This planned initiative will exempt Energy Intensive Industries (EII), like heavy manufacturing companies, from a large proportion of the CfD element of electricity costs, which are otherwise automatically added to electricity bills.
The CfD charge is replacing the Renewables Obligation (RO) as a means of subsidising new large-scale renewable projects. The RO scheme closed to new entrants on 31st March 2017, however, existing RO projects will continue to receive subsidies for approximately 20 years. The Feed-in-Tariff scheme continues to operate, though subsidies for new projects have been reduced significantly in recent years. Nearly 6GW of new CFD-funded capacity is due online by 2020, which will increase the costs of CFD to more than £2bn.
Clearly this scheme will be welcomed by exempt businesses, but those that aren’t eligible for exemption will absorb the extra costs – which is expected to raise RO and FiT costs by around 6% for each business.
Post continues below.
As of this month, the CfD charge is a new addition to the energy bill. The below table shows the impact of the three charges (CfD, RO & FiT) on a range of businesses over the next 3 years:
| Company Scenario | Charges | 2016 | 2017 | 2018 | 2019 | 2016-19 Increase |
| A typical small retail store – 1GWh annual consumption | RO | £14k | £20k | £20k | £20k | £6k |
| FiT | £5k | £6k | £6k | £6k | £1k | |
| CfD | £1k | £3k | £6k | £8k | £7k | |
| Total | £21k | £28k | £32k | £35k | £14k | |
| A typical cinema – 2GWh annual consumption | RO | £31k | £39k | £40k | £40k | £9k |
| FiT | £10k | £11k | £12k | £13k | £3k | |
| CfD | £0.5k | £6k | £11k | £17k | £16k | |
| Total | £42k | £56k | £63k | £70k | £28k | |
| A typical large retail park – 3GWh annual consumption | RO | £46k | £59k | £60k | £60k | £14k |
| FiT | £15k | £17k | £18k | £20k | £5k | |
| CfD | £2k | £9k | £17k | £25k | £23k | |
| Total | £63k | £85k | £95k | £105k | £42k | |
| A typical inner city university building – 5GWh annual consumption | RO | £78k | £98k | £99k | £100k | £22k |
| FiT | £3k | £15k | £29k | £42k | £39k | |
| CfD | £25k | £28k | £31k | £32k | £7k | |
| Total | £106k | £141k | £159k | £174k | £68k | |
| A typical manufacturing site – 10GWh annual consumption | RO | £156k | £196k | £199k | £201k | £45k |
| FiT | £50k | £57k | £61k | £65k | £15k | |
| CfD | £6k | £30k | £57k | £85k | £79k | |
| Total | £212k | £283k | £317k | £351k | £139k |
Using published rates and forward-looking estimates, Inenco have created an Interactive Non-Commodity Cost Dashboard for users to calculate how their business will be exposed to incremental non-commodity costs (also known as ‘third party costs’ over the coming years.
To view the make-up of your typical energy bill going forward and how your business will be impacted, click here.
Please note: the figures included in the dashboard should only be used for indicative purposes.
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