Greenhouse growers are ineligible for the higher rates of energy bill support for ‘vulnerable’ business sectors in the new energy bill discount scheme announced by the government in January. Instead they will receive only the standard energy price discounts that will apply to most other businesses.
The NFU says it will be lobbying the government to apply the higher rates to protected cropping.
The scheme will run for 12 months from April this year and takes over from the current energy bill relief mechanism which ends in March. It will apply a per-unit discount on the wholesale energy price on a business’s gas and electricity bills, rather than capping energy prices as the current scheme does.
The maximum standard discount for electricity will be £19.61/MWh, phased in once the wholesale price in a business’s contract rises above £302/MWh. For gas, the discount will be phased in above a wholesale contract price threshold of £107/MWh (314p/therm) with the maximum set at £6.97/MWh (20p/therm). The discount is calculated as the difference between the wholesale price in the energy contract and the price threshold.
As with the current scheme, the discount applies only to the wholesale energy cost component of a grower’s bill and excludes grid or supply costs and ‘green’ taxes.
Had the protected crops sector been recognised as particularly vulnerable to high energy costs, the discounts would have been £89/MWh with a price threshold of £185/MWh for electricity, and £40/MWh with a price threshold of £99/MWh for gas. To qualify for these rates, a business sector has to be in the top 20% of sectors by energy use, and the top 40% by a measure of ‘trade intensity’ that reflects how likely a sector is to be undercut by international competition.
NFU Energy director Jon Swain said the overall level of support was “disappointing and a token gesture at best”, but the gas price discounts would be of some help for greenhouse heating.
NFU president Minette Batters said: “The omission of horticulture [from the higher rate band] is particularly regrettable, with energy prices already threatening next year’s crop of tomatoes, cucumbers and aubergines, and seems at odds with the government’s ambition to grow more fruit and vegetables as set out in the national food strategy.”
Tim Pratt, who runs the horticultural consultancy Now Then Energy, said the amount of support on offer is ‘a fraction’ of that available to growers under the current scheme. He predicts the new mechanism is unlikely to pay out in many cases.
“For example, at the time the scheme was announced, on January 9, wholesale electricity prices for winter 2023 of 22p/kWh for baseload and 30p/kWh peak suggest no discount will be payable for new fixed price contracts,” he said. “And wholesale gas prices for winter 2023 were trading at 210p/therm.”
Mr Swain said much would depend on what happens next in the Ukraine conflict. “It wouldn’t take much for prices to spike again so we do at least have some insurance against that,” he said. “But the government is sending the message that while it will support business if something goes badly wrong, in the longer term higher energy costs are going to have to be part of business decisions.”