British Industrial Competitiveness Scheme: could your manufacturing business benefit?

The government has recently published further details of the British Industrial Competitiveness Scheme (BICS), a new initiative designed to improve the competitiveness of UK manufacturers by reducing electricity costs.

For many manufacturers, energy remains one of the largest operating expenses. The government hopes that lowering energy-related costs will help UK businesses compete more effectively with international rivals, encourage investment and support growth within strategically important sectors of the economy.

The scheme is expected to provide meaningful savings for eligible businesses from 2027 onwards.

What is the British Industrial Competitiveness Scheme?

BICS is aimed at manufacturers operating within the UK’s industrial strategy growth sectors, often referred to as the ‘IS-8’ sectors, as well as certain foundational manufacturing industries that supply products and materials to those sectors.

Eligible businesses will receive exemptions from the indirect costs associated with three existing electricity policy schemes:

• Renewables obligation (RO)
• Feed-in tariffs (FiT)
• Capacity market (CM)

The government estimates that eligible businesses could see electricity cost reductions of up to £40 per MWh.

For organisations with high electricity consumption, the resulting savings could be significant and may help improve profitability, support investment plans and strengthen international competitiveness.

Which businesses might qualify?

Eligibility is determined by specific standard industrial classification (SIC) codes and harmonised system (HS) product codes. However, businesses that may fall within the scope of the scheme include manufacturers operating in:

• Advanced manufacturing and engineering
• Aerospace and defence supply chains
• Automotive and battery production
• Clean energy technologies
• Life sciences and pharmaceutical manufacturing
• Digital and advanced technology hardware production
• Chemicals, metals, minerals and industrial materials manufacturing
• Foundational manufacturing businesses supplying products, materials and components into these strategic sectors

Businesses that form part of larger supply chains should not assume they are excluded. The scheme extends beyond headline industries to include certain manufacturers providing critical inputs to growth sectors.

What are the eligibility requirements?

To qualify for support, a business must:

• Be registered with Companies House
• Operate within an eligible sector based on its SIC code
• Manufacture an eligible product in Great Britain based on the relevant HS code
• Meet the minimum electricity intensity requirements
• Use at least 33 MWh of grid-supplied electricity each year at the site for which support is being claimed

Meeting one criterion alone will not be enough. Businesses must satisfy both the sector eligibility requirements and the electricity usage thresholds.

When can businesses apply?

Applications will open on 1 October 2026 and close on 30 November 2026.

The government has already launched an online eligibility checker, allowing businesses to assess whether they are likely to qualify before the application window opens.

Early preparation is likely to be worthwhile, particularly for businesses with complex operations, multiple manufacturing sites or uncertainty around product classifications.

What should businesses do now?

Although applications do not open until October 2026, businesses should start preparing now.

Practical steps include:

• Read the full business guidance from HMRC – British Industrial Competitiveness Scheme: business guidance – GOV.UK
• Reviewing SIC codes to ensure they accurately reflect business activities
• Confirming whether products fall within eligible HS classifications
• Gathering electricity consumption data for relevant manufacturing sites
• Identifying any gaps in the information required for an application
• Assessing the potential financial benefit if relief is granted

Taking these steps in advance should help businesses avoid delays once the application process begins.

Why does this matter?

The UK’s manufacturing sector has faced significant pressure from rising energy costs in recent years. Compared with many international competitors, UK industrial electricity prices have often been higher, creating challenges for energy-intensive businesses.

The British Industrial Competitiveness Scheme is intended to address part of this issue by reducing policy-related electricity costs for qualifying manufacturers. While eligibility will depend on specific criteria, the potential savings could be substantial for businesses operating within qualifying sectors.

Manufacturers that believe they may be eligible should consider reviewing their position now so they are ready to apply when the scheme opens.