Government Business Energy Support Scheme explained

Updated October 2024: Please note this scheme has now closed. For more information about other help and support for businesses, visit the UK government's Business Support Service here.

The ongoing cost of living crisis in the UK continues to impact UK residents – particularly due to rising bills and utilities. Domestic energy bills continue to climb, according to the House of Commons Library, putting significant financial pressure on many. This has led to a growing number of people turning to side hustles to manage energy bills and other expenses. However, this surge in utility costs is not limited to households – businesses and their owners are also feeling the financial pinch.

With many businesses still recovering from the impact of lockdown and the pandemic, the increasing energy bills and resulting fallout have prompted the UK Government to take action by introducing the Energy Bills Discount scheme. This scheme is due to end on 1 April 2024 and replaces the Energy Bill Relief scheme, which previously ran from October 2022 to March 2023. 

In this article, we’ll discuss the following:

• What the Government’s latest Business Energy Support Scheme is
• What help is available for businesses
• How to apply for a Business Energy Support Scheme

What is the latest Business Energy Support Scheme?

Why the Business Energy Support Scheme was introduced

The Energy Bill Relief Scheme was first introduced by the UK Government in September 2022 –  when it became clear that the cost of living crisis was contributing towards unaffordable energy bills for many businesses – according to the Federation of Small Businesses (FSB).

By January 2023, small businesses were reporting energy bill increases of up to 349% since February 2021. This means support was crucial to avoid a knock-on effect on the economy as a whole.

To better support businesses, charities and public sector organisations, the Government offered a discount on gas and electricity unit prices. This scheme was designed to help ensure the cost of utilities remained at a baseline price rather than the expected wholesale prices. The discounts were available between 1 October 2022 and 31 March 2023.

By March 2023, prices were still high and the Government was under pressure to extend or bring in a replacement scheme to continue to support struggling businesses. In January 2023, it was announced that the Energy Bills Discount Scheme would come into effect from April 2023 and would run until April 2024.

How does the Energy Discount Scheme work?

So, what help is available for businesses and how does the new scheme differ? 

The current Energy Bills Discount Scheme is made up of three different parts.

• A baseline support for eligible businesses that is applied automatically.
• An Energy and Trade Intensive Industries discount for certain sectors which you’ll need to apply for.
• A Heat Network discount for heat networks with domestic customers which you’ll also need to apply for.

Comparing the old energy support scheme with the new scheme

Businesses, charities, and public sector organisations are eligible for the baseline support, just as with the previous scheme. However, the Government has been clear that most customers wouldn’t see any additional support and that any support would be ‘significantly reduced’ from what was previously given out according to the official government announcement. 

According to the Financial Times, under the Energy Bill Relief Scheme, electricity had been set at a supported price of £211 per megawatt hour with gas at £75 per megawatt hour for business energy bills. Under the Energy Bills Discount Scheme, it’s £19.61 per megawatt hour for electricity and £6.97 per megawatt hour for gas.

The Energy Bills Discount Scheme for Energy and Trade Intensive Industries is designed for a specific group. It targets energy users who are especially vulnerable to high energy prices due to their intensive energy consumption. As a result, these users receive a higher level of support. For them, according to the UK Government Guide on Energy Bill Assistance for Businesses, the business energy relief discount threshold is £185 per megawatt hour for electricity and £99 per megawatt hour for gas.

How to apply for the Business Energy Support Scheme

As mentioned above, if your business is eligible for the Energy Bills Discount Scheme support at a baseline level, you will receive this discount automatically. If you think you may be eligible for the Energy and Trade Intensive Industries discount, you’ll need to apply for a business energy support scheme.

Scheme deadlines to apply by

If your business became eligible for energy support after 26 April 2023, you can apply now. This applies to new businesses or those whose half of income comes from qualifying industries. The deadline has passed for those eligible before this date.

Is your business eligible for the discount?

You’re eligible for the discount if you are:

• on a fixed-price contract signed on or after 1 December 2021
• entering new fixed-price contracts
• on deemed, out-of-contract or variable tariffs
• on flexible purchase contracts or similar arrangements.

How to check your business’s eligibility

The details of which industries are eligible through their Standard Industrial Classification Code are available on the Government website, and you can check whether you qualify there too.