Could Your Business Qualify for EII Support?

Eligibility for the Energy Intensive Industries schemes is based on more than simply having a large electricity bill.

A business must normally satisfy both an eligible-sector test and a business-level electricity-intensity test. The application must also relate to qualifying manufacturing activity carried out in the UK.

EII Advisory helps manufacturers understand whether they are likely to meet these requirements before committing significant time and resources to an application.

The Sector-Level Test

The business must manufacture a qualifying product within an eligible industrial sector.

Eligibility is assessed by reference to specified four-digit NACE classifications. These cover a range of electricity-intensive manufacturing activities, including parts of the:

• paper and packaging industry

• chemicals sector

• glass and ceramics industry

• metals sector

• plastics and rubber industry

• food-processing sector

• mineral-products sector

• electronic-components and battery industries

It is the activity carried out and the product manufactured—not simply the general description of the company—that determines whether the sector-level requirement is met.

A business producing both eligible and ineligible products may still qualify. However, support will ordinarily be limited to the proportion of electricity associated with eligible manufacturing activity.

The Business-Level Test

The business must also demonstrate that its electricity costs meet the required level of electricity intensity.

Under the current scheme rules, electricity costs must represent at least 20% of the business’s Gross Value Added over the relevant assessment period.

For this purpose, Gross Value Added is calculated using financial information including EBITDA and staff costs. The calculation is more specialised than comparing the electricity bill with turnover or profit, and the appropriate financial reference period depends on the amount of trading history available.

Can New Businesses Qualify?

A relatively new business may be able to apply even where full statutory accounts are not yet available.

However, the business must normally have:

• at least one quarter of financial data

• evidence that it is carrying out an eligible activity

• at least three months of relevant electricity-use information

Businesses with fewer than one financial quarter of data are not currently eligible to apply.

Businesses With Several Products or Sites

Eligibility can become more complicated where a business:

• produces both eligible and ineligible products

• operates from several sites

• shares an electricity meter with another organisation

• generates some of its own electricity

• receives electricity through a landlord or another third party

• has recently restructured, acquired or disposed of a business

• has installed a new meter

In these circumstances, the applicant may need to identify and evidence the proportion of electricity attributable to eligible production at each relevant meter.

A SIC Code Alone Is Not Enough

Companies sometimes assume that a Companies House SIC code confirms eligibility.

It does not.

The official assessment is based on the qualifying manufacturing activity and relevant NACE classification, supported by evidence of the products and processes involved. A company’s registered SIC code may be helpful background information, but it does not determine the application by itself.