Author

Sarah Glanville, Strategic Partnerships Manager – UK & IE at Leyton

5 minute read

What you need to know

For years, the cost of electricity has been the line on a manufacturer’s accounts with the least room to move. You can renegotiate a supply contract at the margins, you can invest in efficiency, but the underlying price of industrial power in Great Britain has sat well above what competitors in Europe pay, and there has been very little a business could do about the policy costs bundled into every bill.

The British Industrial Competitiveness Scheme changes that, and for the Scottish Engineering members, it is worth understanding now rather than in the autumn.

What the scheme actually does

BICS exempts eligible manufacturers from the indirect costs of three policy levies that appear as non-commodity charges on an electricity bill: the Renewables Obligation, Feed-in Tariffs, and the Capacity Market. These are costs suppliers pass through to you, and for an energy-intensive site, they add up.

The government’s own estimate puts the benefit at around £35 to £40 per megawatt hour of eligible electricity, with total electricity bills cut by up to 25% once the scheme is fully in place. For a manufacturer drawing millions of kilowatt-hours a year, that line item becomes a number that shapes investment decisions. A site using 3 million kilowatt hours annually is looking at benefits in the range of six figures per year.

Around 10,000 manufacturing businesses across Great Britain are expected to be in scope. This is a wider net than the existing support for the most energy-intensive industries, and it is designed to reach mid-sized manufacturers who have historically fallen between the cracks: energy-intensive enough to feel these charges, but not intensive enough to clear the thresholds for the previous schemes.

Why this matters for Scottish Manufacturers

Engineering and manufacturing businesses are firmly within the target audience. That includes companies operating across energy, defence, aerospace, precision engineering and the wider supply chains supporting these sectors.

For Scottish Engineering members, the opportunity is particularly relevant where manufacturing involves energy-intensive processes – whether that is machining, fabrication, casting and forging, processing, assembly or the production of specialist components and equipment.

If your business, or businesses within your supply chain, operates energy-intensive manufacturing facilities, it is worth exploring eligibility before the window opens rather than after.

The eligibility test, in short

Eligibility turns on two things. First, whether the business operates in a qualifying manufacturing sector, identified through its industrial classification. Second, whether it manufactures at least one eligible product, which must be evidenced in the application, the scheme is aimed at the “frontier” growth sectors named in the Industrial Strategy and the “foundational” industries that supply them.

There is no minimum business size. Both SMEs and large businesses can qualify, and support is not weighted by size.

Where a site manufactures a mix of eligible and ineligible products, the exemption is prorated based on the proportion of the site’s electricity used for eligible manufacturing. Broadly, a site that uses at least half its electricity for an eligible activity can expect the full exemption, and a site that uses between a quarter and a half can expect a partial exemption. Below a quarter, no exemption applies. Because this is calculated site by site, businesses with more than one location need to review each location separately.

The dates that matter

This is why preparation is so important, the government’s proposed timetable runs as follows:

The application window opens in October 2026 and is expected to close at the end of November 2026. The Department for Innovation, Science and Trade (previously DBT) then plans to confirm eligible businesses in January 2027. The Renewables Obligation and Feed-in Tariff exemptions are due to apply from April 2027, with the Capacity Market exemption following from October 2027.

Firstly, there is strong evidence that the benefit will be backdated, although this is yet to be confirmed. This would mean that businesses accepted into the scheme could expect to receive a one-off payment or credit on launch covering support as though the scheme had been running from April 2026. In other words, the value may already be accruing for businesses that qualify, whether or not they have started preparing.

Secondly, the first application window is even more time-limited than initially though and, as the government describes it, will be evidence-heavy. A business that has mapped its sites, checked its classifications and product codes, and understood its electricity split before October is in a very different position from one starting cold when the window is already open, with 10,000 applications expected to move through the system.

It is worth noting that the scheme is still subject to final legislation, and the guidance and exact process may yet change. That uncertainty is precisely the argument for doing the groundwork early: the businesses that benefit first will be the ones that are ready.

What to do now

Three things are worth doing ahead of the window, none of which depend on the final guidance:

Identify which of your sites and legal entities are likely to be in scope, and map their activities against the relevant classifications. Get ahead of the site evidence question, since the application will need it. And look at how your electricity use splits across eligible and ineligible activity at each site, because that determines the size of the exemption.

For businesses looking to understand what this means in practice, Leyton and Scottish Engineering hosted a webinar on 9 September, covering the scheme in detail and answering questions from members.

You can watch the recorded webinar here: https://events.goldcast.io/auth/link/79b6a6b6-3065-4c40-afe5-a9c27f5880b9/BU-wmADLPxU?eventID=d5a4254b-2a83-4cba-9450-ba2e4965ece2&shortId=196544

This article is for general information and reflects the scheme as proposed at the time of writing. BICS is subject to final legislation and guidance, and businesses should take specific advice on their own circumstances before relying on eligibility or benefit estimates.