British Industrial Competitiveness Scheme (BICS) update published

As foreshadowed in the June 2025 Industrial Strategy (see our previous article), the Department for Business and Trade (“DBT”) has issued a further update on the British Industrial Competitiveness Scheme (“BICS”), positioning it as a significant new package of electricity bill relief for manufacturing businesses. 

Under the updated position, BICS is intended to deliver electricity bill reductions of up to 25% from April 2027 (but with a one off payment to effectively backdate the support to April 2026) for eligible manufacturers, with the scheme expanded to a wider set of manufacturing “frontier” and “foundational” industrial sub-sectors. 

As with most other electricity bill support schemes for businesses, electricity bill reductions under this scheme are applied via relief from certain policy costs/final consumption levies that are typically included within electricity bills. In this case those associated with funding the Renewables Obligation (“RO”) and Feed-in Tariffs (“FiT”) and support schemes for renewable generation and the Capacity Market (“CM”) scheme for supporting sufficient generation during times of system stress. Government expects these avoided costs to be around £35–£40/MWh.

Government’s intention is that the concentration of these avoided costs on other electricity bill payers will be offset for other electricity bill payers via the combined effect of the reduction in the aggregate levels RO and FiT support through moving their indexation from RPI to CPI, the removal of Carbon Price Support, and central government funding. As with any conversation on electricity costs and the discounting thereof, this reflects the political sensitivity in respect of how electricity costs (including wider network and net zero policy costs) are distributed/concentrated and the wider debate in this area – with the move to some of these levy costs to centralised (i.e. non electricity-bill) funding a noteworthy policy move.

In essence, the BICS scheme will sit alongside a range of other electricity discounting schemes, including:

• the British Industry Supercharger (“BIS”) for Energy Intensive Industries (“EIIs”) which provides for 100% exemption on the CfD, RO, FIT and the CM levies and the Network Charging Compensation Scheme which from April 2026 provides a 90% network charges discount for eligible EIIs;  
• the Energy‑Intensive Industries Compensation Scheme for certain EIIs for reimbursement of a proportion of their energy costs based on indirect costs under the UK ETS regime; and
• specific locational supply discounts for data centres under AI Growth Zones (on which see our previous article).

It is envisaged that BICS will be open to a wider range of manufacturing businesses than BIS, given the electricity intensity thresholds for the businesses qualifying for BICs relief will be lower than those for EIIs.

DBT has now published more detail on eligibility mechanics and the implementation pathway for BICS (including key dates and a proposed initial eligibility window).   

Key points (at a glance)

• BICS is intended to reduce eligible businesses’ electricity bills by exempting them from certain policy levy costs that are typically passed through by suppliers: RO, FIT and (from later in 2027) the CM.  
• The costs will be funded through a “combination of changes within the energy system”, removal of Carbon Price Support from April 2028 and Exchequer funding with further detail on those arrangements to be published in Autumn 2026 with no increase in domestic and non-domestic bills expected.  
• Government expects these exemptions to be worth around £35–£40/MWh to eligible businesses, and it has described the overall benefit as potentially reducing bills by up to 25% for eligible manufacturers from April 2027.  
• Eligibility is focused on manufacturing “frontier” (such as automotive and aerospace) and “foundational” (such as chemicals) industries. Eligibility is assessed by reference to:
  • a sector test (i.e. whether the business falls within certain stipulated codes within the Office for National Statistics’ Standard Industrial Classification (“SIC”), selected on the basis of an electricity-intensiveness threshold); and
  • a product test (i.e. whether the business manufactures at least one eligible product that fall within certain stipulated codes within the World Customs Organization’s Harmonized System (“HS”)).
• Where businesses manufacture some eligible products and some ineligible products at a site, the exemption will be pro-rated (on a rough banded basis) to reflect the proportion of the electricity consumption at the site that relates to the manufacture of eligible products. 

Background: what is BICS and who is it aimed at?

BICS was originally trailed in the June 2025 Industrial Strategy as part of Government’s approach to improving industrial competitiveness by reducing electricity policy costs for certain energy‑intensive manufacturing activities. It was described as a new electricity policy levy exemption scheme for eligible “further industries” beyond those already in scope of existing support for Energy-Intensive Industries (“EIIs”).

From the outset, the policy logic has been to support UK manufacturing competitiveness and reduce carbon leakage risk by targeting relief at activities that are both strategically important and exposed to relatively high electricity costs.  

What is new in the April 2026 update?

DBT published its response to the first BICS consultation (on “eligibility and approach”) alongside a second consultation (which is open and closes for responses on 14 May 2026) on detailed implementation. 

The April 2026 materials present some key detail around how BICS will work:

• Wider cohort: DBT expects BICS to expand eligibility to cover over 10,000 businesses in total. 
• Launch payment: a one‑off additional payment in April 2027 is proposed, to effectively backdate the support to April 2026.  
• Clearer eligibility criteria: the relevant sector and product codes for eligibility have crystallised. 
• Settled role for electricity intensity: one matter for consultation was whether electricity intensity should be considered at the level of individual business eligibility or on a sector-wide basis. DBT has elected for the latter approach, i.e. the eligible sector codes are selected on the basis of the electricity intensiveness of the relevant sector as a whole. Manufacturing “frontier” sector SIC codes have been excluded if their sector-wide electricity intensity score is less than 0.9%, and the equivalent threshold for manufacturing “foundational” sector SIC codes is 2.7%.
• Settled pro-rating approach for multi-product manufacturers: DBT has settled on a banded site-consumption-based approach to the application of relief to businesses depending on how much of their electricity is used to manufacture eligible products. The proposed bandings are as follows:

• Funding BICS: The April 2026 papers confirm that BICS will be funded by a combination of changes in the energy system such as those made to inflation indexation of RO/FITs, removal of the Carbon Price Support Mechanism from April 2028 and Exchequer funding. The Exchequer’s funding arrangements and bill payer impacts will be provided in an Impact Assessment for BICS along with the proposed legislation in Autumn 2026. 
• Future changes of the exemption: DBT expects that there will be sufficient budget for the scheme, but indicated that, if there is overspend, DBT would administer a uniform reduction in the level of exemption received.  

Interaction with existing EII support

The BICS design and the eligibility consultation position it alongside BIS, and DBT makes clear that businesses cannot receive the same exemptions twice. 

Both schemes provide exemption from indirect costs associated with RO, FIT and CM obligations but BIS also provides support costs associated with the CfD. 

It appears that the BICS will be open to a wider range of manufacturing businesses than existing EII relief. Eligibility for BIS exemptions is based on a sector level test (having a trade intensity of at least 4%, electricity-intensity of at least 7% and that the business manufactures a product which falls within one or more of the eligible 4-digit NACE codes associated with each activity) and a business level test (the business must show that its electricity costs amount to 20% or more of its Gross Value Added over a reference period). The percentage thresholds for the sector-level electricity intensity test for the BICS (as noted above, proposed as 0.9% / 2.7%), depending on the outcome of the consultation, will likely be lower than those for the BIS scheme (i.e. 7%). 

Government indicates that while some businesses could meet criteria for both BIS and BICS, those in receipt of or are already eligible for the Supercharger would be ineligible for BICS (to avoid double exemption), and that businesses meeting both are recommended to apply for BIS given the higher overall level of support associated with the Supercharger package. 

Certification period and recertification requirement

Businesses will need to obtain exemption certificates in order to benefit from BICS exemptions. DBT is proposing a two-year certification period, after which businesses would need to complete a full recertification exercise. For the first cohort, the exemptions are proposed to apply for:

1 April 2027 to 31 March 2029 for RO and FIT exemptions; and

1 October 2027 to 30 September 2029 for the CM exemption.

Businesses will need to submit a mandatory annual declaration in years when a full recertification is not due. These declarations are intended to capture material changes in circumstances (for example, changes in production) that could affect eligibility. 

Where changes are identified, DBT could determine that the business is no longer eligible for exemptions, or adjust the level of exemption (up or down), with any updates taking effect at the start of the next delivery year for the relevant levy.

Businesses will also need to notify DBT promptly of certain other changes (for example, site closure or changes to administrative details), using the reporting route DBT specifies. DBT indicates it would retain the ability to revoke or amend eligibility where appropriate.

Implementation timetable and next steps (as published)

The consultation on regulatory changes and scheme delivery closes 14 May 2026.  

Legislation is expected to be in place by Autumn 2026, with further detail (including an impact assessment and funding/bill impact information) to be published alongside that legislation.  

For the first year of operation, DBT proposes a time‑limited initial eligibility window: businesses would submit information from 1 October 2026, and DBT aims to confirm eligible businesses by 8 January 2027. Suppliers would then have a set‑up period before exemptions start in April 2027. 

The exemptions are intended to apply from April 2027 (RO/FIT) and October 2027 (CM), but as above DBT also proposes an additional payment on launch in April 2027 to retrospectively cover the then elapsed period from April 2026.  

Points to consider for manufacturers

Manufacturers that think they may benefit from BICS may wish to consider taking preparatory steps now, given that the proposals suggest the first eligibility window will be time‑limited and evidence‑heavy.

1. Identify likely eligibility early (and map against other schemes). It may be prudent for manufacturers to identify which legal entities and sites are potentially in scope, map activities to the relevant SIC2007/HS codes, and check electricity‑intensity positioning where the consultation sets thresholds for frontier and foundational categories.

2. Get ahead of the “site evidence” challenge. Given the importance of establishing what electricity is used for what purposes at each manufacturing site, manufacturers are likely to want to understand on a per-site basis: (i) how much electricity the manufacturer typically uses across all boundary meters; (ii) whether the manufacturer takes its supply at the boundary meter from a licensed supplier or whether it is one of multiple users on a private wire system “behind the meter”; and (iii) what metering/sub‑metering exists to support a defensible allocation of consumption to eligible processes. Where supply is landlord‑provided or meters are shared, there is a question around the contractual rights and data access in place to support future submissions and to ensure benefits flow to the intended end user.

3. Consider contract and billing readiness. DBT does not currently propose to require suppliers to pass through the exemption in a specific manner, which increases the importance of how retail contracts and billing are structured and how policy-cost adjustments are treated. It would be prudent to review whether policy charges are itemised and how changes (including exemptions) will be reflected, particularly where contracts are long‑dated or sites are in multi‑occupancy arrangements.

4. Engage with the consultation. The consultation closes 14 May 2026 and covers practical design and delivery issues that could materially affect eligibility and administrative burden (including how the scheme is applied site-by-site and evidencing expectations).

5. Build an internal timeline to the October 2026 window. The proposal to open the Year 1 eligibility window on 1 October 2026 (with confirmation by 8 January 2027) suggests it may be advisable to plan internal governance now—aligning finance, operations and energy procurement teams so submissions can be made quickly and consistently across relevant sites.