Do you know what EII exemption is? You should; it will impact your firm’s energy costs

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The Energy Intensive Industries (EII) exemption is a new government scheme.

Fundamentally it aims to help UK energy intensive industries remain competitive with firms from other countries, while still maintaining overall UK progress on decarbonisation and low carbon energy.

It’s relatively simple; intensive industries like chemicals or engineering can claim back money from their energy bills, for example up to 85% of the money they would have spent on renewables obligations.

But of course, this has to be paid for somehow. Unfortunately, a great many businesses will not qualify for any exemption and the costs of EII will be carried by these non EII-exempt firms across the UK.

You can tell whether you are exempt or not by checking the official guidance. So while EII may put a smile on the face of mining, steel or heaving manufacturing companies, for the rest of UK PLC, the question is; how to manage the financial hit EII puts on us?

The hit may get harder too. A new government consultation is proposing to widen eligibility for the CfD (Contracts for Difference), RO (Renewables Obligation) and possibly the FIT (Feed-in Tariff) exemption schemes.

If it goes through, yet more firms will get cheaper energy; the limit for getting an exemption could be halved. But this would place even more onus on those firms left in the cold to cover the costs.

The message is; if you are NOT covered by the EII exemption, your energy bills are going up. How are you going to manage the challenge?

Managing energy more smartly

The estimates are that EII exemptions can cost NON exempt firms from the hundreds, right up to tens of thousands of extra pounds on energy bills.

That is a significant cost to manage. Thankfully, acting smartly on energy has always offered financial rewards to firms willing to put their time towards understanding and acting on the opportunities.

So what should you be doing?

Smart steps to managing Energy Intensive Industries

One clever thing to do is look at your energy contracts. Are they as affordable as they might be? Are you on the right tariffs? If so, how long do they last for, and if you aren’t, are there any buyout costs to move onto a more affordable supplier?

An equally intelligent move is to look at energy efficiency. It’s long been understood that the unit of energy saved is a unit that needn’t be paid for. With EII, this nugget of intelligence has rarely been more valuable to the UK’s corporate community. Typically, companies could reduce energy costs by up to 20% just by making simple changes.

The challenge is that many UK firms still don’t understand the basics of energy efficiency. Research by the Daily Telegraph hints that some 54% of senior managers were unaware of who was responsible for their energy management in their business.

The upshot; act now on efficiency and mitigate EII

Energy efficiency can be complex, but it needn’t be. Simple steps can offer fast paybacks and tangible savings.

With EII costs on the way for many thousands of UK businesses, the smart money will be going towards learning about, or even looking at partnering with third party solution providers, on how to get efficiency moving to neutralise the EII threat.

The Energy Advice Hub is powered by BiU, the UK’s leading energy and utility consultancy. If you’d like advice on EII, give us a call on 01253 785409 or email energy-hub@biu.com.

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