Industrial electricity discounts UK explained

Business electricity prices in Great Britain have gone up a lot since 2022. This big jump in energy costs puts a lot of pressure on manufacturing and other industries that use a lot of electricity. These higher electricity prices now make it hard for factories to decide if they should stay in the UK or move out. In intensive industries, like those that use lots of electricity for melting glass, making steel, or cooling data centres, even a small change in electricity network charges can have a big effect. A change in electricity network costs may be what helps a business stay open or forces it to close in these sectors.

The UK Government has started a new industrial electricity discounts UK scheme. This scheme gives £420 million to help. The main goal is to bring electricity network charges down. These charges are often some of the most high costs in business electricity bills. Many find these charges hard to avoid.

The Business Secretary Peter Kyle talked about the news when he visited Encirc Glass. This is a big bottle maker. The Government will give a bigger discount on network charges. The most intensive industries will now get their discount increase from 60% up to 90%. There will be about 500 eligible customers, and these businesses will get help to lower their electricity costs.

This is not a discount for every business.
It is for certain groups.
Only some trade intensive industries will get this.

Many companies want to know how a discount works. A lot of people also ask what they should do if they do not get the discount.

What is the £420 million electricity discount scheme?

The discount gives help to people with the new energy bills discount scheme. Some people call it the energy bill relief scheme. The goal is to lower network costs for us all. But it does not lower the unit rate of electricity.

Energy bills and the energy bills discount are there to give people support. The discount scheme helps cut down the cost to run the network, not just the price each person pays for each unit of power. The level of support may change with this new update to the discount. People and businesses feel paid relief in the money spent on energy bills.

If you want to know more, read about the new energy bills discount scheme or the energy bill relief scheme. It lets you see what you get and how it will change your bills.

Network charges are what you pay to use the electricity network. The charges cover the National Grid and the local lines that bring power to your place. The money is used to make repairs, fix wires, and keep enough power for all people. For most businesses, network charges are between 15% and 25% of the total electricity bills.

Instead of lowering the unit price for electricity, the Government will:

• Cut the network cost part of electricity bills.
• Raise the maximum discount from 60% to 90%.
• Focus on businesses that use a lot of energy, measured in MWh of electricity.
• Help factories that need electricity all the time.

This is a part of a modern industrial strategy. It is here to boost British industry. The main goal is to help the country compete better with others.

Key details confirmed

Peter Kyle says this help makes British industry stronger. It does this by bringing down energy costs.

This help is not for people who get electricity for their home. Domestic customers have safety with the energy price guarantee and the alternative fuel payment.

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What recent changes have been made to electricity discounts for UK factories?

The UK Government brought a new rule in October 2024 for UK factories. Now, the discount on electricity network charges has gone up from 60% to 90%. This helps factories and industrial sites that use a lot of energy. They can now save more money on their electricity network charges.

The UK Government now gives more help to heavy industry. It has boosted the level of support in its industrial electricity discount programme. Now, businesses that are in the programme can pay less for electricity costs. This will help companies that use big machines for many hours. It is good news for everyone with high energy bills.

This change is part of the Government’s modern industrial strategy. It aims to help British businesses be more competitive. Government figures show that about 500 businesses with the highest energy use will get support from this plan. The plan could save them up to £420 million year by year.

Key adjustments include:

• This plan will cut down the network charges you pay for electricity, but it will not change the electricity unit prices. The discount you get is the part of your business electricity bill that helps pay for how the power gets to you.
• A price threshold will be set, so you will only get the discount if the relevant wholesale price goes above a set level. This is to make sure everyone gets help in a reasonable way.
• More help will go to trade intensive industries. This includes things like steel, glass, cement, chemicals, and some data centers that use a lot of power.
• This plan will lower electricity costs by cutting network charges. It will also help cut the gap between UK industrial electricity prices and those in other parts of Europe.

These new updates show that the UK Government wants to make sure the UK will have the energy it needs. This is good for jobs in factories. It can help to stop big companies from moving out of the UK. The changes also help british industry get stronger and do well in global markets.

Why is the Government offering industrial electricity discounts?

In Great Britain, industrial electricity prices are higher than in most places in Europe. This means it costs more for people to work or invest there. Some companies may not want to build new factories. Others might take jobs out of Great Britain because of these high electricity prices.

This discount scheme aims to:

• Make the playing field the same with Europe.
• Help keep manufacturing jobs.
• Cut back on how much we need goods from outside.
• Keep safe those parts that are important for energy security and the supply chain.

High energy prices make it more costly to make things, such as steel and food. Companies have to pay more. If no one helps them, some factories may shut down. This can lead to people losing their jobs. A weak supply chain can also make it hard for people to get what they need. High energy prices can hurt both the companies and the people who count on them.

The Government says that bringing down network costs will help with:

• There be more money put in for many years.
• You can have more steady work.
• There be more jobs in making things.

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What does this mean for UK businesses?

Only companies in intensive industries can get these electricity discounts. To get the discount, they look at what industry the company is in and how much electricity the company uses.

Eligible businesses must meet these criteria

1. Be in a place or job that the rules call an Energy and Trade Intensive Industry (ETII).
2. Show that you use a lot of electricity. The amount is looked at in megawatt hours (MWh).
3. Use electricity when you make products, run furnaces, cool things, or heat hot water, and more.

These industries often use electricity to power:

• Furnaces
• Kilns
• Large-scale cooling systems
• Continuous-flow machinery
• Data processing infrastructure

Electricity is not only something you pay for when you do business. You need it to make things.

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Which industries qualify?

Sectors likely to qualify under eligibility criteria

• Glass and ceramics making
• Steel and metal making
• Chemical work
• Cement and lime making
• Paper and pulp plants
• Data centres that need cooling all the time
• Cold storage and deep-freeze places
• Some mining jobs

These industries work both day and night. They use a lot of energy. In one year, they often need thousands of MWh of electricity.

How can UK industrial businesses qualify for government electricity discounts?

UK industrial businesses can get electricity discounts from the government if they meet the eligibility criteria in the energy bill support scheme. Your business must do work in an industry that uses a lot of energy or does a lot of trade. It’s also important that you use plenty of electricity in the production process to get this support scheme.

To qualify, a business has to show all three of the things below:

1. The business operates in a qualifying sector

• The sector has to be known as an Energy and Trade Intensive Industry (ETII).
• To find this out, they look at the company’s SIC code (Standard Industrial Classification).
• Common sectors in this group are steel, glass, chemicals, paper, ceramics, cement, and big data centres.

2. The business consumes high amounts of electricity

• The usage needs to be high and should be for making things, not only for office work.
• The amount used is checked in megawatt hours (MWh) of electricity.
• Factories and plants that use heavy machines, ovens, or freezers, or that keep working all the time, are more likely to get this.

3. Electricity is used directly in manufacturing processes

Examples include:

Information that may be requested during qualification

Businesses may need to provide:

• Use the SIC code to find out the sector group.
• Share your electricity use or smart meter details.
• Give the site and meter details you get from new electricity bills.
• Show that the electricity you use is part of what your work makes or does.

After the information is checked, energy suppliers cut the electricity network charges right away. The money is not given back to businesses as cash. The discount goes straight to the electricity network charges. This way, people and businesses can save money on their electricity network charges.

In short:

Businesses that do not get in should try to save money by checking what they buy. You can do this when you compare other suppliers. You also need to look at if a fixed price contract, or maybe a new contract, will help you save. There are still good savings when you do these things.

Why only these sectors?

Trade intensive industries face global competition. UK electricity prices are high. This lets manufacturers from places with lower energy costs and electricity prices have an edge. UK intensive industries find it tough to compete because their costs are not as low as others.

The UK needs to keep factories and jobs here in the country. Some companies might go to other places where things are cheaper. If that happens, many people could lose their jobs and the money they need. We have to find ways to help UK businesses to stay and to do well. Everyone in the UK must work as one to keep jobs at home and help workers and their families.

See how much you could save — compare business energy today.

How will businesses receive the discount?

Unlike other plans that work to help with energy prices for businesses, companies do not need to send an application to the government. Instead, energy suppliers handle the support for you.

How the discount is applied

The discount pays for part of the bill. It is used on the network charges. It does not make the unit price less. It does not bring down the unit rate. The wholesale price of electricity will not go down because of the discount.

The discount is given only when the costs are more than the reference wholesale price.

This helps to make sure they use their discount the right way. The government support is there if electricity prices really go up.

How much could eligible businesses save?

Here is one example of when network charges can be less than what you usually pay.

That means you could save hundreds of thousands of pounds on the running costs.

If you can get this deal, you will feel like the minimum supply price is much lower. Only a small part of what you pay will change because of network costs.

Are all businesses eligible for the electricity discount?

No.
Only heavy industry qualifies.

These do not qualify:

• SMEs
• Retail shops
• Hospitality, like restaurants, pubs, and hotels
• Office-based businesses
• Professional services, like marketing, finance, and legal
• Public sector organisations, including schools, hospitals, and council buildings

Public sector organisations were given different support through the energy bill relief scheme before.

If you have a business that pays electricity bills and does not need much power, the best thing to do for saving money is to find ways to lower your energy prices.

• compare business energy contracts
• get a better fixed price contract or new contract

Many suppliers may give you more than one contract option. These can be different types, such as:

• A fixed contract locks in the price.
• Pass-through pricing can make the business lose money if market prices go up or down.
• New fixed price contracts now set limits on off charges.

This is where Free Price Compare helps.

Why are electricity costs still high for non-eligible businesses?

Business electricity prices still remain high for a few reasons:

• The price for wholesale gas goes up and down.
• It takes more money to make the power grid better.
• Adding more renewable energy brings extra costs.
• Standing fees are rising. These help pay for growing the grid.

Business electricity does not have a fixed price. There is no cooling-off time after you sign a contract.

This means that if you pick the wrong contract, you can lose a lot of money. It could be thousands of dollars.

For most companies, the smartest strategy is to:

→ compare business energy

How to reduce business energy costs if you don’t qualify

Compare suppliers and get contract options

When you look at contracts in the market, you and other businesses get to see:

• There are different ways to set up contracts.
• You can get different unit cost reductions.
• You can also have different lengths for fixed contracts.

Consider usage patterns

If your business is open during the night or when there are not a lot of people around, you may be able to get lower prices from suppliers.

Use smart meter data

Smart meter readings taken every 30 minutes can tell you if changing to a time-of-use pricing plan is good for you. The smart meter shows you the times when you use the most electricity. This makes it easy to know when you should use power. You can see if switching could save you money. A smart meter is a simple way to track how your power use changes, so you can know if this plan is right for you.

Submit details to receive quotes

Businesses can submit:

• MPAN (meter number)
• Details of the current supplier
• When the contract ends
• Contact or bank details for credit checks

Then an energy specialist calls back with pricing.

It is always good for people to compare business energy before they renew.

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How to apply for the industrial electricity discount (if eligible)

Steps

1. Look to see if you can get this by checking your SIC code.
2. Find out how much electricity you use. Try to use your smart meter for the numbers.
3. Give your supplier the proof.
4. Your supplier will lower your bill right away.

Businesses may have to give more details if there is an audit check.

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Where can industrial businesses find official guidance on energy bill relief?

Industrial businesses who want help, or want to know if they can get electricity discounts, should look at the UK Government’s official information and other sites. These places will show you what to do and how you can get your savings.

1. GOV.UK guidance pages and scheme documents: The Department for Energy Security & Net Zero gives advice in the “Energy and Trade Intensive Industries (ETII): guidance” for the Energy Bills Discount Scheme (EBDS). In this guide, you find help with who can get the energy bills discount, what to do to apply, when the deadlines are, and which rules to keep in mind.
2. Energy suppliers’ information portals: All approved energy suppliers need to give eligible customers the right discount on their energy bills. They also show how the discount scheme works with price contracts, your unit rate, and standing charges. Their sites include FAQs to answer common questions. You read about how the discount changes with the wholesale price of gas, see money for network costs, and more, which is good for those in trade intensive industries and all customers.

Businesses need to know their SIC code. It helps them find the right group. They should look at their use data, which you can get from a smart meter or half-hourly notes. Make sure to have all your papers with you. Check if you are one of the eligible customers. Also, see if your site is in an Energy and Trade Intensive Industry (ETII).

By using the right official advice, industrial companies can know if they are in the energy bills discount scheme. They can use their supplier to apply for it and get help with their energy bills. This way, they are sure to be in the discount scheme and not get wrong advice about an energy bills discount.

FAQ’s about industrial electricity discounts UK