What is micro-generation?

As part of our series on energy security, we’re looking at how businesses can use micro-generation to reduce their energy usage and decrease their reliance on the national grid.

The UK’s energy grid is under stress and, whilst we aren’t in any imminent danger, concerns about blackouts are raised on an annual basis.

Micro-generation is one method of energy production that has been touted as a possible solution. It would move the UK to a more decentralised energy mix, something many would welcome. In fact, according to Greenpeace 67% of primary energy input is wasted in the current system.

Micro-generation is small scale local power generation using renewable sources – think solar panels on your rooftop. It can play a role in providing energy security for the country and helping the Government reach its emissions targets.

Wondering what’s in it for you? By generating your own electricity on a small scale you can reduce your energy bills and your carbon footprint (find out more about going carbon neutral here). What’s more, you can sell the energy you generate back to the National Grid via your utilities provider using the government’s feed in tariff (FIT). You may also be eligible for support towards the cost of installing the technology via the Non Domestic Renewable Heat Incentive (RHI).

About the Feed in Tariff

The feed in tariff provides quarterly payments for anybody who installs one or more of the below energy sources, up to 5 megawatts:

Solar photovoltaic (solar PV)
Micro combined heat and power (CHP)
Anaerobic digestion (AD)

The number of new FIT scheme applicants is limited, meaning you could be on a waiting list for a while until your application is processed. You will have to get a certificate from the Micro-generation Certification Scheme in order to make your application.

How popular is micro-generation?

Micro-generation is becoming increasingly popular, perhaps due to the standard set by companies such as Ikea and Google who famously generate their own energy. A 2012 survey by Ethical Corporation found that 56% of companies  generate their own electricity, or plan to do so in future. Another survey by the same company found that 38% of businesses expected to be generating renewable energy within five years, whilst 42% would switch to micro-generation if it proved to be a money spinner.

What are the advantages of micro-generation?

By diversifying how the UK gets its energy, micro-generation could make the grid more secure and increase its ability to withstand terrorist attacks. By flooding the grid with more renewable energy, it can also help the Government reach its emissions targets. One of the oft-cited drawbacks of renewables is their intermittent nature – the distributed nature of micro-generation can help to overcome this.

Micro-generation has advantages for businesses in the form of FIT payments and reduced energy bills. The fact that a business produces their own energy can also play well with customers, potentially increasing sales.

Micro-generation projects have an initial cost, however this should be offset in time by lower energy bills and FIT payments. In general, it’s considered to be a low risk investment, both for those installing it and the government.

What methods of micro-generation are there?

There are a number of methods of micro-generation. Which one is suitable for you will depend upon your location and business:

Small Scale Wind Power

Whilst the UK is a leader in wind power, you will only want to invest in this method of micro-generation if you are located in an exposed, windy place. The average wind speed at your location will need to be at least 6 mph for wind power to be a viable option. Wind turbines are also considered by some to be ugly and noisy – so be prepared for complaints from your neighbours!

Hydro Power

Only suitable for those who live near a fast flowing water source. If this is you, you’ll want to ensure that your water source is powerful enough to generate electricity and you’ll probably need to seek planning permission.

Solar PV

Solar power, or Solar Photovoltaic (PV), is one of the most common types of micro-generation. Obviously solar panels only generate electricity when the sun is shining, so sunnier areas of the country will have the edge here.  Your solar panels may be insalled on your roof if it’s south facing or installed as arrays if your roof isn’t a viable option. Planning permission may be necessary. 50% of solar PV energy is transported back to the grid and operating and maintenance costs are low.

Solar Thermal

Solar Thermal involves capturing solar energy and using it to heat water. It is usually complemented by a conventional boiler.


Biomass is another word for Anaerobic Digestion. It involves the burning of organic materials, in the form of pellets, to generate electricity. It’s low carbon and doesn’t suffer from the same intermittency issues that plague some renewable energy sources. Planning permission may be needed and you’ll need to make sure you have the appropriate infrastructure in place to handle ventilation, noise and safety; there is also a high initial cost.

What are the drawbacks of micro-generation?

Micro-generation doesn’t come without its drawbacks. There are worries that our ageing grid just isn’t cut out for distributed energy. If micro-generation really took off then distribution network operators (DNOs) would have to essentially become mini grids, balancing energy supply and demand – something that would be a big change for them. However, Ofgem are actively encouraging DNOs to become more involved in energy management, and the grid needs to be updated regardless of micro-generation.

To complicate matters, later this year solar power will become less economically viable: currently small scale non-domestic solar panels are immune from business rate changes. This will change in April, potentially leading to hefty tax increases.  

Getting started in micro-generation can be overwhelming. In 2009 the Office of Fair Trading received over 1000 complaints about companies who were selling and setting up micro-generation systems. Some providers went in for the hard sell – promoting their own preferred type of generation regardless if it was the most suitable, and not advising on broader energy efficiency improvements that would be made. Others made misleading claims about savings or completed sub-standard site inspections.

How to get started in microgeneration?

Think you’d like to get involved in micro-generation but not sure where to start? The first step will be choosing which method of energy generation you’d like to use. You’ll also need to get a Micro-generation Certification (MSC) – there’s lots of information about next steps on the MCS website. When you install your energy source, be sure to use an MCS Certified Installer; more information can be found on the MCS website.

Microgeneration.com has a list of considerations for those considering generation their own energy:

  1. Analyse your current energy usage – In order to become MCS Certified you’ll need to analyse your energy usage and have some ideas about how you can reduce your consumption.
  2. Consider what outputs your chosen energy source can achieve – after all, the amount of energy you can generate will determine how much of a revenue stream your micro-generation project will be. Your installation quote should tell you this information.
  3. Think about your unique situation – how much land do you have? Do you have any neighbours? Are you in an old building? All of these factors will influence which method of micro-generation is suitable for you.
  4. Be prepared to change your habits – you will get the most out of your new energy source if you’re prepared to change your habits and reduce your energy usage. Generating your own energy will probably make you appreciate your energy usage more anyway. For an insight into how much energy everyday office appliances use, check out our interactive infographic.

Are you interested in micro-generation? Let us know about your experiences on Twitter @switchmybiz


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