Energy Intensive Industries Scheme: EII Eligibility and Electricity Cost Relief for UK Manufacturers

June 22, 2026

UK manufacturers continue to face some of the highest industrial electricity costs in Europe, placing pressure on margins, competitiveness and investment.

For businesses operating in energy-intensive sectors such as chemicals, plastics, metals, glass, paper, ceramics and other foundational manufacturing activities, electricity costs can materially affect both day-to-day profitability and long-term growth plans.

The Energy Intensive Industries Scheme, is designed to reduce the impact of certain electricity policy and network costs for eligible manufacturers. In practice, the scheme can help qualifying businesses lower electricity bills through exemptions from specific policy costs, by up to £80/MWh, and compensation for eligible network charges.

Bonham & Brook supports manufacturers throughout the full EII process, from initial eligibility reviews through to application preparation and ongoing scheme compliance. This is everything you need to know about the EII scheme:

Unsure whether your manufacturing activity qualifies?

Bonham & Brook can carry out an initial EII eligibility review and identify whether your business could benefit from current or upcoming electricity cost relief schemes. Contact us today.

What is the Energy Intensive Industries scheme?

The Energy Intensive Industries scheme is a government support mechanism for manufacturers whose competitiveness is most exposed to high electricity costs and international competition. Rather than offering a general discount to all businesses, EII support is targeted at specific qualifying sectors and businesses that meet defined electricity-intensity criteria.

The scheme works by reducing the indirect cost of certain electricity policies that would otherwise be passed through on bills, alongside compensation for qualifying network charges. For many manufacturers, these costs form a meaningful part of the delivered electricity price.

What electricity costs can the EII scheme reduce?

A retail electricity bill is typically made up of three broad components [1]:

Wholesale electricity costs
Network costs
Policy costs

The EII scheme does not remove every element of the bill, but it can reduce specific policy and network-related charges where eligibility is confirmed and supplier pass-through is correctly applied.

Policy cost exemptions

An EII certificate can exempt eligible businesses from the indirect costs of funding several policy schemes [2], including:

Contracts for Difference (CfD)
Renewables Obligation (RO)
Feed-in Tariffs (FIT)
Capacity Market (CM)
Network Charging Compensation Levy (NCC Levy)

These are charges that help fund wider electricity system and low-carbon policy mechanisms. For eligible EII businesses, the qualifying portion of these costs can be removed from future invoices once the certificate is in place and recognised by the supplier.

Network Charges Compensation Scheme

Businesses with an EII certificate can also access the Network Charges Compensation (NCC) Scheme. This provides compensation for a portion of eligible electricity network costs, including:

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 ~£50/MWh and a compensation of ~£30/MWh.

The NCC Scheme began at 60% compensation and, from 1 April 2026, network charges are have been eligible for 90% compensation, paid in arrears.

Who is eligible?

Eligibility is subject to two core tests: a sector-level test and a business-level test.

Sector-level eligibility

The sector-level test looks at what the business manufactures. This is based on the applicant’s production activity ie.e. what final (and sometimes intermediate) products are manufactured. The scheme is generally most relevant to primary manufacturers and businesses producing minimally processed substances or materials.

As an illustrative example, production of fibreboard or glass may fall within eligible manufacturing activity, whereas the manufacture of finished front doors may not. The exact position depends on the relevant product, process and qualifying activity.

Business-level electricity intensity test

The business-level test is a quantitative analysis of the applicant’s electricity usage and financial performance. In broad terms, the business must demonstrate that electricity costs are sufficiently material when measured against the relevant profitability or gross value added calculation.

A business may be eligible where it can evidence:

Your business carries out qualifying manufacturing activity.
Your products fall within eligible sector or product categories.
Electricity costs represent a significant proportion of your business activity.
You can evidence electricity consumption, financials and qualifying production activity.
You have the relevant financial data needed to complete the application assessment.

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, the application process and the subsequent upkeep of the scheme requirements.

Which manufacturing sectors may qualify?

The EII scheme is particularly relevant to manufacturers in sectors exposed to high electricity costs and international competition. Qualifying sectors include chemicals, plastics, metals, paper, glass, ceramics, cement, food ingredients and more.

Bonham & Brook has considerable experience supporting manufacturers across chemical production – Lanxess & Eternis, cereals and food manufacturing – Weetabix, and many in between.

Because eligibility often depends on the specific activity being carried out rather than the way a business describes itself, an initial technical review is usually the most reliable way to determine whether a claim is viable.

How Bonham & Brook supports EII applications

Bonham & Brook works with manufacturers across the full lifecycle of the EII scheme. This includes:

Reviewing whether the business is likely to meet the sector-level eligibility test.
Assessing the business-level electricity intensity calculation.
Reviewing electricity invoices and consumption data to understand potential benefit.
Preparing and submitting the application pack.
Fielding technical queries from the Department for Business and Trade during the review process.
Supporting certificate upkeep, supplier implementation and ongoing compliance requirements.
Identifying whether other relief schemes may be available.

Our role is to make the process clear, seamless and evidence-led. Bonham & Brook helps manufacturers understand not only whether they qualify for EII support, but how relief can support a broader energy strategy; reducing exposure to high electricity costs, protecting competitiveness and creating space to invest in greener, more efficient technology.

Future changes to EII, NCC and BICS

The EII landscape continues to evolve as government seeks to improve the competitiveness of UK manufacturing. Recent and upcoming developments include the introduction of the NCC Scheme, the Capacity Market exemption, the uplift of NCC compensation to 90% from 1 April 2026 [3], and the recently announced British Industrial Competitiveness Scheme (BICS).

BICS is expected to provide electricity cost support to a wider group of manufacturing businesses from April 2027, with exemptions from Renewables Obligation and Feed-in Tariff costs from April 2027 and Capacity Market costs from October 2027.

Scheme amendments, eligibility changes and new government support mechanisms are common in this area. Bonham & Brook keeps clients informed of the latest developments so that available relief is identified, assessed and implemented effectively.

Speak to Bonham & Brook about your company’s EII eligibility

If your business manufactures energy-intensive products or operates in a sector where electricity costs are affecting competitiveness, it may be worth reviewing your EII eligibility.

Bonham & Brook can help you assess whether your business qualifies, estimate the potential impact on electricity costs, and manage the application process from start to finish.

-> Book an EII eligibility review

References

[1]	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.
[2]	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.
[3]	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.