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Window to Secure CCA Discount on Energy Bills for New Applicants Closing Soon

The existing Climate Change Agreement (CCA) was extended alongside the Spring Budget for an additional two years, and it will now run until at least March 2027. Applications for new organisations to apply were also opened, with the window running between 1st May and 30th September 2023. There is now less than two months to apply for a scheme that allows energy-intensive businesses across a range of sectors to secure a substantial discount on their energy costs. 

What is a CCA? 

Introduced in 2001, all UK businesses pay a non-commodity cost known as the Climate Change Levy (CCL) on each unit of energy that they purchase. As an environmental tax, the funds raised by the CCL are used to support the transition towards net zero, while its per kilowatt hour of usage nature is designed to encourage businesses to be more energy efficient.  

For energy intensive businesses, the CCL could represent a huge additional cost when calculating their energy bills. As a result, the Climate Change Agreement scheme was introduced in 2013 to allow these organisations to secure a substantial discount on their CCL. 

In return for meeting certain standards in terms of reporting on energy usage and carbon emissions, as well as making improvements in line with agreed targets over two-year periods, energy-intensive businesses can secure a 90% discount on their CCL.  

Most organisations will sign up to an umbrella agreement, which is agreed between their relevant trade body and the Environment Agency. Currently, 53 sector associations hold umbrella agreements, spanning manufacturing, agriculture and heavy industry. You can find a list of organisations that hold an umbrella agreement here. 

What do businesses need to know? 

With applications for the CCA scheme only open for new organisations until the end of September, the window for applying is narrowing rapidly, particularly as some trade associations may require applications up to four weeks ahead of the final deadline.  

If successful, an applicant will be eligible for their discount on the CCL from January of next year, and this will continue until April 2027. In return, they will be required to meet pre-determined energy efficiency targets laid out by their umbrella agreement holder. 

Failing to meet this target requires organisations to pay a buy-out fee to make up for their underperformance. This is currently set at £18 per ton of excess emissions but could rise as period 5 of the CCA ends in 2023. Failing to pay this buy-out fee by the issued deadline would see an organisation decertified from the scheme. 

For businesses that hold a CCA, or are looking to apply during the current period, ensuring that they continue to receive this important discount is contingent on ongoing carbon reduction efforts to ensure they keep pace with what is expected of them. Even for businesses that don’t hold a CCA, the per unit nature of the CCL means that improvements in energy efficiency deliver a two-fold reduction in energy costs.  

In both cases, Powerstar can help your organisation meet your energy efficiency and carbon reduction goals and reduce the costs your business faces. Our technologies and expertise offer carbon reductions in their own right, as well as facilitating major overhauls of a site’s existing infrastructure to make it cleaner as well as lower cost and more efficient. This includes voltage optimisation, which delivers substantial cost savings while also reducing carbon emissions by reducing and conditioning incoming voltages, eliminating inefficiencies and supplying equipment with optimal voltage levels.  

For larger projects, a smart microgrid has the potential to overhaul how your organisation manages power, as well as the level of Scope 2 emissions in your carbon footprint. Whether it is integrating new on-site renewable generation, maximising the performance of existing equipment, or unlocking new carbon reduction measures such as installing rapid EV charging, smart microgrids can help to ensure that your business stays well ahead of any carbon reduction commitments.