The EIUG strongly supports the proposal to exempt certain EIIs from the cost of the capacity market and would also like to highlight that its costs are likely to increase in the next years. An exemption from the cost of the capacity market will reduce the industrial electricity price differential between the UK and other countries.
It agrees with the intention to exclude electricity demand from eligible EIIs from the charge, similar to the mechanism used in the EII renewable exemption schemes. The administrative processes to reduce the indirect cost of the various renewable deployment schemes for EIIs have worked well, and the EIUG does therefore not see any reason why basing the capacity market exemption on the same process would not deliver on the intent of the policy.
The capacity market supplier charges contribute to the industrial electricity price differential between the UK and other countries thereby putting EIIs at a competitive disadvantage and increasing the risk of carbon leakage. An exemption from the charge will therefore reduce the risk of a decrease in output in the form of demand destruction in the UK.