Why are more small manufacturers turning to Renewable Energy in 2025

In manufacturing, energy isn’t just a utility; it’s what keeps production moving. But in 2025, it’s also a growing pressure point, and one you can’t afford to ignore. Recently, the government outlined a 10-year plan to lower energy costs for UK industry, but is it a little too late? Even more so, is it enough? 

Especially for small manufacturers, every kilowatt counts. So why not make those kilowatts work harder?

Let’s take a closer look at why renewable energy for small manufacturing businesses is no longer a luxury but a smart investment. 

One that many are making. 

The current state of energy in small-scale manufacturing 

Most manufacturers still rely on the standard energy supply, typically a mix of electricity from fossil fuels and, sometimes, direct gas. It’s what has always been there. However, traditional tariffs are volatile, tied to global oil prices and shifting non-power costs (which is industry language for fees and levies that aren’t directly related to the energy itself, such as network charges, balancing services, or environmental obligations for the supplier). 

Right now, these costs are climbing. According to Ofgem, non-energy costs make up over half of a business’s energy bill, which includes network costs (transporting electricity from power stations to your site), and balancing and system charges (helping the National Grid balance supply and demand). 

So while manufacturers work hard to keep processes lean, energy is often leaking value, which raises the following question…

Why should small manufacturers consider renewable energy? 

Of course, switching to renewable energy is "the right thing to do." But, it unlocks so many more advantages beyond that: reputational, operational and even financial. (Despite what you may have heard, yes, it can be the cheaper option.)

Let’s take a closer look at some of the advantages renewable energy can provide for small manufacturers: 

1. Lower long-term costs

While most renewable energy prices still rise and fall with the fossil fuel market, tem is building a new kind of pricing engine, one that breaks those ties. With fixed contract options, small manufacturers can forecast costs with confidence and bring real stability to their energy spend. 

If you generate your renewable power (more on that later), you can even sell any surplus back to the grid, potentially creating a second income stream. 

2. Government support

The UK government continues to offer financial support for energy-efficient businesses. Grants are available at both the national and local levels to support upgrades to low-carbon technologies, helping small manufacturers reduce upfront costs. Two key technologies often backed by these schemes are: 

• Heat pumps replace traditional gas or oil heating systems with a low-carbon alternative that uses electricity to transfer heat, rather than generating it.

• Solar PV panels generate electricity on-site using sunlight. With falling installation costs and government-backed incentives, solar panels remain one of the most accessible routes for manufacturers looking to cut both emissions and bills. 

Support for these technologies is available through schemes like the UK government’s Industrial Energy Transformation Fund (IETF) and various local authority business decarbonisation grants. It’s worth checking what’s available in your region, funding windows and criteria can vary!  

3. Improved energy security 

With renewable energy, you’re less exposed to market spikes. And if you generate on-site (with solar panels or wind turbines), you could gain even more independence. 

Research shows that nearly 65% of UK businesses are planning to increase their on-site generation within the next two years, reflecting a broader industry shift toward self-sufficiency. 

Furthermore, a recent study from the University of Cambridge found that meeting 2030 renewable energy targets could reduce electricity price volatility by 44% in the UK, compared to last year. 

This means whether you’re generating at your sites or utilising renewable energy, through suppliers like tem, it distances your business from unpredictable energy swings. 

4. Boost brand value

More buyers, especially larger organisations, are checking supply chains for low-carbon practices. For example, Microsoft, aiming to be carbon-negative, now requires key suppliers to do the same, to use 100% carbon-free electricity by 2030. 

If you’re able to show that you’re powered by renewable energy, it can become a competitive edge.

To break it down even further… Renewable energy for a manufacturer isn’t just an upgrade, it’s a full refit. Reinforcing your margins, your reputation, and your future. 

What renewable energy options are available?

There’s no single route that fits every manufacturer. The right approach depends on your site, operations and budget. While on-site generation works for some, there are other ways to access low-carbon energy. Here are alternative options that can help manufacturers make the switch and stay in control. 

Power Purchase Agreements 

These are long-term contracts where you buy energy directly from a renewable generator at a fixed price. Ideal for larger manufacturers with predictable demand. 

Renewable energy supply through tem

This is the simplest switch. You keep your current infrastructure but choose a supplier offering renewable energy at competitive rates. tem’s RED™ solution makes this easier by directly connecting buyers with clean energy producers, cutting out unnecessary middlemen and unnecessary costs. 

Curious how energy from tem differs compared to the PPA option above? Our full breakdown explains the difference clearly and simply. 

What’s the cheapest renewable energy option? (On-site vs supplier) 

For manufacturers looking to generate renewable energy on-site, like installing solar panels or wind turbines, it can offer long-term savings, especially once the upfront costs are paid off. However, that is the catch: upfront costs. 

Equipment, installation, grid integration, and maintenance all demand significant capital and time. Going through tem offers another route… 

Access to low-carbon energy without the heavy investment or technical complexity. Through RED™, manufacturers can stabilise spend and avoid market volatility, all while staying focused on production, not power infrastructure. 

The right choice depends on your setup, priorities, and resources. Some manufacturers may find on-site generation worth the investment. Others may prefer the flexibility and lower barrier to entry of working with a supplier.

Either way, renewable energy is within reach. We’re here if you’d like to discuss it further. 

How tem helps small manufacturers switch to renewable energy 

tem exists to change how energy works, for good. Our approach puts manufacturers in the driver's seat, helping you: 

• Access reliable renewable energy at competitive rates

• Cut out the costly middlemen from Big Energy

• Support UK-based generators directly

• Understand exactly what you’re paying for, and why 

And with RED™, you can track every unit of electricity back to its source. That’s not just low-carbon, that’s clean, clear and controlled. 

Let’s sum this all up…

Manufacturers aren’t just shifting to lower-carbon energy, they’re choosing long-term value and better performance. Whether you’re trying to cut costs, build trust with buyers, or make your operations more efficient, renewable energy offers a clear path forward. 

In 2025, relying on a fossil-fuel-based supply is like running precision machinery with outdated tools, inefficient, unpredictable, and costing you more in the long run. 

And, with tem and RED™, the switch is simpler than you think. 

Your energy spend can deliver more for your margins, your resilience, and your reputation. With tem, manufacturers don’t just keep up. They lead. 

Talk to us today to get started.