Compensation for energy intensive industries (EIIs) in the UK for renewables subsidies has cleared state aid, potentially saving such businesses hundreds of millions of pounds.
Late last week EIIs were granted state aid compensation for the cost of renewables which will compensate qualifying industries for the cost of renewables added to electricity bills.
During November’s Autumn Statement chancellor George Osborne announced plans to extend the compensation into a full exemption for levies associated with the feed-in tariff and Renewables Obligation.
The plans were announced by prime minister David Cameron on 28 October, who added that compensation would be paid from the date the UK received state aid clearance from the European Union. This was received during a personal call to business secretary Sajid Javid on 17 December.
The compensation will now stand until the full exemption can be put into place. Full guidance is to be published by the government next month, however payments will be backdated to 17 December.
“This is very welcome news and meets a commitment we made to deliver energy compensation for the steel industry by the end of the year. Relief from energy costs will save our steel industry hundreds of millions of pounds.
“This comes on top of action we have taken in recent months on procurement, anti-dumping and EU emissions directives, as we do all we can to give our steel industry and workers a more secure and sustainable future,” Javid said.
The compensation will be seen as an important boon for EIIs, particularly the steel industry which has suffered a torrid year. Chinese dumping has too been a point of ire for domestic steel manufacturers, but the industry had also repeated calls for certainty over energy prices.
The EII exemption has however proven to be contentious in its own right. In making EIIs exempt from renewables levies, those payments are now being sourced from domestic electricity bills instead. This looks set to place an extra £5 onto regular household bills each year until 2020 – more than the saving the government has made by cutting back the small-scale feed-in tariff.