Energy Intensive Industry exemption?

To ensure the UK meets its low carbon targets, the Government’s introduced several policies to drive renewable growth. However, the policies have also increased the cost of electricity and made UK prices higher than in other countries.

To help Energy Intensive Industries (EIIs) in the UK compete with their EU counterparts, the Government has made these industries exempt from some Third Party Charges (TPCs). The cost of the exemption is paid for through an increase in costs for non-EII organisations.

The Government has made EIIs exempt from the costs of the Renewables Obligation (RO) scheme, the Contracts for Difference (CfD) scheme, the Capacity Market (CM) and the Feed-in Tariff (FiT) scheme. It has also introduced a 60% rebate for EIIs on relevant network charges. These include:

• Transmission Network Use of System (TNUoS)
• Distribution Network Use of System (DUoS)
• Balancing Service Use of System (BSUoS)
• Losses

What's the impact?

The removal of around 3%-4% of total demand from the eligible charging base for the RO, CM, FiT, and CfD schemes has led to a similarly proportioned increase in the costs of these schemes for all other users on the system.

The 60% rebate on network costs is being recovered through an additional TPC to apply on all other users’ power bills. Added in April 2025, the EII Support Levy, is expected to add around £1/MWh to non-EII bills in 2025.

What are EIIs?

EIIs include mining, steel, engineering and heavy manufacturing. They consume lots of electricity so the cost of their power makes up a considerable proportion of their production costs.

What are Third Party Costs (TPCs)?

TPCs are the non-energy elements of your bill that relate to running the electricity network efficiently, paying organisations involved in its running, government policies, and incentivising renewables.

How can Drax help?

We’ll keep customers updated on any changes associated with EII exemption costs.