How switching to biodiesel for generators could save thousands

Diesel generators are widely used for temporary power sources for construction sites, events or backup systems. Net zero commitments and the drive to reduce carbon emissions are forcing businesses to consider their energy sources.

Biodiesel is a renewable, biodegradable fuel manufactured from vegetable oils, animal fats or recycled restaurant grease. In terms of environmental impact, biodiesel significantly reduces greenhouse gas emissions compared to fossil diesel. It produces lower levels of carbon monoxide, particulate matter, and unburned hydrocarbons. Biodiesel combustion also results in reduced sulfur oxide emissions, which contribute to acid rain.

By switching to biodiesel, businesses can benefit from fuel duty savings, cutting their absolute costs. Additionally, organisations contribute to cleaner air, reduced dependence on fossil fuels and making progress towards their net zero targets.

Under UK law, the use of fuel in generators is considered a ‘chargeable use,’ meaning it typically attracts fuel duty, which is currently 52.95p per litre for diesel. These costs have increased significantly since the use of red diesel was restricted on 1 April 2022.

However, biodiesel stands apart from fossil-derived fuels in one crucial way, qualifying for 100% fuel duty relief when used for electricity generation.

This relief applies whether the electricity is used on-site, or exported to the grid. In contrast, fossil-based fuels like standard diesel only qualify for limited relief, and only if the electricity is exported. For most diesel-powered generators, this means no relief is available at all unless you're exporting power.

The same 100% relief applies to other biofuels such as aqua-methanol, bioethanol and other fuel substitutes, with biodiesel the most commonly used in practice. It does not apply to blends of biofuels with hydrocarbon oils though. Those are subject to the normal rules.
For biodiesel this means that B100 (100% biodiesel) qualifies for 100% relief, but B20 (a blend of 20% biodiesel and 80% diesel) and other fuels such as HVO (hydrotreated vegetable oil) fall under the normal rules for diesel.

If you're purchasing biodiesel from a supplier:

• The supplier must account for the duty when the fuel leaves their site
• You, as the customer, can reclaim the duty from HMRC

The process of claiming fuel duty relief from HMRC involves several steps. You need to retain purchase invoices and delivery notes from biodiesel suppliers that clearly indicate the volume and type of fuel purchased and show the amount of fuel duty paid.

You must complete form EX55, which includes details of the fuel usage, generator specifications and electricity generation records. Supporting documentation such as meter readings and site usage logs may be required to substantiate the claim. Claims can be submitted quarterly, and you need to maintain accurate records to facilitate HMRC audits.

If you're using ordinary diesel, bioblend or HVO in your generators, it is likely you’re missing out. Sites using diesel for temporary or backup power are classed as ‘auto-generators’ and do not qualify for fuel duty relief unless they export electricity. Even then, the relief is capped at the carbon price floor rate, a fraction of what biodiesel offers.

• You are eligible for 100% fuel duty relief for electricity generation
• The relief is applicable to all electricity generation, not just exports
• There are many environmental benefits from using renewable fuel
• There is a cost saving advantage for businesses seeking sustainable credentials

If you're using diesel generators and considering a switch to biodiesel, we offer expert support to help you maximise your savings while staying compliant:

• Technical support to determine your eligibility for fuel duty relief
• Assistance with HMRC claims, including preparing and submitting Form EX55
• Quarterly reclaim services to ensure you recover all entitled duty

Our services are designed to simplify the process and ensure you get the full benefit of switching to biodiesel.

Please get in touch with your usual S&W contact or one of the contacts listed to find out how we can support your transition.

Approval code: NTE