Energy Intensive Industry (EII) Exemption

What is Energy Intensive Industry Exemption?

Energy intensive industries (EIIs) are defined by their industry sector and electricity intensity. The UK government has introduced a scheme to help EIIs in the UK compete with the lower energy costs of some of their EU counterparts. 

What's changed?

Previously, the most energy intensive companies had been compensated against the varying renewable energy schemes in the GB market.

Through the introduction of legislation, EIIs are exempt from up to 85% of the costs of Contracts for Difference (CfD), Renewable Obligation (RO) and Small-Scale Feed in tariff (FiT).

The cost of the exemption would be paid for through an increase in costs for non-EII businesses.

Is my business eligible for an exemption from CFD, RO and FIT?

There are two steps to assessing whether your business is eligible for an EII certificate for an exemption from the indirect costs of funding the CFD, RO and FIT*:

1.     The business must manufacture a product in the UK within an eligible sector (defined by a 4-digit NACE Code. The NACE Code will typically be a business registered at Companies House.

2.     The business must pass a 20% electricity intensity test – the “business level test”.

The purpose of the business level test is to ensure that the exemptions target only those businesses where support is most needed, i.e. those that will be put at a significant competitive disadvantage from the costs of funding renewable and low carbon policies.

Find out more about applying for an exemption certificate

 

 

What happens next?

A business that successfully applies for the exemption will be issued with an EII certificate confirming their eligibility for the CFD, RO and FIT exemption.

Successful applicants should then pass their certificate on to their energy supplier so that they receive the benefit of the exemption. 

For further guidance for applicants seeking a certificate for an exemption from the indirect costs of funding Contracts for Difference (CFD), the Renewables Obligation (RO) and the small-scale Feed in Tariff (FIT) please visit: GOV.UK.

Further information

*Companies based in Northern Ireland

 

The Contracts for Difference (CFD), Renewable Obligation (RO) and Small-Scale Feed in tariff (FIT) exemptions do not apply to Northern Ireland. Companies based solely in Northern Ireland can currently apply for RO. compensation and should refer to the compensation scheme. Companies with sites in both Great Britain and Northern Ireland should refer to GOV.UK for further guidance.

Why have Energy Intensive Industry Exemptions been introduced?

 

The UK Government is committed to reducing greenhouse gas emissions by at least 80% by 2050. This requires a transformation of the UK economy, including the energy market, while keeping energy costs down for business and consumers, and maintaining competitiveness.