Gareth Parry: The Green Deal must be a good deal

THIS autumn will see the introduction of the UK government’s flagship Green Deal to help households and businesses become more energy efficient. In Scotland the renewables debate often blows in the direction of wind farms, but there are plenty of alternatives.

For example, Scottish farmers are increasingly looking at utilising anaerobic digestion to generate electricity and heat. The idea of farmers becoming energy self-sufficient makes perfect sense.

Although green technology is there for farmers to exploit, such schemes must work financially. This means feed-in tariff rates have to be set high enough to offset the cost of installing an anaerobic digestion facility.

Furthermore, for farmers you have to factor in “farm gate costs” such as the fluctuating price of diesel to ensure green technology gets the take-up; green energy support must be a good deal for small businesses.

So, with this in mind, a recent announcement by the government of new support levels for hydroelectric, anaerobic digestion and micro combined heat and power systems was partly welcome. It gave assurance about feed-in tariffs for small-scale electricity generators.

But, as with last week’s renewable obligation banding announcement, both reviews were limited in giving the green energy sector the continued confidence it needs to invest. For bigger businesses the financial risks of installing renewable technology can be offset by the size of their balance sheets. That’s why Sainsbury’s will power 100 of its supermarkets with underground renewable heat, cutting carbon emissions by 2020. We know smaller Scottish businesses are keen to take advantage of green technology to become more energy efficient. So we must remove as many of the financial barriers as possible.

Our Green Deal “wish list” would include no upfront costs for energy-efficient improvements and flexible financing packages that take into account a firm’s running costs. Moreover, we would like a stable and consistent policy platform. We hope the Green Deal will address the concerns of smaller businesses and provide a sound basis on which to invest. Going green comes with an entry fee, but with the right approach it should not cost the earth.

• Gareth Parry is a partner at DLA Piper Scotland.