The latest developments on the British Industrial Competitiveness Scheme (BICS) and what they could mean for UK manufacturers.
Government progresses new electricity cost support for UK manufacturers
The proposed British Industrial Competitiveness Scheme (BICS) could reduce eligible electricity policy charges for around 10,000 UK manufacturing businesses. Although the scheme is still progressing through consultation, now is the ideal time for businesses to understand how the changes may affect future energy costs.
Up to 10,000
UK manufacturers may become eligible
Up to 25%
Potential reduction in eligible electricity charges
October 2026
Applications expected to open
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What is the British Industry Competitiveness Scheme (BICS)?
The British Industry Competitiveness Scheme (BICS) is a UK Government initiative designed to reduce electricity costs for energy-intensive manufacturers by removing a proportion of non-energy costs (NECs) from their bills.
In practice, this includes relief from policy-related charges such as:
Renewables Obligation (RO)
Contracts for Difference (CfD)
Feed-in Tariff (FiT)
Capacity Market costs
By reducing these components, the scheme aims to narrow the gap between UK industrial electricity prices and those in competing international markets.
Eligibility is focused on energy-intensive sectors where electricity costs form a significant proportion of overall operating expenditure. While the recent expansion increases access to over 10,000 businesses, qualification remains dependent on sector classification and energy intensity thresholds.
For those that qualify, BICS will provide a measurable reduction in electricity costs. However, it does not address wholesale energy pricing or broader market volatility, meaning procurement strategy and contract management remain critical.
Which Businesses Could Benefit?
BICS has been developed primarily for manufacturing businesses that consume significant amounts of electricity.This may include organisations operating within:
• Food Manufacturing
• Plastics
• Chemicals
• Steel & Metals
• Engineering
• Pharmaceutical Manufacturing
• Aerospace
• Automotive
• Battery Manufacturing
• Industrial Components
• Advanced Manufacturing
Businesses supplying materials or components into these industries may also qualify.
How Does the Scheme Work?
Eligibility is based on how much of a site's electricity is used for qualifying manufacturing activity.
Current proposals include three support bands:
• Less than 25% qualifying electricity use
No exemption
• 25%–50% qualifying electricity use
50% exemption on eligible policy charges
• More than 50% qualifying electricity use
100% exemption on eligible policy charges
Final eligibility criteria will be confirmed by Government following consultation.
What costs does BICS reduce?
The scheme is intended to reduce selected Government policy charges included within electricity bills.
It does not reduce wholesale electricity prices, network costs or standing charges.
Businesses will still benefit from effective procurement and energy management.
Why does procurement still matter?
Even if a business qualifies for BICS, wholesale electricity prices continue to fluctuate.Contract timing, purchasing strategy and market conditions remain some of the biggest factors affecting long-term energy costs.
Button TextWhy should businesses prepare now?
Although applications have not yet opened, reviewing eligibility early allows businesses to prepare supporting information and understand how future support could affect procurement decisions and contract renewals.
Button TextWhat This Means For
Manufacturers
The proposed BICS legislation represents one of the most significant changes to industrial electricity support in recent years. For eligible manufacturers, the scheme could reduce certain electricity policy charges and improve long-term competitiveness.
However, Government support is only one part of managing commercial energy costs.
Wholesale markets remain volatile, contract structures vary considerably between businesses, and procurement decisions continue to influence overall costs.
Businesses should therefore review both their eligibility for BICS and their wider energy strategy rather than relying on policy changes alone.
Advantage Utilities
10,000+
£40/MWh
6 to 18 months
Next year
Why Strategy Still Matters
BICS has the potential to reduce a portion of electricity costs for qualifying manufacturers, but it does not replace effective energy procurement.
The greatest long-term savings usually come from combining Government support with a well-managed purchasing strategy.
This includes:
• Reviewing contracts before renewal
• Monitoring wholesale market movements
• Selecting appropriate purchasing structures
• Understanding consumption patterns
• Identifying opportunities to improve efficiency
Businesses that prepare early generally have more options available and greater control over future energy costs.
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