What is the energy bills discount scheme for businesses?

Wondering how your business can get a break on those sky-high energy bills? The Energy Bills Discount Scheme (EBDS) stepped in on 1 April 2023 to help. It replaced the earlier Energy Bill Relief Scheme (EBRS) and ran until 31 March 2024. 

Under EBDS, eligible businesses, charities, schools, and hospitals got automatic unit-rate cuts on gas and electricity—no forms to fill in. Discounts kicked in only when wholesale prices rose above set thresholds: up to £19.61/MWh for electricity over £302 and £6.97/MWh for gas over £107. 

Background of the Energy Bills Discount Scheme 

Origins and Purpose

The government introduced EBDS on 1 April 2023 to replace the EBRS. It reacted to soaring wholesale energy prices after the 2022 crisis. EBDS aimed to help businesses, charities, and public sector organisations manage their energy bills during volatile markets.

Comparison with the Energy Bill Relief Scheme

• EBRS (Oct 2022–Mar 2023): Capped wholesale prices at below-government thresholds.
• EBDS (Apr 2023–Mar 2024): Offers discounts on unit rates only when prices exceed set thresholds.

The EBRS cost around £18 billion, while EBDS had a smaller £5.5 billion budget. That means EBDS delivered less help per unit but ran longer, targeting support to where it was needed most.

How the Energy Bills Discount Scheme Works 

Baseline Discount Mechanism

Under EBDS, your energy supplier cuts your unit rates on gas and electricity. You don’t need to apply—the discount appears automatically on your invoice as a separate line item. Here’s how it works:

• Electricity: If wholesale prices rise above £302 per MWh, you get up to £19.61 off per MWh.
• Gas: When prices exceed £107 per MWh, you save up to £6.97 per MWh.

The actual discount equals the difference between the wholesale price and the threshold, capped at the maximum limits. For example, if electricity hits £320 MWh, you’d see a discount of £18 per MWh on your bill.

Application Process

You don’t lift a finger. Licensed energy suppliers apply these discounts for all eligible non-domestic accounts, including fixed contracts signed on or after 1 December 2021, plus deemed, variable, and flexible contracts. It’s all handled behind the scenes, so you get relief without paperwork.

Eligibility Criteria 

Who Qualifies?

• Non-domestic customers with licensed suppliers.
• Eligible sectors: Businesses, charities, schools, hospitals, and other public bodies.
• Covered contracts: Any fixed deal from 1 December 2021 or later, plus deemed, variable, or out-of-contract arrangements.

Exclusions

• Contracts signed before 1 December 2021.
• Businesses whose wholesale energy costs never cross the price thresholds.

That means if your average wholesale price stayed below the trigger points, you won’t see a discount. Always check your invoices to see if EBDS relief appears as a line item.

Energy and Trade Intensive Industries (ETII) Support 

Higher Support for ETII Sectors

Certain energy-intensive industries get extra help. This covers fields like steel, ceramics, and glassmaking. Under ETII:

• Electricity discount: Up to £89 per MWh when prices exceed £185 per MWh.
• Gas discount: Up to £40 per MWh when prices top £99 per MWh.
• Volume: 70% of your energy use qualifies for the higher discount.

Application Process for ETII

Unlike the baseline scheme, you must apply for ETII support. You do this through your supplier, who checks your Standard Industrial Classification (SIC) code. Make sure to apply by 21 October 2024 to secure the full benefit.

Impact and Limitations of the Scheme 

Benefits for Businesses

• Lower bills: Many businesses enjoyed significant savings. For example, a pub might save around £2,280 a year, and a small retailer about £403.
• Budget stability: Automatic discounts helped with short-term planning.

Limitations and Criticisms

• Less generous: EBDS offered smaller cuts than EBRS did.
• Threshold-based: If prices fell below triggers, support vanished.
• Limited reach: Some sectors, like farming, missed out.
• Time-limited: The scheme ended on 31 March 2024, with no direct UK replacement since.

While EBDS eased the pressure for a year, it showed that businesses still need long-term energy strategies to handle future spikes.

Post-Scheme Considerations for Businesses

Strategies After EBDS

• Shop around: Compare suppliers and tariffs in any future business electricity comparison to find the best deal.
• Boost efficiency: Fit smart meters, seal draughts, or upgrade equipment to cut use.
• Budget wisely: Plan for price swings by setting aside an energy reserve fund.

Current Support Options

As of May 2025, no new UK discount schemes exist. But you can explore local grants, energy efficiency programs, or even look at overseas models like Australia’s Energy Bill Relief Fund, which gives small businesses up to $325.

Conclusion

Ready to take control of your energy costs? At Utility4Business, we make it easy to compare rates, switch suppliers, and lock in savings fast. Visit our site today for your free business electricity comparison and start saving on your next bill!