Glasgow tech firm awarded UK Government funding to improve SME energy efficiency

Department for Business, Energy & Industrial Strategy

Scottish proptech firm arbnco has been awarded phase one funding for the Government innovation competition “Boosting Access for SMEs to Energy Efficiency” (BASEE).  

arbnco will be developing a Digital Energy Efficiency Platform (DEEP) to improve energy efficiency across the 5.7m SMEs across the UK. 

Small and medium-sized enterprises (SMEs) account for 99% of businesses in the UK and are responsible for over 50% of energy use. DEEP is aiming to eliminate the common barriers SMEs face in tackling energy efficiency, such as high upfront and transactional costs, economies of scale and difficulties accessing finance. 

The aim of the Government’s BASEE competition is to accelerate the growth of the energy services market for SMEs by driving down transaction costs and promoting third party investment in small-scale energy efficiency projects. BASEE is making available £6m of funding for innovative, scalable business models or solutions that facilitate investment for small energy efficiency retrofit/refurbishment projects in commercial and industrial buildings in the UK.

arbnco’s digital platform, DEEP, will generate a bespoke list of energy efficiency measures for SMEs, including costs and finance options, and a business case for implementing energy efficiency.  

The platform will also allow potential aggregators to build portfolios of energy efficiency improvement measures across local regions, sectors or improvement types. It is envisioned that projects could be grouped together to achieve economies of scale and favourable financial terms for SMEs. arbnco will work with manufacturers and specialist financial firms to develop strategies for aggregating energy efficiency projects. 

Andrew Stewart, research and development manager at arbnco outlined how the project could open up access to energy efficiency projects. He said:

“SMEs account for over half of the UK’s energy use, but when it comes to energy efficiency projects they are often hampered by a lack of expertise or capital. Finance remains a key stumbling block. Small businesses may have a fear of getting into debt and banks also have a reluctance to lend on small projects. 

“DEEP aims to increase accessibility and help SMEs identify the quick wins that could reduce energy bills and increase carbon savings. We want DEEP to be a one-stop shop for businesses to identify and prioritise energy efficiency projects, and find the appropriate finance and best supplier for the chosen retrofit project. ”

arbnco has partnered with Energy Systems Catapult on the project. The Catapult is providing expertise to the BASEE project in the form of Business Model Innovation support.

The Catapult is an independent innovation centre set up by government to accelerate the UK’s transformation to a low carbon energy system at lowest cost – while ensuring UK businesses and consumers capture the opportunities of clean growth.

Rebecca Lane, business modelling analyst at the Catapult, said: “arbnco has come up with a really interesting and exciting concept that aims to deliver energy efficiency solutions for the UK’s millions of small businesses.

“Initially we’ll be exploring the overall feasibility of the business model that arbnco has in place, including segmenting the target market and looking at the value proposition they are offering potential customers.

“That means customers from both ends of the value chain: the manufacturers and installers of the energy efficiency products that arbnco wants to promote, and the small businesses that will ultimately procure those products to have installed.

“We’ll then explore alternative options for the business model, from basic match-making through to a full-service platform including financing.”

arbnco and the Catapult will work with a stakeholder group, as well as SMEs, to fully understand the issues and barriers SMEs face in implementing energy efficiency measures.

The BASEE initiative was launched by the Department for Business, Energy and Industrial Strategy (BEIS) in July as part of the Clean Growth Strategy. 

The Clean Growth Strategy aims to improve business productivity by enabling businesses to improve their energy efficiency by at least 20% by 2030, delivering up to £6bn cost savings for businesses and Carbon savings of up to 22 million tonnes of carbon dioxide equivalent. 

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