Why renewable energy is crucial for SMEs

Written by
Pierre-Louis Lemaire
December 1, 2022
min read

Fossil fuels still dominate the global energy mix, accounting for 79% of energy production in 2021, and their consumption hasn’t started to decline. Moreover, coal, oil, and gas are responsible for 87% of global CO2e emissions, which causes and continues to exacerbate global warming. Massive heat waves, fires, droughts, and floods are already having disastrous effects on social and economic health. In order to limit the consequences of climate change, we must quickly reach "net zero", i.e., switch from fossil fuels to a cleaner energy system. How can renewable energy help achieve net zero emissions? In a recent report, the International Energy Agency (IEA) warned that “reaching net zero emissions by 2050 means doubling renewable energy in 10 years”.

Beyond carbon emissions alone, switching from fossil fuels to renewable energy can bring substantial benefits to individuals and small businesses. As current events show, our societies are heavily dependent on fossil fuels and risk facing a recession when their supply is challenged (e.g., the war in Ukraine causing energy prices to skyrocket, or fossil fuel stocks rapidly declining). Switching to renewable energy can bring resilience to small businesses in a world that seems to be facing an endless energy crisis.

Last but not least, fossil fuels kill millions of people every year, while renewable energy is one of the safest energy sources. Small businesses around the world depend on healthy teams and customers to thrive and would benefit greatly from a world where renewable energy becomes the norm.

In this Academy article, we’ll dive deeper into each of these reasons. You’ll learn what you can do to contribute to the global transition to renewable energy and how your company can benefit from it.

Resilience during an endless energy crisis

Although many may consider Europe to be on the verge of decarbonization, our energy consumption is still very high and carbon-intensive, resulting in one of the highest carbon footprints in the world. For example, 86.63% of the Netherlands' energy consumption comes from fossil fuels (gas, oil, and coal), making its economy highly dependent on energy price fluctuations. Unfortunately, as recent events have shown, energy prices are not immune to crisis, and on the contrary, we are entering a phase of endless energy crisis.

In the EU, gas prices have recently skyrocketed, reaching an inflation rate of over 40%, while electricity has remained below 25% thanks to the stability of renewables. For the first time in 2020 (before fossil fuels became incredibly expensive), ⅔ of the world's new renewable energy projects were producing electricity for less than the cheapest coal plants. “Today, renewables are the cheapest source of power, said IRENA’s Director-General Francesco La Camera. In the span of a single year, renewable energy prices dropped by:

  • 15% for onshore wind;
  • 13% for solar photovoltaics;
  • 13% for offshore wind.

Energy prices from 2010 to 2022 - Fossil gas, onshore wind, offshore wind, PV
Renewable energy v.s. fossil gas in the last decade - INERA

As fossil fuel supplies come under pressure from crises, geopolitical tensions, and resource depletion, energy deprivation and rationing will take hold in spite of us, and  SMEs, being more vulnerable and dependent, will have to bear the consequences first. Small businesses will be the first to go under the bus if they still majorly rely on fossil fuels at the time.

On the other hand, renewable energy often results in more positive outcomes and less system vulnerabilities. Co-founder of Regreener, Bernard De Wit told Coolset that renewables projects lead to: “long-lasting employment for locals to co-create, set-up and maintain the installations that provide renewable energy sources. Next to that, people are trained and educated to learn the benefits of renewable energy sources, plus reduced pollution so increased health.”

Small businesses thrive in a healthy world

While no energy source is totally clean and risk-free, some of them have huge differences in their contribution to global warming and their risk to human health. Fossil fuels are the most polluting and harmful sources of energy, causing millions of deaths every year through air pollution (of which they are the main cause), accidents, and global warming (of which, again, they are the main cause).

Death rate per electricty source - Solar is the lowest while rown coal is the highest
Renewables have by far the lowest death rate among other energy sources - OurWorldInData

In addition to weakening our health through air pollution, fossil fuels power a system of overconsumption that seriously harms our health, long-term productivity, and resilience. On the other hand, renewable energies are more adapted to decentralized systems that favor the development of local small businesses and enterprises, meaning that SMEs would greatly benefit from globally switching to renewable energy.

How to get started - Netherlands

The most common way for businesses to contribute to renewable energy expansion is to install solar panels on their facility’s roofs. Whether your company owns a large building such as a factory or a storage facility, or a smaller office building, solar panels installation offers a great Return-On-Investment (ROI).

In general, solar energy project costs have dropped over the last decade. Moreover, the Dutch Government offers multiple subsidies and tax returns for businesses that choose to produce their own renewable energy:

  • SDE++ (Stimulation of sustainable energy production and climate transition) pays for the amount of carbon emissions your renewable energy saved;
  • ISDE (Sustainable energy investment subsidy scheme) is a subsidy for businesses that produce their own renewable energy from solar panels or heat pumps.
  • Other schemes offer tax returns to entrepreneurs that invest in solar panels to power their company’s electricity consumption;
  • The net metering scheme (intended for companies with a small consumer connection to the grid) allows companies to offset electricity powered back into the grid into future consumption credits to prevent financial loss when electricity is produced by the solar panels but not consumed. As of 2023, this scheme will be phased out by 9% annually.

Most solar panel installers offer two options to companies: either purchasing or leasing the panels. Both alternatives offer great advantages to businesses that want to invest in solar energy.

Finally, SMEs can choose to buy their electricity from a renewable energy supplier to encourage the renewable sector to grow. Another effective alternative is to invest in heat pumps to cut your electricity consumption and lower your dependence on fossil fuels (heat pumps are mostly eligible for the subsidies above).

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