The UK government have introduced the Industry Supercharger which aims to make the UK’s largest industrial usinesses, competitive with the rest of Europe and the World. The Department of Business & Trade and the Department of Energy Security & Net Zero have jointly proposed solutions to improve international competitiveness.

In addition to paying for the commodity (gas/electric), customers also pay for non-commodity costs. Depending on the type of contract you have, you may see some of these non-commodity costs broken down on your bill. Some customers may not see the breakdown and instead the non-commodity cost will be built into your unit rate and/ or standing charge.

If you are an Energy Intensive Industry (EII)1 , you will already receive exemptions up to 85% from some of your noncommodity costs, including the Renewables Obligation, Feed in Tariff & Contracts for Difference. These are all costs that come from renewable subsidies. The government is now planning to improve the levels of exemption that EII customers are receiving. Following industry consultation, the government has decided on the following measures:

• Increasing the current Exemption Scheme from up to 85% to 100%, for costs such as Feed-in-Tariff (FiT), Contracts for Difference (CfD) and Renewables Obligation (RO).
• A new full, indirect exemption from the costs associated with the Capacity Market scheme.
• 60% exemption from network charges for costs such as the Balancing Services Use of System (BSUoS), Transmission Network Use of System (TNUoS) and Distribution Use of System (DUoS).2

The above amendments to the scheme are expected to reduce the overall electricity price for any consumer who qualifies as an EII consumer by approximately in the region of £24-30/MWh. The increase in the current EII exemptions for RO, FiT and CfD would result in a reduction of £5/MWh, alongside the 100% exemption from capacity market charges which would result in a further reduction of £5/MWh, whilst the introduction of exemptions for network charges reduces EII costs by a further £14/MWh.

For EII customers, these changes could have a material impact on your monthly invoice. Brook Green Supply are engaged with the relevant government departments and will be helping to shape future policy in this area. The current understanding is that the changes will be implemented using a staggered approach between April 2024-April 2025, where it is expected that that the first amendment would come into effect in Apr-24, the second in Oct24 and the network exemption would be implemented in Apr-25. Network costs incurred by EII’s in Apr-24 will be compensated in 2025 after the funding is raised by an EII Support Levy (ESL), which has not yet been confirmed, but the intention of the government is to finalise details with the new scheme administrator once appointed.

We are awaiting final details to be confirmed for all three different policy changes. The second & third proposals are subject to secondary legislation that will need to pass through parliament before being confirmed.

If you are unsure whether you are an EII or if you want to know more about how this change could impact on your invoice, please reach out to your CRM, or account manager.