Energy

Potentially. UK businesses may have access to a range of schemes designed to reduce energy taxes, levies and other electricity costs, particularly where they operate in energy-intensive manufacturing or industrial sectors. These include the Energy Intensive Industries (EII) arrangements and British Industry Supercharger, Climate Change Agreements (CCAs) and associated Climate Change Levy reductions. Eligibility varies considerably between schemes and can depend on your activities, sector classification, energy intensity and how energy is used. A review of your activities and energy bills can help establish which reliefs may be available.

Eligibility depends on the particular EII support arrangement and involves both sector-level and business-level considerations.

The business generally needs to manufacture an eligible product or undertake an eligible activity within the specified industrial classifications. It must also satisfy the applicable electricity-intensity test using the relevant financial and energy data. The 7% figure is associated with the sector-level test in the eligibility methodology; the business-level test has its own requirements and should not be treated as the same threshold.

A business producing a mixture of eligible and non-eligible products may be able to receive support only in relation to the electricity associated with eligible production. Eligibility should therefore be assessed against the actual products manufactured, activities undertaken and underlying energy and financial data, rather than the company’s broad industry label alone.

The potential saving depends on the amount of eligible electricity consumed and the costs included in the company’s electricity bills.

Support may arise through more than one arrangement, including the EII and British Industry Supercharger package. The package can include full exemptions from specified renewable-policy and Capacity Market costs, together with compensation for eligible network charges. Current government material describes network-charge compensation of up to 90% for eligible businesses, while the wider combined support has been expressed in approximate per-MWh terms.

The actual benefit will depend on the company’s eligibility, the proportion of electricity used for eligible production, the applicable implementation dates and the charges included in its bills. A detailed energy-bill and activity review is needed before estimating the saving.

The British Industry Supercharger is a package of electricity-cost relief measures for eligible energy-intensive industries. It is intended to improve the international competitiveness of businesses exposed to high electricity costs.

The package can provide full exemptions from specified renewable-policy and Capacity Market costs and compensation for eligible electricity network charges. From 2026, the network-charge compensation rate for eligible sectors increased from 60% to 90%.

Eligibility is not available to manufacturing businesses generally. The business must meet the relevant sector, product, energy-intensity and evidence requirements. The position should be distinguished from the separate British Industrial Competitiveness Scheme, which has its own eligibility rules and implementation timetable.

Eligibility is targeted at specified energy-intensive industrial activities rather than manufacturing businesses generally. Eligible activities may include certain operations in sectors such as metals, chemicals, paper, glass, cement and other electricity-intensive manufacturing areas.

The precise test depends on the particular scheme. It may involve specified classification codes, eligible products, electricity-intensity requirements, trade exposure and evidence of the electricity used in eligible production. A business should not assume that its broad sector, Companies House SIC code or general description is sufficient.

The relevant product and activity classifications, site-level use of electricity and current scheme guidance should be checked before eligibility is confirmed.

Your SIC code can provide a useful starting point, but eligibility should not be determined simply by looking at the SIC code recorded at Companies House. EII eligibility is based on whether the business manufactures products falling within specified eligible industrial classification codes and activities. The actual activity undertaken by the business is therefore critical. A company whose registered SIC code appears relevant may not necessarily qualify, while a business should not automatically assume it is excluded simply because its Companies House classification appears different.

First establish what the business actually manufactures and which industrial classification most accurately describes that activity. For energy-intensive support schemes, eligibility is based on the underlying qualifying activity and products, rather than simply accepting the classification appearing on a company record. Evidence may therefore be needed to demonstrate the nature of the manufacturing activity. If your registered SIC information is inaccurate or outdated, it may also be appropriate to update it, but changing a SIC code by itself does not create eligibility for an energy support scheme.

Potentially, if your business operates an eligible energy-intensive process or sector covered by the CCA scheme. A CCA is a voluntary agreement under which participating businesses commit to energy-efficiency or carbon-reduction targets in return for significant reductions in the Climate Change Levy charged on their energy bills. A new CCA scheme began in 2026 and runs through to 2033. Eligibility depends on the activities undertaken at the facility and the relevant sector agreement, so it needs to be assessed at site and process level rather than simply by company sector.

The main direct financial benefit is a substantial reduction in the Climate Change Levy. From April 2026, businesses with a qualifying CCA receive a 92% discount on the CCL applying to electricity and an 89% discount on gas and most other taxable fuels, with a 77% discount for LPG. The actual saving therefore depends on the quantity and type of energy consumed. For a large energy user, the benefit can be significant, although businesses must also consider the obligations, targets and costs associated with participating in the scheme.

The Climate Change Levy (CCL) is an environmental tax applied to electricity, gas and certain other fuels supplied to businesses and public-sector organisations. It normally appears as part of the business's energy costs. Certain supplies are exempt or receive special treatment, while energy-intensive businesses participating in a qualifying Climate Change Agreement can obtain substantial reductions in the levy. Reviewing your energy use, activities and existing billing can help establish whether the correct CCL treatment is being applied and whether relief may be available.

Potentially, yes. The schemes address different elements of energy costs. A CCA primarily provides a reduction in Climate Change Levy, while the EII and British Industry Supercharger arrangements reduce specified electricity policy and network costs. A business may therefore potentially benefit from both where it independently meets the eligibility requirements for each. The overall position should be reviewed carefully to ensure the business qualifies and that relief is being correctly applied to the relevant energy consumption.

Yes. Different schemes address different energy costs, taxes, investments and regulatory requirements, so businesses can potentially benefit from several forms of support. For example, an eligible manufacturer might benefit from EII/British Industry Supercharger support and a Climate Change Agreement, while also accessing tax relief or grant support for qualifying energy-efficiency investment. However, individual scheme rules need to be considered carefully, particularly where two programmes potentially provide support for the same underlying cost or activity.

The opportunities depend on the manufacturer's sector, energy consumption and investment plans. Relevant measures can include EII and British Industry Supercharger support, Climate Change Agreements and Climate Change Levy reductions, alongside tax relief through Capital Allowances for qualifying plant and machinery. Grant programmes may also periodically support energy efficiency, decarbonisation, low-carbon technology and industrial transformation. Rather than considering each scheme independently, manufacturers should review their energy costs and planned capital investment together to identify potentially complementary opportunities.

Energy-intensive businesses should consider whether they qualify for EII/British Industry Supercharger support, a Climate Change Agreement and reduced Climate Change Levy rates, together with any relevant investment incentives or grant programmes. The most valuable opportunities can depend on the nature of the industrial activity and electricity consumption. Because eligibility criteria differ between schemes, a business that fails to qualify for one form of support may still qualify for another.

Start with a detailed review of your electricity and gas bills, sites, manufacturing activities, energy consumption and existing relief arrangements. This can establish what Climate Change Levy, renewable policy, Capacity Market and network-related costs are being charged and whether your business may meet the requirements for available reliefs. It is also worth checking whether relief already awarded is being correctly reflected by energy suppliers. For larger industrial businesses, even relatively small billing or eligibility issues can translate into significant costs over several sites and years.

The Energy Savings Opportunity Scheme (ESOS) is a mandatory energy-assessment regime applying principally to large UK undertakings and corporate groups. For Phase 4, qualification is assessed at 31 December 2026, with the compliance notification deadline on 5 December 2027. Where a corporate group contains at least one UK undertaking meeting the large-undertaking criteria, the group can fall within ESOS. Qualifying organisations must measure energy consumption, identify energy-saving opportunities and meet the relevant reporting and notification requirements.

Yes. Although ESOS is a compliance requirement for qualifying organisations, its energy assessments are intended to identify practical opportunities to improve energy efficiency and reduce consumption. Rather than treating ESOS simply as a regulatory exercise, businesses can use the assessment to identify and prioritise investments according to potential energy and financial savings. Phase 4 places greater emphasis on reporting energy savings achieved and reviewing progress against proposed measures, strengthening the connection between compliance and implementation.

Investment in energy-efficient equipment may qualify for Capital Allowances, depending on the type of asset and the business's circumstances. Potential mechanisms include the Annual Investment Allowance, Full Expensing and other first-year allowances. Some investment associated with qualifying R&D may potentially be eligible for R&D Allowances instead. The appropriate treatment depends on the asset, whether it is new or used, how it will be used and the tax position of the business. Energy investment should therefore be considered alongside the wider capital allowances position before expenditure is committed.

Potentially. UK government, devolved government, regional and sector-specific programmes periodically provide support for energy efficiency, industrial decarbonisation, low-carbon technology, heat, renewable energy and process improvement. Availability changes considerably over time and individual programmes can have narrow eligibility criteria, funding windows and technology requirements. Businesses planning substantial energy or decarbonisation investment should therefore review the funding landscape early, ideally before contracts are signed or expenditure committed, as retrospective grant funding is generally much harder to secure.

A lower-carbon manufacturing project may potentially access several forms of support depending on the technology, sector and scale of investment. These can include grant funding, Capital Allowances, R&D tax relief or R&D Allowances where genuine R&D is involved, and energy-cost relief through schemes such as CCAs or EII support where the business qualifies. This is an area where looking at the project as a whole can be particularly valuable. A major investment in new production technology may involve capital expenditure, innovation, energy savings and decarbonisation, creating several potential support opportunities rather than a single energy incentive.