EBDS: Everything you should know about the Energy Bills Discount Scheme for businesses

• The Energy Bills Discount Scheme (EBDS) supports businesses struggling with rising energy costs. 
• The discounts help businesses to gain relief when wholesale costs rise. This benefits high-energy users.
• The new EBDS replaces the previous Energy Bill Relief Scheme (EBRS), which supported eligible businesses until March 31st 2023.
• To support reductions in energy costs for businesses, the EBDS will run for 12 months. It began on April 1st 2023, and will therefore run until March 2024. 

The UK is experiencing a nationwide energy crisis. In such a competitive landscape for every industry, every business needs to stay ahead on cost savings — and energy expenses are a significant cost. But long-term savings must be pursued to maintain a competitive edge, future growth, and financial stability; this could leave some UK businesses in hot water.

This is where EBDS comes in. Let’s look at how businesses can make the most of the Energy Bills Discount Scheme:

What is the background and rationale of EBDS?

The Energy Bills Discount Scheme (EBDS) is a government initiative to save on non-domestic energy bills, with a budget of £5.5 billion for 12 months. Businesses gain discounts on the wholesale price per unit for electricity and gas.

How will the EBDS help businesses face new energy challenges?

The aim of EBDS is to help businesses cut energy costs in the face of the many energy usage challenges. A few key benefits of this include the following:

• Reducing your carbon footprint: The scheme promotes investment in renewable energy and reduces reliance on fossil fuels to help the UK achieve Net Zero targets. 
• Showing the benefits of energy efficiency: The scheme promotes the adoption of energy efficiency practices for long-term reduced energy costs. Lower rates on gas and electricity help businesses allocate more funds to investments and growth. Discounts are tied to energy usage. Investing in energy efficiency attracts energy-conscious investors and customers.

• Improve your bottom line: By reducing energy expenses, businesses can be more competitive in their markets. Businesses can fight rising energy costs and achieve better economic stability, i.e., increased profits, fewer closures, and reduced layoffs.   

• Avoiding disproportionate energy costs: Energy costs impact larger industries, such as hospitality and manufacturing, the most. These businesses need support to protect their jobs and future operations with a safety net from the costly, volatile energy markets. Recent price spikes have caused inflated costs to businesses not shielded against the fluctuations in price for gas and electricity. The limited-time discounts avoid long-term financial commitments. This supports targeted sectors and vulnerable businesses and protects customers from high energy prices.
• Long-term financial savings: While the EBDS is a temporary scheme until March 2024, the energy cost-cutting measures encourage you to achieve long-term savings. When the scheme ends, you should continue to run your business using sustainable energy methods.

• It’s automatically applied by energy providers: If you’re a qualified non-domestic customer in the UK and Northern Ireland, your energy supplier will apply the discounts automatically.

These aims comprise the role of the government in helping businesses manage energy costs. Through energy discounts, the EBDS will:

• Promote sustainable energy.
• Improve the health of the UK economy.

What are the eligibility criteria for the EBDS discounts?

Here are the general eligibility requirements. 

• Your licensed energy supplier and your business must be in the UK.
• You are already on a fixed price contract that started after December 1st 2021, or signing a new fixed price contract, deemed out-of-contract or on a standard variable tariff.
• Not in receipt of government energy support.
• Your business is classed as a micro business with an annual consumption of electricity of less than 100,000 kWh and gas usage of less than 293,000 kWh. This criterion does not apply to ETII industries.
• You operate a voluntary organisation like a charity or a public sector organisation, such as a school or hospital.
• You are in Northern Ireland and on variable Day Ahead Index (DAI) tariffs.

There is no application process for getting EBDS other than meeting the energy discount scheme criteria. If so, your energy supplier will automatically apply the discounts to your account.

The exception is for Energy Trade Intensive Industries (ETII) large-scale business premises. ETII businesses must apply for the EBDS discount. 

What are the steps to complete the EBDS application process for ETII-sized businesses?

Follow these specific steps if an ETII-sized business.

• Apply online and check that you have all the supporting financial information and documents as specified below.
• From July 25th 2023 onwards, ETIIs must become eligible after April 26th 2023, in order to apply for the higher level of support. There is a 90-day application period for new or newly eligible organisations.   
• Your business operates in a relevant sector. Check up to four relevant SIC codes that relate to your company, where you produce at least 50% of your annual revenue. Evidence for this criterion can be a signed letter from your accountant. 
• You must provide financial evidence for at least six months to meet the criteria. Apply within 90 days after accumulating six months of evidence.
• You’ll need the company registration number or CRN if applicable.
• The documentation may include:
  A. Business name and contact details as it appears on your energy supplier bill.
  B. Email address and website.
  B. Contract details showing the fixed price tariff and start date.
  C. MPAN (Meter Point Administration Number) for electricity meters.
  D. MPRN (Meter Point Reference Number) for gas meters.
• Local authorities must assess eligibility at the premise level, declaring that at least 50% of the space is occupied by eligible operations.
• If you don’t pay your energy supplier directly, include the name of the provider you do pay.

Your application will be reviewed, and if you’re eligible, you will receive an email with a certificate and your next steps.

Common mistakes for ETII businesses to avoid when applying

Save yourself the hassle of finding your application rejected by avoiding these mistakes.

• Not submitting the application within the EBDS timeframe.
• Inaccurate data on the application form, resulting in the rejection of your application.
• Failing to contact your energy supplier for guidance and to start the application process.
• Applying for the discounts when your energy generated is stored and also exports energy back to the grid.
• Not checking that your business is categorised by a relevant SIC code as per the UK government guidelines.
• Missing documents for the application process as specified by the energy supplier.

You can find all the updated details on EBDS eligibility in the official EBDS Rules document on the UK GOV website. You can access further documentation and guidance via the EBDS factsheets.

How the energy discount is calculated

The energy discounts from the EBDS scheme are calculated like this.

• Gas: 0.697p/kWh maximum discount between the current wholesale rate and your gas supplier rate to a threshold of 10.70p/kWh.
• Electricity: 1.961p/kWh maximum discount between the current wholesale rate and your electricity supplier to a threshold of 30.2p/kWh.

The discount is determined by subtracting the price threshold from the wholesale price of an energy contract. Once the contract’s wholesale price exceeds the floor price, the discount is gradually introduced until it reaches the maximum discount for that fuel. The discount only affects the wholesale portion of the bill.

Discounts for ETII businesses are larger to accommodate for their higher energy costs. 

• Gas: 4.0p/kWh maximum discount between the current wholesale rate and your gas supplier rate to a threshold of 9.9p/kWh.
• Electricity: 8.9p/kWh maximum discount between the current wholesale rate and your electricity supplier to a threshold of 18.5p/kWh.

These maximum discount rates only apply to 70% of the energy volumes for ETII businesses. The remaining 30% of energy usage will be charged at full rates.
There may be additional discounts if you use energy-saving measures such as low-cost energy-saving measures.

There is another task that you should do, and that’s to improve your current energy deal. Negotiate with your energy supplier to get a better fixed-rate contract deal or give us a call. Our business energy consultants are ready to help you save money. Gain a dedicated account handler at Renew & Sustain. Be prepared to switch suppliers if you can find a better rate.

How to make the most of EBDS

These are strategies to help you make the best use of the EBDS benefits.

• Use an energy audit: Track your energy usage and request this data from your energy supplier. Note where savings are possible.
• Encourage sustainable habits: Use natural lighting as much as possible and maintain a reasonable temperature setting. Set company-wide energy-saving goals for long-term energy usage reduction.
• Invest in low-energy technology: Make use of smart thermostats and LED lighting. Is there an energy-efficient option for the machinery you use?
• Demonstrate energy efficiency measures:
  Explore on-site renewable energy generation, such as solar panels or wind turbines, to offset energy consumption and potentially earn additional incentives. Adjust operating hours to align with peak and off-peak energy rates, reducing costs during high-demand periods.
• Shop around for energy deals: Compare prices from different energy suppliers to find the best deals.

Or, get in touch with an expert at Renew & Sustain for tailored advice on the best energy solutions for your company. As an energy utility broker, we’ll evaluate different suppliers and tariffs.

We can help you maximise the benefits of EBDS by identifying energy-saving ways to cut your costs.

What do businesses say about EBDS? Challenges and criticisms 

Let’s look at the top challenges highlighted by many businesses and how the government could mitigate these barriers to entry.

• Businesses not meeting criteria: The government could consider alternative schemes for businesses not meeting the eligible criteria to cover exempt industry sectors.
• Complex application process for ETII industries: The government can provide clearer guidelines and simplify the application for ETII industries.
• The EBDS funding is capped at £5.5 million. An increase in funding to raise the £5.5 million cap would enable more businesses to qualify for the discounts.
• Not all businesses are aware of the EBDS and its benefits: Underutilisation of the scheme can be avoided with more investment in marketing campaigns spreading the word about the EBDS benefits. 
• Industries not categorised as energy-intensive industries: Better categorisation of high-energy-intensive industries is needed to prevent businesses such as leisure centres from missing out on the higher discounts.

Summary of key points covered in the article

• The EBDS scheme discounts will help eligible businesses cut their energy costs for the 12 months from April 1st 2023 to March 31st 2024.
• Businesses can drive growth, efficiency, competitive advantage and more customer satisfaction with reduced energy prices.

• EBDS offers discounted unit rates on fixed-price contracts signed on or after December 1st 2021, as well as deemed and out-of-contract rates.
• The discount applies to the wholesale portion of unit rates and is higher for ETII Industries.
• The maximum discounts are 0.07p/kWh for gas to a threshold of 10.70p/kWh and 0.20p/kWh for electricity to a threshold of 30.2p/kWh for most businesses.
• The maximum discounts for Energy Trade Intensive Industries (ETII) are 4.0p/kWh for gas to a threshold of 9.9p/kWh and 8.9p/kWh for electricity to a threshold of 18.5p/kWh.
• Non-ETII high-energy users do not need to apply for a discount, as energy suppliers automatically apply reductions for eligible customers.

Check that your energy supplier has applied the discounts. If you are an ETII business, apply online for Energy Bills Discount Scheme (EBDS) rates today. Don’t miss out on this opportunity to navigate rising energy prices and support a sustainable future.

Frequently asked questions (FAQs) on the EBDS discounts

What is the difference between EBDS and EBRS?

The EBRS was a temporary measure for six months to help businesses through increasing energy rates during winter, but the EBDS has a more long-term view over a 12-month period. Non-domestic gas and electricity unit rate discounts are now offered through the EBDS scheme.

How does the EBDS discount work?

Your supplier will automatically apply the unit rate discount set by the government. 

Is there a renewal process in March 2024?

Businesses won’t have to reapply for the discount if the government extends the EBDS past March 31st 2024. Their energy suppliers will automatically apply the discount to your bill.

Additional resources on EBDS

1. Information on how to improve your energy efficiency and increase the profitability of your business by cutting energy usage.
2. A complete guide to energy audits for businesses to best implement cost-saving measures.

One call can optimise your energy usage

As business owners, we understand how daunting it can be to navigate the complex landscape of energy procurement. That’s why we offer our expertise and guidance to help you:

1. Make informed decisions on energy provider choices.
2. Save money on your energy bills.

Our team of experts are here at Renew & Sustain to help you start your journey towards a more sustainable future, starting with a comprehensive energy assessment. Get in touch with us today to arrange a free and no-obligation quote.