On 16th April, the government announced that electricity bills will be cut for over 10,000 businesses from April 2027 through BICS. The scheme aims to reduce electricity costs for manufacturing frontier and foundational manufacturing businesses within the sectors identified by the government within its Industrial Strategy.
Why is the Scheme Being Introduced?
As with the existing Energy Intensive Industries Compensation (EIIC) scheme, the central reason behind the introduction of BICS is energy costs. Persistently high commodity costs, impacted domestically by the UK’s decision to have electricity prices tied to gas prices and internationally by geopolitical conflict, have dogged energy intensive businesses in the UK. Whilst increases to non-commodity charges, which are to pay for infrastructure upgrades to meet the UK’s clean power and net zero targets, have also had an impact. Together these high energy costs have undermined investment, productivity and employment in industries and businesses that the government see as pivotal to the UK remaining competitive against European counterparts and maintaining a resilient industrial base. It is for this reason that the government wants to introduce support through BICS.
What Support will BICS provide?
The scheme aims to cut energy bills through providing exemptions on a range of non-commodity costs. Initial government analysis suggests that BICS could reduce electricity costs by £35-£40/MWh. The non-commodity charges eligible businesses will be exempt from paying are:
• Renewables Obligation (RO)- A charge levied by suppliers to pass on the costs for low-carbon electricity generation.
• Feed-In-Tariffs (FITs)- A charge which is passed on to consumers to pay users for generating renewable electricity.
• Capacity Market (CM)- A charge to ensure grid security and enough capacity for the UK’s electricity needs.
Exemption on RO & FITs is to be introduced from April 2027 and CM exemption is to be begin from October 2027. An additional one-off payment will also be paid in April 2027 to cover the discounts if they were available from April 2026.
Who will be Eligible?
BICS is intended to support manufacturing frontier and foundational manufacturing that were identified in the Industrial Strategy as ‘growth sectors’ and known as the IS-8. These industries are defined by SIC & HS codes. The below table is an indicative example of what industries could be included and could be subject to change.
As well as being a business in a relevant sector, an electricity intensity test will also be calculated to confirm eligibility. This test will be:
• Electricity intensity over 0.9% for manufacturing frontier industries
• Electricity intensity over 2.7% for manufacturing foundational industries
Unlike EIIC, BICS is intended to be much wider in scope and could provide bill relief to over 10,000 UK manufacturers (expanded by 40% from the initial consultation to include an additional 3,000 businesses), with eligibility testing also likely to be less stringent, helping provide support to businesses that have previously missed out.
If you are a participant in EIIC, you cannot be an eligible for discounts through BICS.
Who will Pay for the Scheme?
Unlike elements of the EIIC scheme, such as Network Charging Compensation (NCC), which are paid for through raising a levy on non-EII consumers, BICS will be funded through the Exchequer and will not lead to any increases in electricity bills for non-eligible consumers.
Next Steps
A further consultation has been launched by the government, specifically on regulatory changes and delivery of BICS which is closing to responses on May 14th, with the expectation being that any relevant amendments from the consultation will be made and legislated for in Autumn 2026, subject to parliamentary approval.
LGE’s View
LGE has always welcomed and supported schemes for UK businesses facing the highest costs and with TNUoS charges increasing by 50% upon average in April and the introduction of the RAB charge in last November, non-commodity costs now make up to 60% of an energy invoice. BICS is therefore a much-needed lifeline for the UK businesses that will play an important role in helping the nation’s industrial competitiveness, especially as EIIC currently only provides support to a limited number of businesses. Likewise, the government’s announcement that it is looking to decouple electricity and gas prices is also a welcome move that could help ease commodity prices, alongside schemes such as EIIC and BICS easing non-commodity charges.
However, the imbalance between those who receive support and those who do not is increasingly growing, meaning further invention could be needed. For example, the leisure and hospitality industry are not covered by any support schemes, whilst facing increasing costs across the board.
LGE’s Support
Assessing your eligibility early will be crucial in getting a headstart and ensuring, that if you are eligible, you receive all the discounts and rebates available from April 2027. LGE’s expertise in providing services for clients within the EIIC scheme mean it is well placed to provide support for BICS eligibility. LGE’s services include:
• Evaluation of eligibility
• Calculation of electricity intensity tests
• Identification of eligible and non-eligible MPANs
• Completion and submission of the application
• On-going submissions, declarations and returns
• Maintenance of evidence packs
For further information, speak to your account manager today or contact us at info@lgegroup.com.