CfDs are the government’s new mechanism for providing subsidies to large-scale renewable electricity projects; they set a guaranteed price for power and pay generators the difference between this “strike price” and the prevailing wholesale price. This cost is covered by energy users through their energy bills. In order to support the competitiveness of EIIs, the government has implemented a number of measures to cut these costs.

The government is proposing that, in order to ensure that only those businesses eligible for compensation receive it, firms should be required to notify the government when there are changes that would affect their eligibility for the scheme.

The government is also proposing changes to the issuing and expiry of the certificates issued to eligible EIIs to prevent them from lasting for six months or less, which is possible under the current regulations.

Figures in the consultation show the impact of the exemption will be to increase the energy bill of a medium business energy user by £524 in 2016-17, while decreasing the bill of an exempt EII by £69,191.

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