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British Industrial Competitiveness Scheme: What manufacturers need to know

From April 2027, over 10,000 manufacturers will see their electricity bills cut under a new government scheme designed to tackle one of the biggest hurdles to British industrial competitiveness.

This guide covers what the British Industrial Competitiveness Scheme (BICS) means for manufacturers, who qualify and how much eligible businesses could save.

Contents

• What is the British Industrial Competitiveness Scheme?
• When does the British Industrial Competitiveness Scheme start?
• What electricity costs does BICS cover?
• Who is eligible for the British Industrial Competitiveness Scheme?
• How the British Industrial Competitiveness Scheme exemption works

What is the British Industrial Competitiveness Scheme?

The British Industrial Competitiveness Scheme is a UK Government scheme that will reduce electricity costs for eligible manufacturers in Great Britain.

Support is targeted at manufacturers in the growth sectors identified in the Modern Industrial Strategy, known as frontier industries, as well as electricity-intensive foundational industries that supply them.

Over 10,000 manufacturers are expected to benefit when the scheme goes live in April 2027.

Why was the British Industrial Competitiveness Scheme introduced?

Energy-intensive manufacturing businesses in Britain pay some of the highest industrial electricity prices in Europe, making them less competitive in the global market.

A key reason for this is the environmental levies that the UK Government adds to all electricity bills, which fund the renewable energy subsidies behind the Clean Power 2030 plan.

The British Industrial Competitiveness Scheme aims to make selected manufacturing businesses more competitive by exempting them from contributing to these environmental levies.

When does the British Industrial Competitiveness Scheme start?

The British Industrial Competitiveness Scheme was announced by the UK Government as part of the Modern Industrial Strategy in June 2025. Details are still subject to consultation, but the following support timeline has been confirmed:

• April 2027: A one-off backdated payment covering the period from April 2026 through to March 2027.
• April 2027 onwards: Exemptions from Renewable Obligation and Feed-in Tariff levies begin.
• October 2027 onwards: Capacity Market exemption comes into effect.

The scheme is expected to undergo a formal review in 2030 to assess its effectiveness and design.

What electricity costs does BICS cover?

The British Industrial Competitiveness Scheme will exempt eligible businesses from paying the following non-commodity costs associated with business electricity bills.

All of these costs feed directly into the unit rate businesses pay per kWh.

Renewable Obligation

The Renewable Obligation scheme was the main mechanism for supporting large-scale renewable energy generation between 2002 and 2017 when it was replaced by the CfD scheme.

Business energy suppliers are still required to purchase Renewable Obligation Certificates from generators and retire them in proportion to the electricity their customers use.

This levy currently adds approximately 3 pence per kWh to business electricity prices.

Feed-in Tariff

The Feed-in Tariff is another older subsidy scheme that provided a guaranteed unit price for exported electricity to micro-generators between 2010 and 2019.

Funding for the scheme continues to be shared among all electricity users, affecting electricity costs by approximately 0.7 pence per kWh.

Capacity Market

The Capacity Market is a scheme run by the grid operator NESO to ensure there is enough reserve generation capacity on the national grid. It acts as a buffer against blackouts during periods of high demand or unexpected plant outages.

The scheme is funded through the Capacity Market supplier charge, which is paid by licensed electricity suppliers based on customer consumption.

The Capacity Market supplier charge currently affects business electricity prices by approximately 0.5 pence per kWh.

How much could businesses save under the British Industrial Competitiveness Scheme?

Combined, the three BICS exemptions currently reduce electricity costs by around 4p per kWh for qualifying businesses.

At current prices, this will reduce the unit cost of electricity by approximately 20% at fully eligible sites. The scheme is not expected to affect business electricity standing charges.

The Department for Business and Trade estimates that BICS will deliver up to £600 million of support per year, spread across around 10,000 eligible businesses.

Who is eligible for the British Industrial Competitiveness Scheme?

Eligibility for the British Industrial Competitiveness Scheme comes down to two criteria.

The first is sector-based: businesses must operate in a defined ‘frontier industry’ or manufacture energy-intensive products that supply one. The second is product-based: the business must produce at least one item on the Government’s HS code list.

Below, we explain each element of the eligibility criteria.

Specified frontier industries

The frontier industries identified by the Government fall within the IS-8 sectors, selected for their potential to drive economic growth. The eligible industries are listed in the table below.

Source: Department of Business and Trade – Manufacturing frontier industries

Electricity-intensive suppliers to frontier industries

Electricity-intensive businesses in the supply chain of the frontier industries above are also eligible under BICS. These are defined as “foundational industries”.

Based on these requirements, the Government has selected the following foundational industries:

• Chemicals
• Composites
• Critical minerals
• Materials
• Steel
• Electricity networks (manufacturing of components)

The Government has published an initial list of eligible SIC codes covering electricity-intensive manufacturers that supply key inputs to the frontier industries.

However, this list is subject to change following further analysis of the supply chains within these specific industries.

Harmonised System (HS codes)

The criteria above are designed so that only businesses in particular targeted industries are eligible for lower prices under the scheme.

The Government then uses a defined list of HS codes to identify the specific products whose manufacture qualifies under the scheme.

The HS code system is generally used in customs and trade. The current list of the 1,800 eligible HS codes is published in a spreadsheet on the gov.uk site.

How the British Industrial Competitiveness Scheme exemption works

Eligible businesses under the British Industrial Competitiveness Scheme receive an exemption from paying environmental levies on electricity used to manufacture eligible products.

Here’s how this works in practice:

1. Identify qualifying MPANs

Every connection to the grid in Britain is identified by a Meter Point Administration Number (MPAN).

Qualifying businesses must identify the MPANs that import electricity from the grid to manufacture eligible products.

2. Calculate the eligible proportion of electricity usage

The business must provide evidence of the share of the site’s electricity that is used in the manufacture of eligible products.

Typically, the share will be measured by comparing sub-metering data from eligible manufacturing processes against the main half-hourly electricity meter consumption for the entire site.

3. Determine exemption percentage

The calculated eligible proportion will be used to determine the value of the exemption received, as follows:

• If less than 25% – No exemption.
• If between 25% and 50% – 50% exemption from relevant levy costs.
• If greater than 50% – 100% exemption from relevant levy costs.

4. Apply the exemption to all consumption at the site

The exemption percentage determined in step 3 is used by the site’s business electricity supplier to calculate the environmental levies for the site.

The supplier incorporates the exemption when calculating the business electricity bill for the site.

What still needs to be confirmed about the British Industrial Competitiveness Scheme?

The Government is currently working through the results of a second consultation on BICS, which closed on 14 May 2026. The formal response to the consultation is expected in August 2026.

The information presented above is based on the Government’s current publications. Key details that remain to be confirmed include:

• Funding for the scheme: The Government has confirmed that the price of energy for other users will be unaffected, but details of an alternative funding mechanism have yet to be confirmed.
• Backdated payment: The Government has announced its intention to backdate support under the scheme to April 2026, but the criteria and mechanism for this have not been confirmed.
• Interaction with on-site generation: On-site generation from commercial solar panels and CHP units is common at manufacturing businesses. It is currently unclear how the scheme will interact with power produced by these sources.
• Supplier delivery mechanics: It is unclear what electricity suppliers will need to submit to Elexon and the LCCC to avoid paying environmental levies associated with eligible BICS customers.

The Government has committed to opening applications under the scheme in October and November 2026.

How does BICS interact with the British Industry Supercharger

The British Industry Supercharger is the UK’s existing electricity cost relief scheme for the most electricity-intensive industries (EIIs), such as steel, cement, glass and parts of the chemicals sector.

It was launched in April 2025, giving eligible EIIs relief from both environmental levies and certain infrastructure costs through the network charging compensation scheme.

The British Industry Supercharger targets a small number of the most energy-intensive businesses with very generous support, whereas BICS is designed to apply to more businesses but provides a less generous reduction in energy costs.

The British Industrial Competitiveness Scheme and the British Industry Supercharger are designed to work alongside each other, targeting different groups of businesses.

A single business cannot apply to both schemes. Any businesses that meet the criteria for both will be incentivised to apply for the more generous British Industry Supercharger scheme.

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