What's the Energy Intensive Industry exemption?

To ensure the UK meets its low carbon targets, the Government’s introduced several policies to drive renewable growth. However, the policies have also increased the cost of electricity and made UK prices higher than in other countries.

To help Energy Intensive Industries (EIIs) in the UK compete with their EU counterparts, the Government suggested they should be exempt from some Third Party Charges (TPCs). The cost of the exemption would be paid for through an increase in costs for non-EII organisations.

The Government proposed that EIIs should be exempt from the costs of the Renewables Obligation (RO) scheme, the Contracts for Difference (CfD) scheme and the Feed-in Tariff (FiT) scheme.

What's the impact?

Parliament recently approved the CfD and RO exemptions for EIIs, and the table below shows the new prices of these schemes for non-EII businesses:

CfD Image

The CfD exemption charge, charged monthly, is likely to change from quarter to quarter.

What are EIIs?

EIIs include mining, steel, engineering and heavy manufacturing. They consume lots of electricity so the cost of their power makes up a considerable proportion of their production costs.

How will EIIs benefit from the exemptions?

The Department of Business, Energy and Industrial Strategy (BEIS) expects the measures to benefit over 130 heavy users, saving them around £100m a year. The total energy exempt volume will be around 10TWh per annum.

What are Third Party Costs (TPCs)?

TPCs are the non-energy elements of your bill that relate to running the electricity network efficiently, paying organisations involved in its running, government policies, and incentivising renewables.

How can Drax help?

We’ll keep customers updated on any changes associated with EII exemption costs.