Level the playing field against your foreign competitors who are taking advantage of lower energy costs. At Professional Energy Services we specialize in helping businesses that fall within the Energy Intensive Industry (EII) exemption scheme gain certification to make savings on their energy costs. EIIs are industries where energy production is extremely intensive and costly.
While the government exempts eligible EIIs from the indirect costs of renewable policies, this exemption isn’t automatic and businesses must apply and be approved for EII exemption certificates before they can benefit from savings.
How Can PES Help?
EII exemptions can’t be backdated so the sooner your business applies for the exemption scheme the quicker you can receive entitlements and save on your energy bills. However, putting together and effective application isn’t always easy and is time consuming for any business owner.
Why risk the chance of an unsuccessful application and delaying those cost savings, or taking the time away from your already busy schedule when you could hire an energy expert like PES who can act on your behalf.
Take advantage of our detailed knowledge of government schemes and energy legislation as we help you navigate complex applications, such as for the EII exemption certificate on your behalf.
EII Exemption Scheme Guidance
If you’re new to energy legalisation and don’t know much about the legal ins and outs of EII, we’ve included a brief guide to the exemption scheme for your convenience below.
What is the EII Exemption Scheme?
The UK government created the Energy-Intensive Industries (EII) Exemption Scheme between 2017 and 2018 to replace the EII Compensation Scheme. The scheme allows businesses where their production process results in intensive energy usage to apply for relief of up 85% of theirs costs for Contract of Differences (CoD), Renewable Obligation (RO) costs and Feed-in Tariff (FiT) schemes to become exempt by the Department for Business, Energy & Industrial Strategy (BEIS).
The shift from compensation to exemption was intended to provide more financial certainty and savings for energy-intensive industries. Thus, the new legislation excludes certain high energy-producing businesses from absorbing the higher energy costs associated with renewable schemes altogether – namely, those that were implemented to achieve the 2050 zero carbon emissions goal.
While renewable schemes can do a lot of good, their related costs ultimately fall on energy-intensive businesses through increased energy costs.
Therefore the EEI Exemption Scheme is great to gain relief on energy costs and compete against foreign businesses that don’t incur these costs.
Does my Business Qualify for EII?
Before applying for an EII exemption, a business should determine whether they qualify and can meet the following five requirements:
- They must manufacture a product in the UK within an eligible industry, and pass the “sector level test”. The UK Government have published an extensive list eligible industries that EII encompasses.
- The business must pass a 20% electricity intensity test – the “business level test” where they use more than 20% of their total site costs on electricity
- The business must not be under any considerable financial burdens and this is measured by not having a status of Undertaking in Difficulty (UID). The UID guidelines define this as “an undertaking is considered to be in difficulty when, without intervention by the State, it will almost certainly be condemned to going out of business in the short or medium term.”
- They must have at least two quarters of financial data to present
- The application must show evidence of the amount of electricity used to manufacture the product for a period of at least three months
More Common EII Questions
As mentioned above, Businesses that fall under the definition “energy-intensive industry” are listed by UK Government guidance and the formal list of activities that a company might carry out to be classified as “energy intensive” includes coal mining, steel production, chemical production, engineering, brick making, quarrying, leather tanning, and meat processing. It also includes the manufacturing of certain items ranging from wallpaper to electronic components.
If you decide to apply for EII exemption yourself, to begin your application process, access the application forms that BEIS have developed, and download applicable guidance and spreadsheets to help you calculate what costs your business may be exempt from. However, without the guidance of an energy consultant it is easy to miscalculate your costs and miss out on potential savings or even worse incorrectly come to the conclusion that you do not meet the inclusion criteria so we recommend speaking with a consultant first.
Like the rest of the world, high energy-producing businesses were affected by the pandemic. The first half of 2020 came with a sharp decline in energy consumption, leading to an unusually steep drop in electricity prices. This data could skew calculations for businesses regarding what percentage of their costs are allotted to electricity, making it less uncertain whether a business is “in difficulty” or not.
As a result, the UK government will exclude the period from 31 December 2019 to 30 June 2020 from its assessment of whether or not a business is undergoing financial hardship.
Not every business with high energy usage will qualify for the EII Exemption Scheme. Those who fail to meet the criteria should explore alternative relief strategies such as Carbon Footprinting, Energy Audits, Streamlined Energy and Carbon Reporting (SECR), and the Energy Savings Opportunity Scheme (ESOS). These alternative options can provide greater insight into a company’s environmental impact, as well as reveal ways that your company could improve energy expenditure and cost efficiency.
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