Ben Brading 7 min read

Business energy grants

Business energy grants are financial incentives intended to encourage companies to invest in making their business greener. These generous grants are a key part of the government’s building for 2050 plan.

Explore how your business can benefit from government energy grants promoting green initiatives, such as heat pump installation, enhanced building insulation, and renewable energy generation.

Discover how to take advantage of these grant schemes with our guide:

Types of green investment that can receive grants
The different ways you can receive grant funds
How to find and apply for business energy grants

What are business energy grants?

Business energy grants available in the UK aim to promote specific green energy investments by providing financial support in various forms. Initially, let’s examine the types of green energy expenditures for which grants are generally available.

Types of business energy initiatives that receive grants

Here are the types of green business investments that are supported by energy grants:

Upgrading to green heating solutions – Most commercial buildings in the UK use traditional gas boilers for heating over the winter. The issue is that these boilers burn natural gas – a fossil fuel. Grants are available for investing in green alternatives like heat pumps or biomass boilers.
Energy efficiency upgrades – Businesses can significantly reduce their business gas rates and associated carbon emissions by investing in improved building insulations. Similarly, investing in LED lighting and energy-efficient air conditioning systems can reduce business electricity rates.
Electric vehicle charging – The government is encouraging the adoption of electric vehicles (EVs) in commercial fleets. The UK government actively supports installing EV charging stations that use a business electricity supply as an alternative to petrol and diesel.
Energy audit – Business energy audits are a service that large companies can use to identify inefficiencies in their energy consumption. Some local councils offer vouchers to fund external energy auditors.
Green energy generation – There are many grants and incentives available for businesses that want to invest in commercial renewable energy generation. The most popular option is investing in a commercial solar panel array.

Types of business energy grants

Business energy grants are provided in different ways depending on the scheme. Here are the main ones to be aware of:

Capital contributions – These are grants where a government authority contributes a specific percentage towards the capital expenditure made by a business for a large green investment, such as commercial solar panels or heat pumps.
Vouchers – Vouchers can be used to pay for services from specific government-approved firms. Business energy grant vouchers can be used to pay for business energy audits and for purchasing EV charging equipment.
Enhanced capital allowances – A scheme that reduces a business’s corporation tax liability in the year where capital investment is made into green technology. The incentive typically allows the company to take the entire investment as a deduction in the year in which the investment was made.
Green financing – These are business loans supported by the government, offered on favourable terms to provide businesses with the capital required to make substantial investments in green technology. Businesses can then repay the investment over the lifetime of the investment.
Export schemes – Schemes which allow businesses to sell green electricity they generate from renewables back to the national grid on favourable terms. The current scheme export scheme for new renewables installations is the Smart Export Guarantee.

Why would an energy grant be useful to my business?

Here are the three main ways an energy grant can benefit your business:

Reduced business energy costs: Improved efficiency of plant and equipment leads to lower energy expenses.
Reduced overall carbon footprint: Boosts your business’s green credentials by lessening its environmental impact.
Development of additional income streams: Opportunities arise from investing in renewable energy generation, eliminating energy bills or creating new revenue sources.

How do you apply for a business energy grant?

The process of obtaining a business energy grant can seem daunting, often involving completing a lengthy application form. We’ll break down the key steps here.

It’s important to note that business energy grant applications are usually administered by local councils, and the process may vary from one council to another. However, the typical steps involved in applying for a business energy grant are as follows:

Step 1: Decide on your green investment

The first point to consider is that all types of business energy grants only provide a contribution towards a green investment; there is no completely ‘free’ money available.

The most generous business energy grants offer up to a 50% contribution towards an investment, but most provide significantly less.

The initial step is to determine which type of green investment would be most beneficial and affordable for your business. Review our Types of expenditure supported by green grants above for more information.

Step 2: Research the types of grants that are available

The next is to research what types of grants are available to support your planned investment.

Grants may be offered by the central government, devolved administrations, or local councils, so it’s worth committing the time to identify all the grants you are eligible for.

Jump to below for our full guide to finding the business energy grants available to your business..

Step 3: Review the eligibility and support criteria

The next step involves ensuring that the energy grant aligns with your business’s needs and that your company meets its criteria. We recommend reviewing the following factors:

Grant support amount: Assess whether the support offered by the grant is sufficient, considering your budget and chosen green investment.
Location criteria: Local council grants typically have strict location criteria. Verify that your business’s address falls within their catchment area.
Application deadlines: Grants often have limited funds available and may close quickly. Ensure that the scheme is still open for applications.
Grant conditions: Examine the detailed conditions of the grant funding, including the method and timing of receiving the grant funds if your application is successful.

Step 4: Apply for the business energy grant

The next step is to proceed with the application process for your chosen business energy grant, which, for some grants, can be quite laborious.

The application for local grants is typically a Microsoft Word document found on your council’s website. This document can be filled out, electronically signed, and emailed to a specified address.

If you require assistance during this process, there are local and national organisations that specialise in supporting the business energy grant application process. We would, in particular, recommend the energy-saving trust.

Step 5: Await grant approval and settlement

Local business energy grant applications are typically processed within two weeks of submission.

If your application is accepted, the business energy grant will usually specify a time frame (typically six months) during which your business must provide proof of the green energy investment purchase. This proof generally takes the form of a VAT invoice from the vendor and a bank statement showing the payment.

What happens if my business energy grant application is unsuccessful?

Business energy grants invariably have strict sets of conditions and criteria that determine eligibility. If your business fails to meet these conditions, your application is likely to be rejected.

The decision to approve or refuse a grant and the amount awarded is typically at the sole discretion of the authority administering the grant.

In the unfortunate event of a grant application rejection, the administering authority should provide feedback and the reasons for the rejection. Your right to appeal such a decision will depend on the rejection’s specific reasons and the terms and conditions outlined in the grant.

How to find available business energy grants

In the UK, the general business energy grants available to companies in all regions can be found on the gov.uk page on finding funding to help your business become greener.

The best business energy grants, however, are typically offered by devolved administrations or local councils where your business is investing in their district.

With local grant schemes, there is usually a specified maximum funding available, meaning that the council will only accept applications for a short period.

Therefore, it’s crucial to stay informed about the grants that are available. Here’s how to do it:

English and Welsh business energy grants

In England and Wales, the best business energy grants are offered by local councils. Happily, the website gov.uk offers an easy search function to find the grants available in your region here.

Here’s how to use this search function:

Select ‘grant’ on the left-hand side
Select whether you are an established business or start-up
Select the location of your business within the country.

The service will then automatically filter for the relevant grants available.

If the available grants are limited, we recommend opting for the “Get Emails” feature to receive weekly emails about new and pertinent grants available for your business.

Scottish business energy grants

The devolved Scottish administration currently offers more generous business energy grants compared to the rest of the country.

Here are some key resources to explore for finding Scottish business energy grants:

SME loan (and cashback) scheme – Used to finance the installation of energy-efficient systems or equipment.
Scottish Enterprise funding programmes – A live list of the current Scottish business funding schemes.
Find business support services in Scotland – A regional search function for funding and other support.

Finding local business energy grants

Local councils are often the best source of business energy grants. Your local council website is a great place to visit to find information about upcoming and currently available grants.

If you are awaiting a specific type of grant, we recommend regularly checking your local council’s website for updates.

Here’s a service you can use to find your local council website.

Business Energy Grants – FAQs

Business energy grants can be complex. Here, our business energy experts aim to answer the most commonly asked questions about the grant process.

Are there grants specifically for small businesses?

Yes, many grants offered by local councils are specifically available to small and medium-sized enterprises (SMEs). These grants are often more generous for smaller businesses, which typically have less access to the capital needed to invest in green technologies.

Check out our finding business energy grants section above to find out the support available to your small business.

Can I apply for multiple grants simultaneously?

It depends. Certain types of business energy incentives can be combined. For instance, a grant for investing in commercial solar batteries can work in conjunction with the Smart Export Guarantee Scheme.

However, some grants prohibit combining with others. It’s advisable to thoroughly review the criteria and conditions of each business energy grant you intend to apply for.

How long does it take to receive grant funding?

For most business energy grants, the funds will only be released to your business after you have made payment for your green investment.

Typically, you are required to provide your local council with an invoice and proof of payment. Upon receipt of these documents, your council will usually reimburse your business with the grant funds within a few working days.

Can non-profit organisations apply for business energy grants?

It depends. Some local grants are designed to encourage business growth in certain regions and may not be available to non-profit organisations.

Other grants are open to a variety of entities, including charities, businesses, schools, and other organisations that aim to reduce the carbon footprint associated with their energy use.

Are there business energy grants available to struggling businesses?

Yes, some business energy grants are specifically targeted to help businesses which are struggling financially. Ofgem, the regulator, maintains a page on getting help if your business cannot afford its energy bills.

Some specific business energy suppliers and commercial gas suppliers also proactively offer support to their small business customers. For example, here’s British Gas’s page on their small business energy support fund.

Businesses can also proactively reduce their energy costs if you compare business energy and compare business gas to find cheaper fixed deals available in the market.