Energy Intensive Industries (EII) Compensation

In August 2016, the Department for Business, Industry and Industrial Strategy (BEIS) released guidance on how electricity-intensive businesses could apply for relief from the indirect costs of renewable policy to keep UK businesses internationally competitive. This scheme is known as Energy Intensive Industries (EII) Compensation.

This means that some businesses will be able to apply for relief or compensation for part of their electricity costs, specifically the elements relating to Renewables Obligation and Feed in Tariff support. Eligible companies need to register directly with BEIS and claim their compensation. From April 2017, this may be paid through the supply bill, as long as State Aid Approval is given by the EU.

A qualifying medium-sized company could get over £200,000 a year under EII Compensation

There are two questions that determine eligibility for Energy Intensive Industries Compensation:

1. Are you in an eligible sector?
2. Is your business electrically intensive?

NACE codes published by BEIS list eligible sectors. These generally include steel makers, chemicals companies, mining firms, cement makers, brick makers and similar businesses where energy is a significant part of process and operations.

Showing your business is electrically intensive is not easy. You have to show that your electricity costs are more than 20% of your Gross Value Added (GVA), calculated from the three most recent financial years. Your return also needs to be edited before submission.

You should apply for EII Compensation as soon as possible

Ameresco helped a client who spends around £1.5 million per year negotiate an aid package with BEIS of £360,000 per year, reducing their costs by 24%. This will rise to over £500,000 next year and continue year on year. The sooner you apply, the sooner you can start receiving any benefit to which you are entitled.

The aid you will receive is calculated by BEIS based on the percentage of costs the government can give back to you under State Aid, the price impact of policies and the baseline electricity price calculated by the government. At current levels, businesses will get back around 85% of the costs of renewable policies such as Renewables Obligation and Feed in Tariff.

At current rates, you could get over £20,000 per GWh of consumption. The exemption is on the order of a few hundred thousand pounds of a year for most businesses. This rebate will continue year on year and will increase depending on the overall level of subsidy being recovered through energy bills.

Contact us today to see how we can help you claim your share of Energy Intensive Industries Compensation.