The Energy Intensive Industries Compensation Scheme

On 29 April 2022, the UK government announced that it will continue and boost support to energy-intensive businesses on their electricity costs.

The Energy Intensive Industries Compensation Scheme remunerates certain businesses that use high levels of energy. This three-year extension of the scheme will also have double the budget than its first iteration.

The scheme provides relief to businesses for the costs of the UK Emissions Trading Scheme and Carbon Price Support mechanism in their electricity bills. The scheme now also offers support for companies that manufacture batteries for electric vehicles.

Businesses who qualify (read more below on who qualifies for the scheme) can claim up to 85 percent exemption of their Contract for Differences (CfD), Renewables Obligation (RO), and Feed-in Tariff (FiT) costs.

The background of the EII Compensation Scheme

A transformative shift towards clean energy across the UK’s economy is required if the country wants to achieve net zero. To meet this goal, the government has unveiled schemes to encourage more reliance on electricity generated from renewable and low carbon sources.

While these initiatives have achieved success in creating higher generation of electricity through renewable sources, they have come at a cost. The levies and obligations funding this growth are initially covered by energy suppliers, yet these costs are then passed down to business (non-business) energy consumers in the form of higher energy bills. The energy crisis has only exacerbated the energy market further in recent times.

Energy-intensive businesses are at a disadvantage. The launch of the EII Compensation Scheme in 2016 was created to help these businesses maintain the UK’s position in the global market.

Does my business qualify for the EII scheme?

Your business may qualify for the EII scheme should you meet the below criteria:

1. 1. Business must be engaged in an activity included in the government guidance (Appendix 1). This is known as passing the “sector level.”
2. 2. A business must pass what the government calls a “business level test”, where they prove that their electricity costs amount to 20 percent or more of their Gross Value Added over a reference period.
3. 3. Provide two months of financial data.
4. 4. Prove no financial difficulties within the company.
5. 5. Show how much electricity is used towards qualifying activity for a period of three months.

How do I get started with EII?

If your business would like guidance on whether you are eligible for this scheme or you need assistance on completing an application for it, please contact our Energy Consultancy teams on +44 (0)3 300 300 200 or +44 (0)3 300 300 800.

Northern Gas and Power provides industry-leading energy procurement, management, and optimisation consultancy services. Speak to our energy experts today for more information on EII or other government schemes.

How else can Northern Gas and Power help?

Even if your business, despite being a big energy user, does not qualify for the EII compensation scheme, there are other means of support and assistance to help you mitigate soaring energy costs. Our energy management consultancy services guide businesses through other schemes and policies such as carbon footprinting, energy audits, Streamlined Energy and Carbon Reporting (SECR), and Energy Savings Opportunity Scheme (ESOS). These provide invaluable insight into your energy consumption patterns and environmental impact, and they reveal ways for you to improve energy efficiency within your company.