Energy UK Response to British Industrial Competitiveness Scheme: consultation onscheme eligibility and approach

Executive Summary

Energy UK supports the Government’s ambition to secure economic growth, jobs and supply chain investment from the energy transition, and recognises the important role manufacturers will play. While we welcome efforts to address high electricity costs, we are concerned that the proposed British Industrial Competitiveness Scheme (BICS) lacks sufficient detail, undermining confidence and risking unintended impacts on other electricity consumers.

A critical omission is clarity on how the scheme will be funded. Without this, suppliers cannot accurately assess eligibility, volumes or cost recovery, creating under-recovery risk and leading them to price uncertainty into fixed contracts. This is already increasing costs, particularly for SMEs. Past difficulties with forecasting, such as under the domestic price cap and Network Charging Compensation, show the risks of proceeding without robust analysis – risks amplified by the potentially large number of BICS beneficiaries.

We consider that some policy costs should be removed from electricity bills and funded instead through gas Climate Change Levy reforms, general taxation and hypothecated CBAM and ETS revenues, while core system costs like the Capacity Market and CfDs should remain broadly shared. The BICS proposal to exempt firms from CM, RO and FiT costs does not align with this approach and may weaken incentives to reduce peak demand.

We are also concerned about reliance on uncertain system savings, growing policy complexity from multiple overlapping schemes, and lack of coordination across government. Energy UK therefore supports narrow, targeted eligibility, pro-rated relief, formal consultation on funding, and clearer scheme design to ensure the BICS genuinely improves competitiveness without increasing costs for others or discouraging energy efficiency and clean heat investment.