The government has confirmed in response to its earlier consultation that energy intensive industries (EII) are to be made exempt from the indirect costs of the Renewables Obligation (RO).

The RO is a scheme intended to increase the deployment of large-scale renewable energy projects. Its expenses are paid for through energy bills, however, the government’s choice means that a number of large energy-intensive industries will be exempt to ensure they are internationally competitive, with the costs passing on to other bill payers. The government plans to implement the exemption from 1 January 2018.

Pointedly, there will now be an effect on non-exempt businesses. The government estimated that average annual electricity bills for non-eligible business will increase by around 0.2% to 0.6% over 2017-18 to 2027-28. In an impact assessment, the government put the best estimate of the average addition to the bill of a small business energy user over 2017-18 to 2027-28 at £4,300.

The government said it knows that businesses which do not benefit from the exemption will deal with additional costs, however it felt the superseding benefits of the exemption justified proceeding. In terms of businesses that do not benefit, the government restated how it is continuing to bear down on business energy costs.

 

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