Why?
Increase profitability – The Sustainable Energy Authority of Ireland (“SEAI”) estimates that the typical Irish SME with average energy costs of 10% of total operating costs can reduce its energy costs by 30%. It is also worth noting that a 10% saving can typically be achieved with little to no capital outlay. While some expenditure may be required to achieve the additional 20% the payback for energy efficiency investments can be as short as 2 years such in the case of LED lighting.
Aside from increasing margins – and insulating your business from future energy price increases – investing in energy efficiency can improve your businesses reputation with staff and customers while also potentially increasing the value of your property.
How?
Seek advice from impartial experts. SEAI is a good place to start and they have a detailed guide for SMEs whether you are a light or industrial user of energy. Measures can range from energy audits for larger energy users to simply speaking to staff about turning off lights when leaving a room to ensuring thermostats are set at the appropriate temperatures.
Areas to be considered often include lighting, heating, motors and equipment, and monitoring and tracking.
Financing the investment
There are a multitude of SEAI administered grants (typically up to 35% of the cost of a project) available to support eligible investments. In addition, Accelerated Capital Allowances allow companies to write off 100% of the purchase value of qualifying energy efficient equipment against their profit in the year of purchase. This compares to just 12.5% for standard plant and machinery purchases.
Financing of energy efficiency investments can be made through traditional term loans products or in many cases asset finance such as leasing may be the most appropriate financing method. SBCI offers a range of products that can be used to finance energy efficiency investments. For example:
- The Future Growth Loan Scheme is a long-term loan (7-10 years) to finance investment
- A number of flexible asset finance funding schemes are available through the SBCI, including leasing, hire purchase and rental schemes.
Full details of each scheme’s features and how to apply are available on the SBCI website.
To find out more
You can access more energy saving tips on SEAI’s website here: https://www.seai.ie/business-and-public-sector/small-and-medium-business/. SEAI also publishes a very useful guide to energy efficiency for SMEs: https://www.seai.ie/publications/SME-Guide-to-Energy-Efficiency.pdf