of the common uses for a green energy grant awarded to a small business can include:

• Installing LED lighting to replace older systems using traditional incandescent, fluorescent or halogen bulbs.

• Installing solar PV systems to generate green energy using solar panels.

• Installing insulation in the work premises

• Installing a more efficient heating system

Every individual scheme has its own eligibility criteria, requirements, and conditions, but most businesses will need to carry out an independent assessment to confirm the potential impact of the change on their energy use and carbon emission reduction before applying for a grant.

Take a look at our SME energy saving tips for more ways to reduce energy use in the workplace.

Finding Green Energy Grants for Small Businesses

To find the current small business green energy grants available in your area, check:

The government’s ‘find green funding’ page.

Your local authority’s website, which will have a dedicated area for businesses, then use the search function to look for ‘green grants’.

Your local Growth Hub, a government-supported programme offering businesses of any size and sector with advice and support, including sustainability schemes and grants.

Most regions will also have a Chamber of Commerce, which provides support to businesses operating in that area. They can often signpost to any other local grants available to help with greener business energy and other sustainability goals.

Find out more about energy grants for small businesses.

Green Energy Grants for Large Businesses

For larger businesses, who already have to report on their energy and carbon emissions if they meet the criteria, some of the grants available to smaller firms are not an option. However, there may be alternative funding sources, depending on the circumstances. Every green energy grant scheme will have its own eligibility criteria and application process. Some of the options may include:

The Industrial Energy Transformation Fund (IETF)

Aimed at businesses with large sites that have high energy use, IETF provides a matched funding scheme for businesses implementing a variety of different energy efficiency measures. This is capped at £30 million per business.

Find out more about IETF.

DEFRA Grants

Primarily aimed at supporting sustainable initiatives in rural communities, agricultural businesses and other food production, DEFRA sometimes offers grants to eligible businesses to help implement more sustainable processes or other measures that contribute towards protecting the planet and reducing carbon emissions.

Find relevant DEFRA grants using the government’s 'Find a Grant' tool.

Other Types of Green Funding for Businesses

Along with the grants already mentioned from local or national government organisations, there are other kinds of grants and funding to help businesses take certain sustainable steps where green energy is concerned. These include:

EV Workplace Charging Scheme

This nationwide scheme provides support for businesses (along with charities and public sector organisations, amongst others) for installing up to 40 electric vehicle charging points at their sites. This grant covers up to 75% of the product and installation costs, which is capped at £350 per socket.

Businesses may want to install EV chargers at work for their staff, fleets, or visitors to help encourage more sustainable transport methods.

Find out more about this workplace EV charging grant.

Green Loans

The beauty of grants is that they don’t need to be repaid. However, if green energy grants are not available for a specific business and circumstances, another option to access money to invest in sustainability that will benefit the organisation in the long term could be a green loan from a business lender. These loans, often available from many of the UK’s biggest banks, offer funding at a reduced interest rate, which must be used by the business to invest in specific sustainability measures.

There are many different types of green loans and lenders to choose from, and every lender will have their criteria for what the money can be spent on, so it’s important to do plenty of research before taking on this kind of loan to make sure it’s right for the individual business and situation.

Green Business Energy

Along with making positive changes in business energy technology, use, and processes, businesses can also help lower their carbon footprint by choosing renewable business energy.

Taking measures to reduce business energy usage is a great way to help the planet while also making a real difference in bills, but switching to a cost-effective renewable energy tariff can also save money, on top of having a positive impact on the environment.

Find out more about the benefits of renewable energy for businesses.