My Lords, as a matter of good practice, I refer the Committee to my interests. I do not believe that there is any conflict with these specific measures.
The Electricity Supplier Obligations (Excluded Electricity) (Amendment) Regulations 2024, the Electricity Capacity (Supplier Payment etc.) (Amendment and Excluded Electricity) Regulations 2024, the Energy-Intensive Industry Electricity Support Payments and Levy Regulations 2024 and the Renewables Obligation (Amendment) (Energy Intensive Industries) Order 2024 were laid on 23 and 24 January this year. I acknowledge that the Joint Committee on Statutory Instruments provided a helpful review of these instruments and did not draw the special attention of this House or the other place to them. I also acknowledge that the Secondary Legislation Scrutiny Committee has reported these statutory instruments as instruments of interest to Members.
Together, these four instruments make up the British industry supercharger, which aims to support our most energy-intensive industries with the cost of electricity. Energy-intensive industries, known as EIIs, include important foundational manufacturing sectors such as steel and metals in Port Talbot, for example; chemical manufacturers; paper, glass, ceramics and so on. As foundation industries, these businesses are critical in the development of new projects including offshore wind. They therefore play an important role in the transition to net zero.
The British industry supercharger also provides relief for new and emerging industries such as battery manufacturers, which are critical to electric vehicles and manufacturers of semiconductors, which are critical to the high-tech economy. Due to their nature, these industries require significantly more electricity use than other sectors. As a result, they are disproportionately impacted by high electricity prices.
The Government already provide some electricity price support to these industries, but there remains a competitive gap with other nations. In the UK, our electricity prices for medium and large industrial users were the highest in western Europe in 2019, so these regulations importantly seek to close that gap, ensuring that British industry can thrive and grow, attracting new investment rather than losing out to cheaper production overseas, and helping to mitigate the risk of carbon leakage due to cheaper energy costs elsewhere.
This existing support was put in place in 2017 and, since then, over 370 businesses have benefited from an 85% exemption from certain renewable energy levies. Under these new measures, those business that are eligible for the exemption scheme will not only see an increase in the value of their exemption, up to 100%, but benefit from a new exemption from capacity market charges, as well as receiving compensation for a proportion of their network charges.
Taken together, the Government estimate that this support could be worth, on average, around £24 to £31 per megawatt hour, closing the competitive gap between UK industrial energy prices and those faced by international competitors.
These savings are funded by spreading the cost widely among all other electricity consumers, which is estimated to add between 5 to 10 pence per week to the average domestic bill, and increase electricity costs for non-domestic consumers by about £1 a megawatt hour, once all measures have been fully implemented by 2025-26. These are clearly estimates, since the energy market is highly volatile, but these are our projections and it is important to understand the scale of the effect.
The sectors eligible for the British industry supercharger support scheme employ around 400,000 workers and account for more than a quarter of total UK exports. Many are located in areas of economic disadvantage and provide good, high-paid jobs. This carefully crafted support will mean strategically important UK industries remaining competitive on the world stage. We will back these businesses to keep on growing our economy and delivering into the UK both high-quality jobs and investment as well as the products that we rely on for our everyday lives and work.
I shall summarise for noble Lords. These regulations amend the Electricity Supplier Obligations (Amendment & Excluded Electricity) Regulations 2015, which make provision for indirectly exempting eligible energy-intensive industries from the full costs of funding the contracts for difference scheme as set out in the Contracts for Difference (Electricity Supplier Obligations) Regulations 2014. They amend the Electricity Capacity (Supplier Payment etc.) Regulations 2014 to make provision for indirectly exempting eligible energy-intensive industries from the costs of funding the capacity market. They make provision under the Energy-Intensive Industry Electricity Support Payments and Levy Regulations 2024 for electricity support payments to be provided to energy-intensive industries for the purpose of alleviating the impact of electricity costs under the proposed network charging compensation scheme. They amend the Renewables Obligation Order 2015 to allow the Secretary of State for the Department for Energy Security and Net Zero to revise the renewables obligation
level for the 2024-25 scheme year; this will allow the implementation of the increased EII exemption rate under this scheme from 1 April 2024 onwards.
In conclusion, this suite of regulations will help bring electricity costs down for the most energy-intensive and trade-intensive industries—such as steel, chemicals, glass and battery manufacturers—to a level similar to those of their European counterparts. In my view, this is crucial in helping UK-based firms remain competitive, incentivising investment and a move towards decarbonisation through electrification. With that, I beg to move.