The Energy Intensive Industries (EII) Scheme is a support mechanism for UK manufacturers whose energy costs could render them uncompetitive globally.
In an era of rising global energy prices and increasing pressure to decarbonise, this scheme allows eligible businesses to benefit from potentially sizable discounts on certain non-commodity levies and charges. By doing so, it helps maintain the competitive position of British industries, making the country an attractive investment proposition for sectors like steel, cement, chemicals, paper, and more.
In 2023–2024, the government reaffirmed its commitment to supporting EIIs as part of its wider Net Zero and industrial decarbonisation strategy.
This guide explains which businesses can benefit from discounts and reductions via an application to the Department for Business and Trade (DPT).
Which charges can be reduced?
An Energy Intensive Industries Certificate of Exemption can unlock discounts across several levies and charges built into business energy pricing:
Renewables Obligation (RO): Supports large‑scale renewable generation.
Contracts for Difference (CfD): Supports low‑carbon generation projects.
Feed‑in Tariff (FiT): Supports smaller‑scale renewable installations.
Energy Intensive Industries Eligibility
To qualify for the EII scheme, your business must:
- Manufacture a product in the UK within an eligible sector (defined by its 4‑digit NACE code). Within the context of the EII scheme, this is referred to as the sector level test.
- Pass the business level test, where electricity costs must account for ≥20% of the business’ Gross Value Added (GVA).
- Have at least one quarter of financial data available.
- Be able to evidence the proportion of electricity used for manufacturing the eligible product.
Annex A. shows the list of eligible NACE codes at the end of this guide.
Ineligible Companies and meters
The following are NOT eligible for the EII scheme:
- Non‑Half‑Hourly meters (including domestic meter types and export meters).
- Businesses that cannot evidence their proportion of electricity used for eligible manufacturing.
- Sites that do not fall within the defined NACE codes.
Key details and notes
If your business has been trading for over a year, you must apply using financial data submitted to Companies House. You cannot exclude years from records to meet requirements, other than 2020 to 2021 due to extraordinary pandemic financial impacts.
For businesses with one or two years of published accounts, those records are used in the application.
New businesses without published accounts must have at least three months of financial data. They will be obligated to supply their first set of annual accounts within 30 days of completion to satisfy the requirements of the scheme.
For businesses with varied financial periods different to 12 months, the periods in the accounts will be used.
Your eligible electricity usage includes both grid and off‑grid generation (such as renewables or private grid energy).
Mixed eligible and ineligible manufacturing must be separately metered or demonstrably accurately apportioned.
Energy Intensive Industries Certificates expire every 12 months and need to be re-applied for every year, unless the business has applied with three or more years of financial accounts. In this instance, the application is not reassessed until the sixth year, but annual applications must still be submitted.
The government website provides particular guidance for scenarios including meter sharing between businesses, restructuring during applications and procuring energy from a third party, not a supplier.
Calculating Exemption Percentage
The percentage of electricity eligible for the EII exemption is calculated as:
Exemption Percentage = (Eligible Electricity Usage / Total Electricity Through the Meter) x 100
Example:
If a manufacturer uses 600,000 kWh for eligible activities and total site usage is 1,000,000 kWh, the exemption percentage is:
600,000 ÷ 1,000,000 = 0.60 x 100 = 60%
In this example you would calculate 60% of your electricity cost annually, to be used in the second part of the calculation below: GVA.
What is Gross Value Added & How to Calculate It
GVA = EBITDA + Gross Staffing Costs (including pensions and NI)
Example:
If a manufacturer has:
- EBITDA: £2,000,000
- Gross staffing costs: £1,000,000
Then:
GVA = £2,000,000 + £1,000,000 = £3,000,000
To qualify for the scheme, your eligible electricity cost ÷ GVA must be ≥20%. It is important to note that the scheme is administered in 2012 pricing, meaning you must use His Majesty’s Treasury (HMT) deflator tool to convert each year’s GVA in your application and take into account inflation.
Energy Intensive Industries Scheme Application Process and Tips
Download the application forms and full guidance from .gov, here.
Application guidance and tips:
- Ensure your energy data includes both grid and off‑grid generation.
- Maintain evidence for any instances of force majeure which affect figures in your application. This will need to be supplied to DPT.
- Clearly apportion usage for mixed eligible/ineligible activities. Metered records are preferred to evidence this, utilising some form of energy management software or meter-level segmentation of data.
- If meter data is not available, you can apportion energy based on tonnage of product produced, which may be accepted if the calculation is deemed to be accurate.
- Consider working with an energy expert for precise calculations and robust applications.
- Your application will need to include copies of energy bills (including May and/or November), full staffing costs and a document evidencing any discrepancies between internal accounts and published accounts. The full checklist to complete before beginning your application is available in Annex B at the bottom of this guide.
- For unsuccessful applications, appeals can be made within 20 days of decision, direct to the DBT.
Once the DBT confirms you are to be awarded an exemption, the certificate must be sent to your electricity supplier, who will work with the Low Carbon Contracts Company (LCCC) to close the loop on application and apply the discount. This can cause delays and should be chased regularly.
If you change electricity supplier, you will need to send the new supplier your EII Certificate and this process needs to be repeated. Working with a Third Party Intermediary (TPI) or consultant can help expedite this process and alleviate the burden on the applying business.
Reporting Requirements
Once your EII Certificate has been issued, this is not the end of the administration. You will need to conduct quarterly reporting activity to maintain the certificate’s validity.
These reports include:
- Quarterly notifications to DBT confirming ongoing eligible manufacturing activity and the business’ trading status.
- Any changes to use of the exempt meter.
- For recipients whose application was approved on less than 12 months of financial records, quarterly proof of consumption must be provided.
- Immediate notifications are required if:
- The contact person or site address changes.
- The eligible activity ceases.
- An error is discovered that affects the exemption.
Final Thoughts
The EII Scheme provides significant benefits for eligible manufacturers, reducing operational costs and allowing businesses to stay competitive in a global marketplace.
The administrative burden should not be overlooked, however. It is beneficial to work with a consultant or TPI to reduce the time associated with activating EII Certificates and take away a proportion of the regular administration required.
Speak to Procure Smart today to investigate how much you could save with an EII Certificate.
Annex A: Eligible Product Types
| NACE Class | Description |
| 05.10 | Mining of hard coal |
| 08.11 | Quarrying of ornamental and building stone, limestone, gypsum, chalk and slate |
| 08.12 | Operation of gravel and sand pits; mining of clays and kaolin |
| 08.99 | Other mining and quarrying not elsewhere classified |
| 10.12 | Processing and preserving of poultry meat |
| 10.61 | Manufacture of grain mill products |
| 10.91 | Manufacture of prepared feeds for farm animals |
| 11.06 | Manufacture of malt |
| 13.10 | Preparation and spinning of textile fibres |
| 13.20 | Weaving of textiles |
| 13.91 | Manufacture of knitted and crocheted fabrics |
| 13.93 | Manufacture of carpets and rugs |
| 13.95 | Manufacture of non‑wovens and articles made from non‑wovens, except apparel |
| 13.96 | Manufacture of other technical and industrial textiles |
| 13.99 | Manufacture of other textiles not elsewhere classified |
| 14.19 | Manufacture of other wearing apparel and accessories |
| 14.31 | Manufacture of knitted and crocheted hosiery |
| 14.39 | Manufacture of other knitted and crocheted apparel |
| 15.11 | Tanning and dressing of leather; dressing and dyeing of fur |
| 16.10 | Sawmilling and planing of wood |
| 16.21 | Manufacture of veneer sheets and wood‑based panels |
| 16.29 | Manufacture of other products of wood, cork, straw, and plaiting materials |
| 17.12 | Manufacture of paper and paperboard |
| 17.21 | Manufacture of corrugated paper and paperboard and of containers |
| 17.22 | Manufacture of household and sanitary goods and of toilet requisites |
| 17.24 | Manufacture of wallpaper |
| 19.20 | Manufacture of refined petroleum products |
| 20.11 | Manufacture of industrial gases |
| 20.13 | Manufacture of other inorganic basic chemicals |
| 20.14 | Manufacture of other organic basic chemicals |
| 20.15 | Manufacture of fertilisers and nitrogen compounds |
| 20.16 | Manufacture of plastics in primary forms |
| 20.17 | Manufacture of synthetic rubber in primary forms |
| 20.60 | Manufacture of man‑made fibres |
| 22.11 | Manufacture of rubber tyres and tubes; retreading and rebuilding of rubber tyres |
| 22.19 | Manufacture of other rubber products |
| 22.21 | Manufacture of plastic plates, sheets, tubes and profiles |
| 22.22 | Manufacture of plastic packing goods |
| 22.29 | Manufacture of other plastic products |
| 23.11 | Manufacture of flat glass |
| 23.13 | Manufacture of hollow glass |
| 23.14 | Manufacture of glass fibres |
| 23.19 | Manufacture and processing of other glass, including technical glassware |
| 23.20 | Manufacture of refractory products |
| 23.31 | Manufacture of ceramic tiles and flags |
| 23.32 | Manufacture of bricks, tiles and construction products, in baked clay |
| 23.44 | Manufacture of other technical ceramic products |
| 23.49 | Manufacture of other ceramic products |
| 23.51 | Manufacture of cement |
| 23.52 | Manufacture of lime and plaster |
| 23.62 | Manufacture of plaster products for construction |
| 23.65 | Manufacture of fibre cement |
| 23.99 | Manufacture of other non‑metallic mineral products not elsewhere classified |
| 24.10 | Manufacture of basic iron and steel and of ferro‑alloys |
| 24.20 | Manufacture of tubes, pipes, hollow profiles and related fittings of steel |
| 24.31 | Cold drawing of bars |
| 24.32 | Cold rolling of narrow strip |
| 24.34 | Cold drawing of wire |
| 24.42 | Aluminium production |
| 24.43 | Lead, zinc and tin production |
| 24.44 | Copper production |
| 24.45 | Other non‑ferrous metal production |
| 24.51 | Casting of iron |
| 24.52 | Casting of steel |
| 24.53 | Casting of light metals |
| 24.54 | Casting of other non‑ferrous metals |
| 25.92 | Manufacture of light metal packaging |
| 26.11 | Manufacture of electronic components |
| 27.20 | Manufacture of batteries and accumulators |
| 27.32 | Manufacture of other electronic and electric wires and cables |
| 28.91 | Manufacture of machinery for metallurgy |
Annex B: Items Required to Complete the Energy Intensive Industries Application
Here’s what you must provide:
| No. | Requirement |
| 1 | Contact name, address, and e‑mail address |
| 2 | Business name and evidence of legal status (e.g., Companies House number) |
| 3 | Details of the eligible product (using 4‑digit NACE code) |
| 4 | 8‑digit PRODCOM code (for monitoring) |
| 5 | Statement setting out the financial year |
| 6 | Statement of accounting standards used for annual accounts (if applicable) |
| 7 | Earnings (EBITDA) and staff costs for the relevant period (if applicable) |
| 8 | Evidence of total electricity consumed (all meter points and sources) and total cost paid for grid electricity, including May and November bills |
| 9 | Details of the meter used for eligible activity, including MSID/BM Unit ID, total electricity usage, and supplier contact details |
| 10 | Statement confirming that all (or the stated proportion) of the electricity measured by the meter is used for eligible activity |
| 11 | Evidence of the proportion of electricity used for eligible activity |
| 12 | Date of the last continuing change (if applicable) |
| 13 | Evidence of any force majeure events and their impact |
| 14 | Name of the person responsible for paying the electricity supply (if not the business itself) |
