Renewable Energy for Business: What Your Options Actually Are

Renewable energy for business is no longer a niche choice — it’s a mainstream procurement decision. But the range of available options, the different cost structures, and the varying degrees of genuine environmental impact make it one of the more complex areas of energy procurement to navigate without clear information.

This is a practical guide to what actually exists in the UK market, how each option works, and what suits different business profiles.

How Businesses Access Renewable Energy: Three Fundamentally Different Routes

There are three ways a business can use renewable energy: buying it from the grid under a green tariff, contracting directly with a generator, or generating it on-site. Each operates differently, costs differently, and delivers different levels of environmental credibility. Understanding the distinction matters — particularly if you have formal sustainability commitments.

Option 1: Grid-Supplied Renewable Electricity (Green Tariffs)

The simplest entry point. Your supplier matches your electricity consumption to certified renewable generation using REGO (Renewable Energy Guarantees of Origin) certificates. You pay a standard or slightly elevated unit rate; your supply is administratively classified as renewable.

This option is accessible to any UK business regardless of size, sector, or premises type. No changes to your site are required — it’s a contract decision, not an infrastructure investment.

Premium over standard market rates varies considerably: some suppliers offer green tariffs at zero premium; others charge up to 10–15% more. Always benchmark the green tariff rate against standard market rates before committing. The environmental designation should not automatically justify a significant price differential — particularly for REGO-backed products where physical additionality is limited.

Option 2: Power Purchase Agreements (PPAs)

A direct commercial relationship between your business and a renewable energy generator. Instead of buying electricity from a supplier at market rates, you contract to purchase power from a specific wind farm, solar park, or hydro facility at an agreed price for a defined term — typically 5–15 years.

Two main structures exist:

• Sleeved PPA: Physical delivery of the renewable electricity to your meter, balanced through the grid. More complex to administer but genuinely matches your consumption to specific generation output.
• Synthetic PPA (Contract for Difference): A financial arrangement where you pay or receive the difference between your agreed PPA price and the prevailing market price. No physical supply change, but provides long-term cost certainty and associated renewable certificates.

PPAs are typically viable for businesses consuming 2–5 GWh per year or more. The primary commercial benefits are price certainty over the contract term and stronger environmental credentials than certificate-only products. Aggregated PPAs — where smaller businesses pool their consumption to access generator-direct pricing — are developing but remain relatively complex for SME buyers.

Option 3: On-Site Solar Generation

Solar photovoltaic (PV) systems installed on your roof or land generate electricity that directly offsets your grid consumption. It’s the most accessible form of genuine on-site renewable generation for UK businesses and the option with the strongest commercial payback case at current electricity prices.

Key parameters for a UK business evaluation:

• Capital cost: Approximately £700–£900 per kWp installed, inclusive of inverters, mounting, and installation. A 100kW system for a medium-sized industrial unit typically costs £70,000–£90,000.
• Annual generation: UK sites average 850–950 kWh per kWp annually — lower than southern Europe but sufficient to deliver strong returns at current grid electricity prices.
• Self-consumption: Businesses with significant daytime operational loads — manufacturing, food processing, logistics, retail — achieve the highest self-consumption rates and the best financial returns. Buildings that are unoccupied during daylight hours achieve lower self-consumption without battery storage.
• Export income: Surplus generation can be exported under Smart Export Guarantee (SEG) tariffs. Rates range from 3p to 15p per kWh depending on supplier and tariff choice.
• Payback period: Typically 7–12 years for a well-specified system at current electricity prices, with a system lifespan of 25–30 years.

Battery storage is increasingly paired with solar installations to improve self-consumption, reduce peak demand charges, and provide resilience. The additional capital cost (typically £30,000–£50,000 for a system matched to a 100kW solar array) usually extends payback by 2–4 years but improves the overall financial profile where time-of-use pricing applies.

Option 4: On-Site Wind Generation

Large-scale wind turbines are viable for rural and semi-rural businesses with sufficient land, planning consent, and adequate grid connection capacity. A single 500kW turbine installation represents a capital commitment of £600,000–£900,000, and planning and grid connection timelines are typically 2–4 years from initial application.

Small-scale turbines (under 50kW) exist for exposed rural sites, but their economics are less compelling than solar in most UK locations. Unless your site characteristics specifically favour wind — high average wind speeds, open exposure, minimal planning constraints — solar PV typically delivers a better risk-adjusted commercial return.

Option 5: Biomass Heating

Biomass boilers burning wood pellets, chips, or agricultural waste can replace gas boilers for space heating and process heat. Capital costs are higher than equivalent gas systems; fuel costs are typically lower and more stable; and thermal output is classified as carbon-neutral under current UK accounting frameworks.

Biomass is most appropriate for businesses with substantial heat demand, reliable fuel supply access, and adequate space for fuel storage. Rural businesses, food processors, agricultural operations, and facilities with large space heating requirements are the typical best-fit profile.

Which Option Fits Which Business?

A practical guide by annual energy spend:

• Under £30,000/year: Green electricity tariff. Minimal or zero premium, straightforward to arrange, adequate for most ESG reporting requirements.
• £30,000–£150,000/year: Green tariff plus on-site solar evaluation. Solar payback is typically compelling at this consumption scale.
• £150,000–£500,000/year: Solar with battery storage consideration, green tariff, and initial PPA feasibility assessment.
• Over £500,000/year: Full PPA evaluation, on-site generation programme, demand response strategies, and formal Net Zero pathway planning.

How Telnergy Helps

We work with UK businesses across the full spectrum of renewable energy options — from straightforward green tariff procurement to advising on PPA structures and on-site generation feasibility assessments. Our position is always independent: we don’t benefit from directing you towards any particular product, and we will tell you clearly when a renewable premium is not commercially justified for your specific situation.

The starting point is a clear picture of your current consumption, contract status, and operational profile. That conversation takes 20 minutes and costs nothing.

📱 WhatsApp: 07360 272168 | 📧 Email: hello@telnergy.com | 📞 Phone: 01202 028888

Telnergy Limited · Independent commercial energy consultancy since 2002 · Ofgem registered TPI · ADR Ref E3561 · CRN 04576876 · Christchurch, Dorset