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SMEs struggling to make energy efficiency progress

Research from the International Energy Agency reveals that SMEs could reduce their energy consumption by as much as 30 per cent but struggle without access to tailored support.

Research from the International Energy Agency (IEA) reveals that SMEs could reduce their energy consumption by as much as 30 per cent but struggle without access to tailored support.

With SMEs making up 99 per cent of enterprises and providing 60 per cent of employment worldwide, energy efficiency improvements in small businesses represent a significant economic opportunity worldwide.

Benefits

According to a new report from the IEA, SMEs currently consume around 13 per cent of total global energy demand. Cost-effective energy efficiency measures could reduce this by as much as 30 per cent – equivalent to the total energy consumption of Japan and Korea combined. 

On the surface, the benefits of energy efficiency are obvious – reduced costs, increased productivity and profitability, reduced exposure to increasing energy prices and other environmental risks, and improved competitiveness.

However, the research shows that implementation of energy efficiency improvements in SMEs is lagging due to a complex set of barriers and a lack of well-designed and accessible support programmes.

While large industrial energy users are increasingly involved in energy efficiency programmes, the potential for energy efficiency in industrial and commercial SMEs is by comparison going “largely unnoticed”, says the report.

Barriers

The IEA’s findings draw on research from around the globe, including analysis on the UK from ENWORKS, which estimates that the failure to implement cost-effective energy efficiency measures is costing UK SMEs up to £2.6 billion a year. 

37 per cent of this cost saving opportunity could be achieved with zero capital investment – showing that access to finance is not the only barrier to implementation. 

As SMEs often focus on the day-to-day tasks of core business, there is often little time and resource available for investigating energy efficiency improvements. Unlike larger businesses, SMEs also rarely have the capacity to develop in-house expertise and are therefore more likely to rely on external advice and support.

The barriers can also be as much psychological as physical. Despite the majority of interviewed businesses in ENWORKS’ research reporting that an energy efficiency measure with a payback period of less than two years made business sense, the actual implementation rate for these opportunities is still only around 13 per cent.

Accessing support

Access to the right support is therefore crucial to help SMEs take advantage of the significant cost saving opportunities presented by energy efficiency.

Fully-funded resource efficiency support is available for SMEs in Greater Manchester through the Business Growth Hub. The Government has also published an easy-to-use beginner’s guide to energy efficiency in SMEs, which can be found here.