Our goal is to purchase 100% Green Energy for 100% of our clients.

 

Energy Tax Relief

business solutions

What is Energy Tax Relief?

Energy Tax Relief is a scheme designed to reduce the energy costs for energy-intensive businesses and certain types of businesses in the UK. It allows eligible companies to claim reductions or exemptions on certain energy-related taxes, helping them remain competitive while promoting efficiency and sustainability.

Fluid Network Solutions

Fluid Network Solutions was originally formed in 2003 as a totally independent telecoms provider, working with all of the major telecommunications networks, providers and vendors in the UK. The benefit of being independent allows us to offer our customers the freedom of choice and impartial advice, by taking the best parts from the carriers and vendors to provide competitive bespoke solutions for each individual client.

What is the Climate Change Levy (CCL)?

The Climate Change Levy (CCL) is a UK tax applied to energy supplied to businesses and the public sector. It aims to encourage energy efficiency and reduce carbon emissions. Some types of energy use are exempt from the levy — for example, energy used in metallurgical processes (such as steel and aluminium production) and mineralogical processes (such as cement and glass manufacturing).

Who can claim CCL exemptions?

Eligibility for CCL exemptions can be complex, but in general, they may apply to:

  1. Energy used for certain forms of transport
  2. Energy used in metallurgical or mineralogical processes
  3. Energy used for domestic purposes
  4. Energy used by charitable organisations for non-business activities
  5. Energy used in agriculture and horticulture (e.g. greenhouses, crop drying)
  6. Energy used by educational institutions (e.g. schools, colleges, universities)
  7. Energy used in other qualifying sectors where energy is a critical part of the production process

Because the full eligibility criteria are extensive, if you’d like to find out whether your organisation could qualify for a reduction on your energy bills, we can review your situation and provide tailored guidance.

Energy Intensive Industries (EII) Exemption Scheme

What is it and how will it impact your business?

EII stands for Energy Intensive Industries, “industrial sectors – usually manufacturing industries – that are high users of energy”.

Most of the qualifying Energy Intensive Industries are from manufacturing industries, including:

Wood, Paper, Rubber, Glass, Plastics, Metal production, Metal casting and processing, Battery production, Malts, Grain milling, Chemical production, Fertiliser production, Ceramics, Cement, Refectory products, Animal feed and Poultry processing.

The scheme is a form of energy tax relief that allows eligible companies to reduce their energy bills through an exemption on taxes that fund low-carbon and renewable support schemes.

These renewable energy schemes fund renewable energy generation (solar, wind, solar, hydro and nuclear power). There are three different schemes:

  • Contracts for Difference (CfD)
  • Renewables Obligation (RO)
  • Small-scale Feed-in Tariffs (FIT)

The EII scheme is not technically a compensation scheme. Instead, it reduces renewable energy (electricity) related taxes by exempting eligible companies from having to pay by providing them with an exemption certificate. There is a separate UK Emissions Trading Scheme (UK ETS) that acts as a compensation scheme where you receive compensation payments periodically.

1. Understanding the EII Support Levy (ESL)

This new charge was introduced in April 2025, levied on non-EII (i.e. non-exempt) businesses to fund benefits for eligible EII companies.

The estimated rate of the ESL is between:

£0.90–£1.40 per MWh, which equates to £0.0009–£0.0014 per kWh

For example:

  • A business using 500,000 kWh (~500 MWh) could pay around £700 per year.
  • A business using 2,000,000 kWh (~2,000 MWh) might see a cost increase of £2,800 per year
  • Let’s look at two more examples:
  • 50,000 kWh/year would pay approximately £45–£70/year, depending on the exact rate.
  • 1,000,000 kWh/year would see a charge of approximately £900–£1,400/year.
2. What About the EII Exemption/Compensation Scheme?

If a business is eligible for the EII scheme (i.e., it manufactures in high-energy-use sectors and passes the 20% electricity intensity test), it may be exempt from ESL charges and can receive compensation.

Key benefits for eligible EII businesses:

  • 100% exemption from indirect renewable energy-related costs (like CfD, RO, FIT, and Capacity Market charges) as of April 2024
  • 60% compensation for network charging costs (TNUoS, DUoS, BSUoS) since April 2025, with compensation backdated to April 2024
  • A consultation is underway about increasing network compensation from 60% to 90%

If you’re eligible, you don’t pay the ESL, and you benefit from substantial savings on non-commodity and network charges.

Summary: Business Impact Overview

Non-EII business:

  • 50,000 kWh → pays approx. £45–£70/year.
  • 1,000,000 kWh → pays approx. £900–£1,400/year.
  • EII-eligible business:
  • No ESL charge
  • Potentially major savings on non-commodity charges and 60% back on network charges
  • Next Steps—What You Could Do
  • Check eligibility: Use your SIC/NACE code and electricity spend data to determine if you qualify for EII certification (20% electricity cost as a share of GVA) Source AdvisorsConsultiv Utilities.
  • If eligible: Apply for an EII certificate via the Department for Business and Trade. Once issued, you must submit it to your electricity supplier to begin receiving exemptions on your electricity bills for renewable levies and network charges GOV.UK Source Advisors.
  • The certificate is typically valid for one year and must be renewed annually.
  • You will also be required to complete quarterly reporting to DBT to confirm ongoing eligible activities and maintain the certificate’s validity
  • If not eligible: Factor in the ESL cost into your energy budget as above, and monitor policy developments (like increased compensation rates) to inform future

For any questions or concerns, please contact us at info@energysmartconsultancy.co.uk

Could your business qualify?

The rules are detailed, but as a general guide, you may be eligible if:

  1. Your business carries out an approved energy-intensive activity
  2. Your electricity costs are more than 20% of your Gross Value Added (GVA)
  3. You can provide at least two quarters of financial data

If you think your business might qualify, we can review your situation and guide you through the application process.

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