Updated Energy Bills Discount Scheme: what does it mean for UK businesses?

What is the current energy bill scheme?

Under the existing Energy Bill Relief Scheme, the government provides a discount on gas and electricity unit prices for eligible non-domestic customers. 

Wholesale energy prices are discounted to £211 per megawatt hour (MWh) for electricity and £75 per MWh for gas. 

The scheme applies to wholesale costs only, so businesses are still paying additional charges (however, these are comparatively small). The discounts are being applied directly to bills between 1 October 2022 and 31 March 2023. 

What is changing?

With the Energy Bill Relief Scheme coming to an end in March 2023, the government has announced a new scheme to replace it: theEnergy Bills Discount Scheme.

The Energy Bills Discount Scheme will reduce the amount of support for businesses, and is set to take effect from 1 April 2023. All eligible UK non-domestic energy users (including businesses) will benefit from discounts on high energy bills until 31 March 2024.

For gas, bills will be discounted by up to £6.97 per megawatt hour (MWh). For electricity, bills will be discounted by up to £19.61 per MWh.

UK businesses that have high levels of energy usage will get more support. This includes businesses that rely on energy-intensive production techniques, such as those associated with the production of glass, steel and ceramics, for example. 

Who’s eligible?

Like the Energy Bill Relief Scheme, the Energy Bills Discount Scheme is available to non-domestic energy customers. This includes businesses, voluntary sector organisations and public sector organisations like hospitals, care homes and schools. 

To be eligible, non-domestic customers must be:

• on existing fixed price contracts that were agreed on or after 1 December 2021

• signing new fixed price contracts

• on deemed / out of contract or standard variable tariffs

• on flexible purchase or similar contracts

• on variable ‘Day Ahead Index’ (DAI) tariffs (Northern Ireland scheme only)

Suppliers will apply reductions directly to bills, as per the existing scheme. 

What can I do to reduce energy bill costs?

With energy bills set to rise for many businesses, it’s never been more important to adopt energy-saving practices. While there’s no quick or easy fix to make energy bills more affordable, there are things businesses can do to become more energy efficient. 

1. Upgrading equipment 

Old or outdated equipment can often be more energy-intensive. Upgrading to a newer model or a less carbon-intensive one could reduce costs in the long term. Asset finance can help businesses to spread the cost of a purchase, or lease instead of buy it. 

2. Switch off

It sounds simple, but switching off equipment is something that can get overlooked. 

Turning off computers, air conditioning and lighting when nobody is using the building can help cut costs. Businesses operating a manufacturing plant could consider training employees on how to safely switch off machinery at the end of the day. 

3. Switch to smarter lighting

LED bulbs are up to 80% more energy efficient than fluorescent ones. Occupancy sensors ensure that lights stay off when nobody is using the space, while daylight sensors adjust the level of artificial light according to natural light levels. 

4. Get smart with heating and cooling

• ‘Zoning’ ensures that parts of a building that are not in use aren’t heated

• Thermostats should be positioned away from radiators and windows

• Insulation can help keep a building warm

• Newer air conditioners are often less energy-intensive 

Funding to help

Funding Options works with a panel of over 120+ business finance lenders. 

For businesses looking to become more energy-efficient or reduce their carbon emissions, a green finance option could help. Finance products like equipment leasing can help businesses access new equipment or machinery.

There are also a number of finance options out there designed for businesses in need of a working capital boost, or funding to help with short-term cash flow issues.

If you need additional funding, see what you could be eligible for today.