What is the Energy Intensive Industries (EEI) Scheme?
Does your business qualify for the scheme?
- 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 – the “sector level test”
- The business must not be an Undertaking in Difficulty (UID) – the UID guidelines explain that “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”
- The application must contain evidence of the proportion of electricity used to manufacture the product for a period of at least three months
- The business must pass a 20% electricity intensity test – the “business level test”
- The business must have at least two quarters of financial data
Why should you apply?
EIIs are currently 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 is be paid for through an increase in costs for non-EII businesses.
As of August 2022 there is a consultation under way to potentially increase the maximum relief up to 100% and lower the qualifying energy intensity thresholds.
Has COVID-19 had any impact on the scheme?
During the first half of 2020, Covid-19 had thrown various sectors of the UK economy into a state of uncertainty and decline. The energy sector was especially impacted by the fall in energy consumption in the first six months of 2020 and resulted in a subsequent drop in electricity prices. This could make it more difficult to calculate a business’ energy intensity and whether it is “in difficulty”. Because of this, the government will be excluding the period from 31 December 2019 to 30 June 2020 from its assessment of whether a business is in financial difficulty or not.