Energy intensive industries are to be exempt from the Renewables Obligation Charge from 1 April 2018.
The government has confirmed that energy intensive industries (EIIs) will be exempt from the cost of Renewables Obligation (RO) from the 1st of April 2018, however, Feed-in Tariff legislation is yet to be amended to exempt EIIs.
This is the second of three exemptions which have been proposed, following the move to exempt EIIs from up to 85% of the costs of the Contracts for Difference (CfD) scheme at the end of October 2017. The third exemption will involve the Feed-In Tariff (FiT) scheme but it is currently unknown when this will be implemented.
As it stands, costs incurred by CfD, RO and FIT are paid by electricity suppliers dependent on their market share which are then included as non-energy costs in the customer’s energy bill, find out more about non-energy costs here.
EIIs were compensated by the government retrospectively but it was announced in the 2015 autumn statement that this would be changed to an exemption, allowing EIIs to be more competitive in international markets due to more financial security. Energy intensive industries are key to the UK economy and include sectors such as; engineering, chemicals and steel.
Industries which are eligible for an exemption will see a reduction in their energy bill, while non-exempt customers could see a rise of around 3% in CfD and RO charges.
Eligible businesses are UK manufacturers within specific sectors whose electricity costs amount to 20% or more of their gross added value; also referred to as the 20% electricity intensity test.
If an EII has a certificate to show they are eligible to the CfD exemption then they will be automatically eligible for the RO exemption. These certificates can be acquired by registering with the Department for Business, Energy and Industrial Strategy. Once this certificate has been received the customer must then contact their supplier or energy broker to action the exemption.
If you would like more information on these changes then please get in touch with Apollo by calling us on 01257 239500 or by filling out the call-back form on our contact page.