Energy for Londoners: knowledge is power for the capital’s small businesses

Rebecca Sperti, head of business development, services and propositions at British Gas Business, highlights the business benefits of Sadiq Khan's new Energy for Londoners (EfL) initiative.

Eariler this month, mayor of London Sadiq Khan launched the latest phase of his Energy for Londoners (EfL) initiative. The plans detailed £34m of investment in a range of new services to boost energy efficiency and improve access to clean power across the capital.

Of most interest to businesses will be a new £10m commercial boiler scrappage scheme. This will offer London-based SMEs grants to replace old boilers with new, cleaner and more efficient heating systems, helping thousands of businesses in the city with boilers more than a decade old.

So is this the clean energy plan businesses in the capital have been waiting for? It’s certainly a step in the right direction. It can often be a struggle for time-poor small business leaders to prioritise modernising their heating systems. This only tends to happen when it’s absolutely necessary – i.e. when the current one breaks.

But this approch often has an added cost in the long run. Using an inefficient boiler means higher monthly energy outgoings and it is far more likely to breakdown, too, in turn requiring expensive repairs. In the worst case scenario, a very old boiler could even lead to site closures that disrupt business operations entirely and affect customers – a carbon monoxide leak, for example.

With this mind, any intitiative that encourages businesses to review their energy systems before they break down, as the EfL fund will, has to be positive.

But will it work?

We have more than 3000 SME contracts in London whose heating systems we maintain, and 62 per cent of them are using boilers that are 12 or more years old.

We know from speaking to these companies that there are some simple reasons why they don’t take advantage of more modern heating systems.

The first is simple - money. There’s no getting away from the fact that replacing a commercial boiler is a sizeable investment. Whereas larger businesses can generally absorb this cost with more ease, upgrading a boiler is often a more daunting prospect for an SME.

The second challenge is time. Often, the strength of a small business is its speed and versatility. But this can mean there is less manpower that can be spared to manage projects like replacing a heating system that aren’t seen as business critical.

It can be difficult, sometimes, to see past these obstacles. But the benefits of modernising energy systems will outweigh the initial time and cost required to replace a commercial boiler.

Heating and hot water can account for 60% of the total energy use in a commercial building, according to the Carbon Trust, so the whole-life cost savings of a modern, more efficient boiler can be significant – especially for a small business where margins are tight.

Replacing a boiler is also an opportunity to look at new technology like smart meters or, where suitable, low-emissions alternatives to gas such as air source heat pumps.

There is a real need for advice that helps raise awareness of the range of energy options available and, importantly, which one is right for each business. We certainly see this in our work with SME customers and this is why we’ve developed a more consultative approach to energy management.

The EfL initiative has the potential to encourage the capital’s SMEs to think more proactively about replacing their boilers. But there is still a gap to be filled in raising awareness of the business benefits that a modern, more efficient heating system can have.