TO ensure the UK meets its low-carbon targets, the government has introduced several policies encouraging the growth of renewable technologies to help shape a sustainable future.
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 the Feed in Tariff, Renewable Obligation and Contracts for Difference now part of a supplier invoice, the cost of wholesale electricity makes up less than half of the total electricity rate. Third Party Charges passed on from the local Distribution Network Operator, including DUoS and TNUoS, makes up the remaining 20-30 per cent 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 per cent exemption from the Renewable Obligation and Contracts for Difference environmental charges.
What Are EIIs?
EIIs include sectors such as quarrying, engineering and heavy manufacturing that typically consume a high amount of energy. As a result, the cost of electricity makes up a substantial amount of the production costs.
The government has listed the sectors that are eligible for the environmental exemption. As predicted by the Department of Business Energy and Industrial Strategy; the policy will benefit 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 unfortunately. The additional cost as a result of the exemption will be paid for through supplier invoices by all non-EII exempt electricity users including domestic properties. Again, driving the costs of electricity up for us all!
Environmental Charges and Dates
* Contracts for Difference – Exemption started on the 1 November 2017
* Renewable Obligation – Exemption started on 1 April 2018
* Feed in Tariff – At the present moment there has been no confirmation whether EIIs will be given an exemption. The Department for Business Energy and Industrial Strategy have confirmed however that no exemption will be applied before 1 April 2019.
If you feel you are a business that should be exempt and would like further information why not contact us on 01933 448622 for a free Business Energy & Water Healthcheck or email sales@skenergy.co.uk
