Energy Bill Relief Scheme: what businesses need to know

In September, Prime Minister Liz Truss launched an energy bill support package designed to help consumers with rising gas and electricity costs.

The initiative wasn’t simply about offering short-term help but aimed to identify ways to address long-term security of supply and costs, all against the backdrop of working towards achieving net-zero by 2050.

An equivalent for businesses, the Energy Bill Relief Scheme, was announced by the Department for Business, Energy and Industrial Strategy (BEIS) just a few weeks later. It sees the government commit to providing a discount on wholesale gas and electricity prices for all qualifying non-domestic customers and has been designed to reduce business energy consumers’ exposure to the volatile wholesale energy markets over the next six months.

The discount will run for an initial six-month period, which started on 1 October, and applies to fixed energy contracts agreed on or after 1 December 2021, as well as to deemed, variable and flexible tariffs and contracts. Customers do not need to take action to access support, as the discounts will be automatically applied to energy bills with savings set to be first seen in October. 

 To administer the initiative, a maximum discount has been set by the government on 30 September 2022 which is £345/MWh (34.5p/kWh) for electricity and £91/MWh (9.1p/kWh) for gas. The government has also set a floor price. This ensures the discount does not result in prices falling below 21.1p/kWh for electricity or 7.5p/kWh for gas. 

The Energy Bill Relief Scheme is welcome news for businesses. With the aim of supporting growth, preventing unnecessary insolvencies and protecting jobs, the scheme will be equivalent to the Energy Price Guarantee for households.

Many businesses are already taking action to reduce their overall energy consumption, motivated by the commercial and environmental benefits of reviewing operations to optimise energy efficiency through a combination of quick wins and longer-term changes. Close monitoring of energy use across operations is vital, no matter what type of business you are. Understanding the details will set the framework for measuring progress and help to identify where savings can be made.

For many businesses, this can involve installing smart technologies that help to eliminate wasted energy by sensing when rooms, or equipment are not in use and either automatically switching of lighting and heating or prompting action.

The energy efficiency of all types of equipment, especially where heating is concerned, is coming under close scrutiny, as companies look to see whether maintenance or adaptations can improve efficiency, or even what alternatives might be available.

When it comes to saving energy, all employees can play a vital role. From making sure that lighting and equipment is switched off when not in use and windows and doors are kept shut, to flagging any other opportunities they can see to save energy, such as turning off motors on equipment during breaks and job changes.

Turning down thermostats, maximising use of natural light, switching off IT equipment, printers, copiers and water chillers in periods of downtime (such as overnight and at weekends) can save hundreds of pounds over a year. Even reducing pressure on compressed air units and checking for leaks can save money.

Looking at how to maximise the capacity on equipment like ovens or heating tanks so they are not running half empty or looking at ways to maximise the potential advantages of cheaper overnight tariffs should also be a consideration. What’s more, freezers and cold rooms should also be monitored carefully to minimise gaps for warm air and to keep doors closed.

A commitment to energy efficiency not only helps to reduce bills in the long-term, but it can also give you measurable performance data that will help to unlock funding for future investment in more efficient equipment or on-site renewables, helping to guide your journey to decarbonisation.

As more information emerges, such as how the government defines and targets vulnerable industries, we will continue to update our guidance. So, please look out for future blogs and other updates about how we are working with businesses to help manage their energy costs.

For more information visit https://business.shellenergy.co.uk/energy-bill-relief-scheme