Policy costs to be stripped from heavy industry energy bills

Energy costs will be drastically reduced for 300 energy intensive businesses under proposals tabled by the recently-formed Department for Energy Security and Net Zero.

Proposed changes will exempt firms from certain green levies, such as those connected to the Feed in Tariff, Contracts for Difference and the Renewables Obligation, as well as Capacity Market costs.

A consultation on the plans – titled the British Industry Supercharger – will also explore reductions on network charges.

The specific businesses that will benefit from the changes have not been named, however support will be made available to sectors particularly exposed to the cost of electricity, such as those who produce steel, metals, chemicals and paper.

The consultation will take place in the Spring with a view to being rolled out in a year’s time.

The delivery mechanisms and timelines for implementation of the British Industry Supercharger will be revealed as part of the consultation.

Energy security and net zero secretary Grant Shapps said: “Putin’s weaponization of energy has shown how secure and affordable energy is vital to all parts of our economy – especially key sectors like steel and chemicals.

“Today’s measures will help deliver the affordable, reliable energy that these industries need to become greener, and secure jobs for the future.”

It is unclear if this new initiative will replace or run alongside existing schemes to help businesses with rising energy costs.

In April 2022 the government extended the Energy Intensive Industries Compensation Scheme by a further three years, and more than doubled the budget. The scheme provides businesses with relief for the costs of the UK Emissions Trading Scheme (ETS) and Carbon Price Support mechanism in their electricity bills.

From April 2023 to March 2024, the new Energy Bills Discount Scheme will also come into play for UK businesses and other non-domestic users on high energy bills.