It is widely known that the UK has some of the highest electricity costs in the world. This is even more severe for industrial users of electricity, disproportionately impacting manufacturers of chemicals, plastics, metals, and adjacent sectors. While the government acknowledges this requires long term solutions, in the meantime, various schemes are in place to encourage domestic manufacturing. This includes the Energy Intensive Industries (EII) scheme, which offers a reduction of up to £90/MWh on electricity costs.
The EII scheme is a government support mechanism designed to reduce electricity costs for UK manufacturers operating in sectors vulnerable to high energy costs and international competition. In practice, it provides relief from certain policy costs included in electricity bills, as well as offering further compensation for network costs.
What is the benefit?
Retail prices of electricity consist of 3 components [3] :
An EII certificate exempts the benefiting business from indirect costs of funding the following policy costs [4] :
- Contracts for Difference (CFD)
- Renewables Obligation (RO)
- Network Charging Compensation Levy (NCC Levy)
In addition, any business with an EII certificate is automatically eligible for the Network Charges Compensation (NCC) Scheme . This compensates businesses for up to 60% of the following network costs:
- Balancing Services Use of System (BSUoS)
- Distribution Use of System (DUoS)
- Transmission Network Use of System (TNUoS)
In layman’s terms, specific charges and levies are struck off future invoices. These effectively add up to a discounted electricity bill of ~£60/MWh and a compensation of ~£30/MWh .
Who is eligible?
Eligibility is subject to two tests: a sector level test, and a business level test. The sector level test is based on the applicant’s production, i.e. what final (and sometimes intermediate) products are manufactured. The business level test is a quantitative analysis of the applicant’s profitability and electricity usage, and an energy intensity metric must exceed a certain threshold. At Bonham & Brook, we have considerable experience working with manufacturers of chemicals [1] [2] , cereals (Weetabix), and many in between. The EII scheme is available to most primary manufacturers of minimally processed substances. As an illustrative example, production of fibreboard and of glass would both be eligible for the scheme, whereas manufacturing front doors would not. Bonham and Brook cover all aspects of the scheme, including assessing eligibility (both the sector level and business level tests), fielding queries from the Department for Business and Trade during the review process, and the subsequent upkeep of the scheme requirements.
Looking forward
The EII Scheme is reviewed by the Department for Business and Trade regularly to ensure the government is providing adequate support for domestic manufacturing. This includes the introduction of the NCC scheme in April 2025 and exemption from Capacity Market charges in October 2024. From April 2026, the NCC scheme will be uplifted to compensate 90% of network costs , compared to 60% before [5] . In addition to this, the British Industrial Competitiveness Scheme is set to be introduced in April 2027, which seeks to provide similar support to a wider range of sectors (would like to reference/link to B&B BICS article here) . Amendments to scheme regulations, eligibility, and the introduction of new schemes are nothing new in this field, which is why Bonham and Brook prides itself on being informed on all latest developments to ensure client benefit is maximised.
References
[1] Bonham & Brook, “Client Testimonial: How Bonham & Brook Helped Eternis Unlock Unexpected Funding,” 4 March 2025. [Online]. Available: https://bonhamandbrook.co.uk/how-bonham-brook-helped-eternis-unlock-unexpected-funding/
[2] Bonham & Brook, “Client Testimonial: How Lanxess Chemicals Achieved A Seven-Figure Annual Saving With Bonham & Brook,” 3 February 2025. [Online]. Available: https://bonhamandbrook.co.uk/lanxess-chemicals-savings/
[3] Department for Business & Trade, “British Industrial Competitiveness Scheme: consultation on scheme eligibility and approach,” 24 November 2025. [Online]. Available: https://www.gov.uk/government/consultations/british-industrial-competitiveness-scheme-consultation-on-scheme-eligibility-and-approach/british-industrial-competitiveness-scheme-consultation-on-scheme-eligibility-and-approach
[4] Department for Business & Trade, “GOV. UK,” April 2025. [Online]. Available: https://assets.publishing.service.gov.uk/media/67ff6d6b393a986ec5cf8df2/energy-intensive-industries-certificate-for-exemption-funding-contracts-for-difference-renewables-obligation-feed-in-tariff.pdf.
[5] Department for Business & Trade, “Proposed uplift to the Network Charging Compensation Scheme for energy intensive industries (EIIs): government consultation response,” 31 October 2025. [Online]. Available: https://www.gov.uk/government/consultations/network-charging-compensation-scheme-uplift-for-energy-intensive-industries/outcome/proposed-uplift-to-the-network-charging-compensation-scheme-for-energy-intensive-industries-eiis-government-consultation-respon
Get in touch with Bonham & Brook’s Energy Team to begin your EII assessment today. If you would like expert support in navigating these changes, contact us at meljaouhari@bonhamandbrook.co.uk