Energy Bills Discount Scheme for businesses

The Energy Bill Relief Scheme, which provided a price cap for business energy users, ended in March 2023. It has been replaced by the Energy Bills Discount Scheme (EBDS), which runs until March 2024.

Unlike the previous scheme, the EBDS provides a discount on wholesale prices rather than a fixed cap. While less generous for most, it provides targeted support for 'Energy and Trade Intensive Industries' (ETIIs) that are particularly vulnerable to high energy costs.

How the baseline discount works

For most non-domestic energy users in Great Britain and Northern Ireland, the EBDS provides a baseline discount. This discount is applied automatically to bills if wholesale prices rise above a certain threshold. However, the maximum discount is capped at £19.61 per megawatt hour (MWh) for electricity and £6.97 per MWh for gas. This means businesses are more exposed to price fluctuations than they were under the previous cap.

Support for intensive industries

A higher level of support is available for businesses in sectors classified as Energy and Trade Intensive Industries (ETIIs). This includes manufacturing sectors, certain processing industries, and some specific services. Eligible businesses will receive a larger discount, but unlike the baseline support, they must actively apply for this higher tier through a government portal.

Planning for energy costs

With the level of government support reduced, businesses must factor higher and potentially more volatile energy costs into their financial forecasts. Exploring energy efficiency measures, negotiating new fixed-rate contracts carefully, and potentially investing in on-site renewable generation (such as solar panels) are all strategies businesses should consider to mitigate the impact.