Part of the Comprehensive Spending Review, this proposal aims to give these industries more long-term certainty, helping them stay competitive internationally.

At the moment, EIIs receive compensation for the cost of the RO and FiT. They pay their RO and FiT costs through their energy bills and are then given a ‘rebate’ from government’s departmental budgets. Now, the Government is looking to replace this compensation with exemptions. The proposed change is still at a very early stage of development, with Department of Energy and Climate Change (DECC) working on defining the scope of the exemption and how it could be delivered. So far, they’ve suggested it’s likely to be similar to the EII exemption in place for costs associated with the Contract for Difference (CfD) renewables subsidy.

If the change goes ahead, it will mean the cost of these renewables levies will be spread amongst fewer customers, potentially increasing costs for non-EII customers. It’s expected that DECC will consult with the energy industry on the proposed change this spring, with the switch to exemption in place by April 2017. However, DECC has said “this timescale is particularly challenging”, as the move would need changes to RO and FiT legislation and EU State Aid approval.

We’ll keep you up to date as we learn more.