FAC SPECIAL REPORT
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Dear FAC Members
I am writing to share information about a government consultation on the British Industrial Competitiveness Scheme (BICS) shared with us by the Department for Business and Trade (DBT)
This new scheme is intended to reduce electricity costs for manufacturing businesses operating within the eight growth-driving sectors identified in the Industrial Strategy, as well as the foundational sectors that support them.
Beginning in 2027, BICS is expected to exempt thousands of eligible businesses from costs associated with the Renewables Obligation, Feed-in Tariffs, and the Capacity Market. Participating organisations could see electricity cost reductions of approximately 20–25%, helping bring GB industrial electricity prices more in line with European competitors.
The government is seeking feedback to ensure the scheme is practical for businesses and that support is directed where it will have the greatest impact on economic growth. The consultation focuses on how eligibility should be determined for businesses within the manufacturing frontier industries of the Industrial Strategy growth sectors, as well as foundational industries within those supply chains.
The consultation is open until 19 January, and can be accessed here.
We encourage you to review the consultation and share it with colleagues or other interested parties. Your input will be greatly valued.
Department for Business and Trade (DBT)
The British Industrial Competitiveness Scheme (BICS) is a UK government initiative designed to reduce electricity costs for energy‑intensive manufacturing industries, making them more competitive internationally. It will exempt eligible businesses from certain renewables related levies starting in 2027.
Key Objectives
- Lower electricity costs: British industries face some of the highest industrial electricity prices in Europe. BICS aims to bring costs closer to European levels, reducing them by up to £40 per megawatt hour for over 7,000 eligible businesses from April 2027.
- Support strategic sectors: The scheme targets the Industrial Strategy Eight (IS‑8) growth sectors (advanced manufacturing, clean energy, life sciences, etc.) and foundational industries (such as chemicals, steel, and cement) that supply critical inputs.
- Exemptions from levies: Eligible firms will be exempt from paying the indirect costs of the Renewables Obligation (RO), Feed‑in Tariffs (FIT), and the Capacity Market (CM).
Eligibility
- Businesses must meet a threshold of electricity intensity to qualify.
- The consultation process (running late 2025 into early 2026) will determine the exact eligibility rules, with a review point in 2030.
- Relief will extend beyond the small number of industries already supported under the British Industry Supercharger, though BICS will not cover rising network costs (e.g., new pylons and cables).
Strategic Context
- Part of the UK’s Modern Industrial Strategy, which emphasizes resilience, productivity, and sustainable growth.
- Designed to mitigate carbon leakage risks by keeping UK industries competitive while they transition to electrification and net‑zero technologies.
- Reflects a shift away from a “hands‑off” approach, with government actively partnering with industry to secure investment and growth.
Territorial Scope
- Applies to England, Scotland, and Wales, but not Northern Ireland.
Why It Matters
The scheme is a flagship intervention to strengthen Britain’s industrial base. By cutting energy costs, it aims to:
- Improve competitiveness of UK manufacturing.
- Encourage investment in electrification and clean technologies.
- Safeguard jobs and supply chains in critical sectors.
In short, BICS is about leveling the playing field for British industry, ensuring that high energy costs do not undermine the UK’s ability to compete globally.
