Energy efficiency has emerged as a crucial practice for many small businesses. Due to power generation being 273,265 gigawatt hours (GWh) in 2022 and beyond, a 2% increase over one year, small businesses must strive to manage their energy consumption to protect the environment.
With rising energy bills and increasing environmental impacts, small businesses can reduce their energy usage with various government incentives.
Learn more about the energy incentives for small businesses in Australia below.
Australian Government Energy Initiatives and Incentives
A small business energy incentive is important for helping new businesses with their cost savings, environmental responsibility, and long-term sustainable growth. Energy efficiency isn’t just a trend–it’s a strategic imperative that can shape the future of a small business in Australia and the rest of the world.
Discover what these energy incentives are and how businesses can take advantage of them.
Renewable Energy Target (RET)
The Renewable Energy Target (RET) incentive is a national policy framework that encourages the increased generation of renewable energy sources in Australia. It sets a specific target for small businesses to ensure a percentage of Australia’s electricity comes from renewable sources by a designated year.
RET primarily aims to reduce greenhouse gas emissions and foster economic growth in the renewable energy sector.
This incentive allows small businesses to access solar panels, wind turbines, and renewable energy systems. They will gain Small-scale Technology Certificates (STCs), which can be traded or sold, providing businesses with an additional revenue source.
Small-scale Renewable Energy Scheme (SRES)
The Small-scale Renewable Energy Scheme (SRES) facilitates the uptake of small-scale renewable energy systems by encouraging businesses to use solar panels, micro-combined heat and power (CHP) systems, or LED commercial lighting. This incentive is similar to RET, except it doesn’t set a target for energy capacity each year.
SRES encourages the adoption of smaller systems depending on the business and its individual installations for energy production.
Businesses can also sell STCs to energy retailers or registered agents to get a discount for the upfront costs of installing energy systems.
Energy Savings Scheme (ESS Scheme)
The Energy Savings Scheme (ESS) wants small businesses to implement energy-efficient measures to reduce their overall energy consumption. They can earn STCs for every megawatt-hour (MWh) of energy they save through renewable energy systems. Selling these certificates, along with the reduction of operational costs, can help a business save money.
Some examples of energy-efficient products in this scheme include LED lighting, heating, ventilation, and air conditioning (HVAC) systems, and insulation. Simple installations with LED lighting mean businesses can use 75% less power, reducing their energy bills and protecting the environment.
Retailer Energy Productivity Scheme (REPS)
The Retailer Energy Productivity Scheme (REPS) enhances energy efficiency in the retail sector to reduce energy consumption and greenhouse gas emissions. This scheme helps small retailers lower their energy bills through product implementation or energy-saving advice.
Products such as heat pumps, LED lighting, HVAC systems, and solar panels can reduce operational costs, meaning small businesses will save money in the long term. They will also gain attention from environmentally conscious customers who pay more money to a business with energy-saving strategies in place.
Energy Efficiency Grants
An energy efficiency grant is a small business energy incentive that encourages businesses to adopt eco-friendly practices to reduce their carbon footprint. The government created the Small Business Energy Saver Program to offer businesses personalised energy assessments and insights into their current energy consumption.
Small businesses can also receive grants to cover the costs of installing heating and cooling systems, solar panels, and other eligible assets.
The grants also promote the Energy Efficiency Improvement Scheme (EEIS), which helps businesses reduce their energy bills while gaining financial incentives from the scheme. In turn, they can transform their operations without worrying about the costs of implementing eco-friendly measures.
Tax Incentives and Deductions
The last small business energy incentive is a maximum bonus tax deduction. These incentives created by the Australian government can reward businesses for taking proactive steps toward reducing their carbon footprint.
Some of these tax incentives and deductions include:
- Instant asset write-off: Small businesses can claim an immediate deduction for the full value of eligible assets, such as solar panels, heating and cooling systems, and commercial lighting. This maximum bonus tax deduction reduces their tax liability, making them more inclined to choose energy-efficient upgrades.
- Small business income tax offset: Businesses with an aggregated annual turnover of less than a specified threshold can gain additional tax relief. This means the business has a reduced tax burden.
- Energy-efficient investment deductions: The government offers deductions for businesses with energy-efficient assets like solar water heaters, heat pumps, LED lighting, and more.
Energy incentives encourage small businesses to embrace energy efficiency and gain financial benefits at the same time. This not only improves their financial health, but also pushes them toward a sustainable future.
Australia could experience sufficient greenhouse gas reductions by 2023 if businesses made sustainable changes. Therefore, energy incentives are crucial for protecting our environment in the long term.
For more information on the energy incentives for small businesses in Australia, contact Ecosaver today to learn about the best energy-efficient products.