The UK Government’s Energy Intensive Industries (EII) Compensation Scheme is designed to ease the financial pressure on businesses that consume large amounts of electricity. These industries often face elevated energy costs due to environmental levies that fund renewable and low-carbon initiatives. By offering targeted relief, the scheme helps level the playing field allowing energy intensive sectors (essentially manufacturing) to stay competitive in the global market while continuing to operate within the UK.
What is the EII Scheme?
The Energy Intensive Industries (EII) Compensation Scheme has been introduced by the UK Government to ensure UK electricity intensive businesses are not at a significant competitive disadvantage when they are operating in international markets.
The EII allows eligible businesses to apply for an exemption to their Contracts for Difference (CfD), Renewables Obligation (RO), Feed-In-Tariff (FiT) and Capacity Market (CM) charges, which appear on electricity utility invoices.
Who can Apply?
The EII Scheme typically covers sectors such Steel, Glass, Wood, Paper, Metal Production, Metal Casting, Plastics and Chemicals (see here for full list) where energy contributes to a significant proportion of production costs.
The UK Government outlines two tests that businesses need to complete to ascertain if they are eligible for the EII scheme, see below.
- Sector Level Test - The business must manufacture a product in the UK within an eligible sector (defined by a 4-digit NACE Code) – the “sector level test”.
- Business Level Test - The business must pass a 20% electricity intensity test – the “business level test”. The purpose of the business level test is to ensure that the exemptions target only those businesses where support is most needed, i.e. those that will be put at a significant competitive disadvantage due to the costs of funding renewable and low carbon policies.
Eligible EII Participants can also Achieve the Following:
To achieve a new level of competitiveness the UK Government has implemented the following changes to the existing EII Scheme.
- Increased the subsidy under the existing Energy Intensive Industries (EII) Renewable Levy Exemption scheme from 85% up to 100% aid intensity of the Renewable Obligation (RO), Contract for Difference (CfD), and Small-Scale Feed in Tariff (FiT) charges.
- Full exemption from GB Capacity Market Charges (CM) for the EII scheme participants from April 2024.
- Introduction of the Network Charging Compensations Scheme (NCC) for EII scheme participants, which offers up to 60% compensation for all BSUoS/DUoS charges and all TNUoS charges (including annual connection charges and transmission losses in this context in all three cases). The level of exemption is planned to increase to 90% from 2027 as part of the Government’s recently - June 2025 - published UK Modern Industrial Strategy Plan.
How Can NUS Help?
NUS’ Energy and Sustainability Services (ESS) team can support you in the following areas.
- Advice for businesses about their eligibility for the EII Scheme.
- Assistance with applications for the EII Scheme.
- Assistance for registration into the NCC Scheme (EII Scheme participants only).
- Assistance with any data collection/provision and reporting exercises requested by the Department of Business and Trade (DBT)/ELEXON.
- Monitor information to identify any significant changes in data, discuss causes and agree any action required.
- Provide advice on any changes to legislation affecting the EII and/or NCC schemes.
If you are interested in discussing NUS Support, please get in touch with your NUS consultant, or contact us and we will provide further information on the full scope of assistance in relation to the EII / NCC Schemes.