Energy Intensive Industry Subsidies
What it means for businesses
As a consequence of these policies, new renewable charges have been introduced to business and domestic invoices, hence increasing the cost of electricity to the end user.
With charges such as; Feed in Tariff (FiT), Renewable Obligation (RO) and Contracts for Difference (CfD) now part of a supplier invoice. The cost of wholesale electricity makes up less than half of the total electricity rate. Third Party Charges (TPCs) passed on from the local Distribution Network Operator (DNO) including DUoS and TNUoS makes up the remaining 20-30% of an invoice charge, depending on the location within the UK.
In an effort to ensure UK businesses are able to compete on a global stage and lower the cost of electricity, the government has introduced legislation to exempt Energy Intensive Industries (EIIs) from some of the environmental subsidies.
Eligible businesses can apply for up to 85% exemption from the Renewable Obligation and Contracts for Difference environmental charges.
What Are Energy Intensive Industries?
The government has listed the sectors that are eligible for the environmental exemption and can be accessed here. As predicted by the Department of Business Energy and Industrial Strategy; the policy will benefit over 130 energy intensive users saving around £100m a year in energy costs. The total energy exempt volume will be approximately 10TWh per annum.
Most businesses will not qualify for the rebate however. The additional cost as a result of the exemption will be paid for though supplier invoices by all non-EII exempt electricity including domestic properties.