This article was reviewed and updated in June 2026.
A quick guide to the renewable levies currently in place and how energy-intensive businesses can claim exemption from them.
What are the main green levies for UK businesses?
As of June 2026, the UK government has three main schemes to support the delivery of renewable generation sources. These are:
- Contracts for Difference (CFD)
- Renewables Obligation (RO)
- Small-Scale Feed-In Tariffs (FIT)
In the long term, these schemes help to secure lower and more stable energy prices for all consumers. The government pays for these schemes by charging levies on electricity suppliers, who then pass the costs on to customers. Most UK businesses will see these charges in the “non-commodity costs” part of their energy bills. They make up a significant proportion of your total energy costs.
Other important levies
As well as levies for supporting renewables, the government also charges levies to help pay for maintaining a reliable electricity supply. These are:
- Network charges
- Capacity Market (CM) charges
(We explain a bit more about network charging costs in our guide to the British Industry Supercharger.)
Who gets renewable levy exemptions?
Energy-intensive businesses in England, Wales and Scotland can claim exemption from contributing to all the schemes we’ve mentioned: Contracts for Difference, Renewables Obligation and Feed-In Tariffs, plus network charges and the Capacity Market contribution.
Your business has to meet certain criteria to qualify as an energy-intensive business that’s eligible for these exemptions. We explain the two tests below, but basically:
- Your work has to be on the official list of important and energy-intensive activities;
- Energy needs to make up a certain percentage of your overall costs.
Businesses based solely in Northern Ireland can apply for exemption to the Renewables Obligation (RO) scheme only.
What’s the point of renewable levy exemptions?
All the levies we list above have an important function, supporting clean energy deployment and paying for the vital networks that deliver our electricity.
But for energy-intensive businesses, these levies push up their running costs significantly. This could potentially lead to counterproductive outcomes, like businesses going bust or moving overseas to avoid the charges. Renewable levy exemptions are designed to reduce the risk of this by giving energy-intensive businesses the opportunity to avoid these payments.
How the exemptions work
First your business needs to prove eligibility. This means submitting information about the sector you operate in and the energy intensity of your processes.
If you’re eligible, you will get an EII certificate. This entitles you to exemption from all the schemes we’ve mentioned.
Give your EII certificate to your energy supplier. They then need time to administer the changes to your billing. They might need to adjust your metering. Once you’re set up on the scheme, your bills will no longer include the costs of the schemes you’re exempt from paying for.
Your EII certificate usually expires after a year and you’ll need to re-apply after that. You’ll also need to re-apply if you change supplier in the meantime.
Does my business qualify for exemption from renewable levies?
Under the current system, securing an EII certificate means you can claim exemption from all renewable levies and grid maintenance charges.
Your business has to meet two tests to qualify.
- The “sector level test”: the business must manufacture a product in the UK within an eligible sector. The UK government uses the Europe-wide NACE system to classify businesses into types of activity and gives them all a four-digit code. For example, a sawmill would be 16.10. The full list of sectors that qualify is listed in Annex 1 of the official guidance.
- The “business level test”: you must show that your electricity intensity is at least 20%. That means that electricity costs add up to 20% or more of the company’s Gross Value Added.
What you need to submit
You need to show how much of the company’s electricity consumption goes on the specific eligible activity. The government currently requests three months’ worth of data for this. So for example, if you run a factory you’ll ideally have sub-metering that can separate the electricity used by your offices and warehouses from the electricity that goes on actually manufacturing the product.
You’ll also need to provide at least one quarter of financial data, because businesses that have less than this aren’t eligible for the exemption.
How do I apply for the exemptions?
You make one application to exempt your business from the Contracts for Difference, Renewables Obligation, Feed-in Tariffs and Capacity Market charges. If your business is ruled to be eligible for these exemptions, you will automatically be eligible for Network Charging Compensation too.
As we write in June 2026, there are two application forms to download from the government website. (We suggest you read the full official guidance first.)
- The first application form is a fairly short text document that can be opened in Word, asking for information about your business such as the Companies House registration number.
- The second form is a spreadsheet where you need to fill in detailed information about the electricity consumption of the business.
If your application is successful, you will be issued with an EII certificate confirming your exemption. Then you should pass this certificate on to your electricity supplier so that they can pass on the exemptions in future bills.
There’s different guidance and a different form for Northern Ireland.
What if my business carries out a mix of activities?
You could still be eligible for levy exemptions, but only in relation to activities that count as eligible under the government rules. Ideally, you will provide the data to prove this from different sub-meters.
If you don’t have sub-metering in place, you could calculate the proportion of your activity that relates to the eligible product and then base the proportion of electricity usage on that. For example, if your output is 60% non-woven fabric (not apparel) and 40% apparel, you could estimate that 60% of your electricity use is eligible for the exemption.
We would always suggest getting sub-metering set up to help you track exactly what your electricity consumption is going on. The kind of granular data you get is incredibly useful for future-proofing regulatory compliance and having a robust climate strategy.
What if the business dramatically reduces its electricity consumption because of exceptional circumstances?
The rules recognise that unusual circumstances, such as a flood or fire, may drastically reduce the electricity consumption of a business so that it no longer passes the Business Level Test. The government classes some disasters as “force majeure” if they were truly not foreseeable or avoidable. If the issue affecting your business comes into this category, you may still be able to get an EII certificate even with much lower consumption than usual. You will need to supply evidence of whatever affected your business.
Further advice and support
Renewable levy exemptions aren’t the only energy bill support available to EIIs. We’ve covered the different support schemes in our larger guide to government support for energy intensive industries.
Sustainable Energy First supports many energy intensive businesses to identify and secure the EII support they are eligible for, as well as strategies for reducing overall energy costs.
If you need further advice, get in touch with our team via the form below.