BICS Eligibility Explained: Will Your Manufacturing Business Qualify for Energy Relief?

The British Industrial Competitiveness Scheme (BICS) represents the most significant energy cost relief programme for UK manufacturers since the Energy Intensive Industries (EII) exemption launched over a decade ago. With consultation ongoing until 19 January 2026 and the scheme launching in April 2027, now is the time for manufacturing directors and operations managers to assess their eligibility.

The stakes are substantial: eligible businesses could save £35-40 per MWh on their electricity bills through exemptions from renewable energy levies. For a medium-sized manufacturer consuming 5,000 MWh annually, this translates to potential savings of £175,000-£200,000 per year.

Understanding the Energy Competitiveness Crisis

UK manufacturers face the highest industrial electricity prices in the OECD. Our industrial energy costs sit 46% above the average for developed countries and four times higher than the United States. This cost disparity puts British manufacturing at a severe competitive disadvantage, with UK steelmakers alone paying £37-50 million more annually than their European competitors.

The government’s Modern Industrial Strategy acknowledges this challenge explicitly, positioning BICS as essential to preventing further deindustrialisation and maintaining Britain’s manufacturing base. The scheme will run from April 2027 to 2035, with a review point in 2030 to ensure it continues delivering competitive advantage.

Core Eligibility Requirements

BICS eligibility centres on three fundamental criteria that businesses must meet simultaneously:

Manufacturing Activity Requirements

The scheme specifically targets manufacturing businesses, not trading or service companies. This means your business must be actively engaged in physical production processes, not merely distributing or selling manufactured goods. The government will assess this at both sectoral and individual business levels to ensure support reaches genuine manufacturers.

Sector Classification: IS-8 Frontier Industries

Your business must operate within one of the manufacturing frontier industries within the government’s eight priority IS-8 sectors:

Advanced Manufacturing: Including advanced materials, aerospace, agri-tech, automotive, batteries, and space technologies. Key SIC codes include manufacture of motor vehicles (2910), air and spacecraft (3030), and various precision engineering activities.

Clean Energy Industries: Covering carbon capture, heat pumps, hydrogen, nuclear technologies, and renewable energy. This encompasses everything from nuclear fuel processing (2446) to manufacture of steam generators (2530).

Defence: Including combat air, complex weapons, directed energy, drones, and maritime capabilities. Relevant codes include manufacture of weapons and ammunition (2540) and military fighting vehicles (3040).

Digital and Technologies: Covering artificial intelligence, cyber security, quantum technologies, and semiconductors. Key manufacturing activities include electronic components (2611), communication equipment (2630), and optical precision instruments (26701).

Life Sciences: Focusing on biopharma and medical technology manufacturing, including basic pharmaceutical products (2110), pharmaceutical preparations (2120), and medical instruments (3250).

Manufacturing Foundational Industries Alternative

If your business doesn’t operate in an IS-8 frontier industry, you may still qualify if you operate in manufacturing foundational industries that supply inputs to frontier industries. These cover critical supply chains including:

Chemicals: The entire SIC division 20 is included, recognising chemicals as fundamental inputs across multiple frontier industries.

Steel and Metals: Including basic iron and steel manufacture (2410), aluminium production (2442), and other non-ferrous metal production (2443-2445).

Materials and Composites: Covering glass manufacturing (2311-2319), ceramics (2331-2349), cement and construction materials (2351-2369), and advanced materials processing.

Critical Minerals: Recognising the strategic importance of mineral processing for frontier industries.

Electricity Network Components: Manufacturing of electrical equipment essential for grid infrastructure (2711, 2712, 2732).

Electricity Intensity Test

The third crucial requirement involves demonstrating sufficient electricity intensity. While the government hasn’t published specific thresholds, the consultation indicates they’re developing “the most appropriate combination of tests to administer at sector and business level.”

This intensity test will likely consider both absolute electricity consumption and electricity costs as a percentage of turnover or gross value added. The aim is to target support at businesses where electricity costs genuinely impact competitiveness and investment decisions.

Application Timeline and Process

The consultation phase runs until 19 January 2026, during which the government will finalise eligibility criteria and the application process. Following consultation analysis, the government will legislate through the Finance Bill 2025-26, with applications opening from April 2027.

Eligible businesses should use this preparation period to:

• Verify their SIC code classification matches eligible categories
• Gather electricity consumption and cost data for the past three years
• Document their manufacturing activities and UK-based production processes
• Consider how they contribute to the supply chains of IS-8 frontier industries

Relationship with Existing Support Schemes

BICS operates alongside, rather than replacing, existing energy support schemes. However, there are important exclusions:

British Industrial Supercharger Recipients: Companies already receiving support under the British Industrial Supercharger cannot access BICS, as they receive similar or greater exemptions covering the same policy costs.

Energy Intensive Industries (EII) Exemption: Current EII recipients may be eligible for BICS if they meet the new criteria, potentially receiving additional relief beyond their existing exemptions.

The government estimates that over 7,000 businesses could benefit from BICS, significantly expanding energy cost support beyond the current EII scheme’s coverage.

What BICS Covers and What It Doesn’t

BICS provides exemptions from three specific policy costs:

1. Renewables Obligation (RO): The main mechanism supporting large-scale renewable electricity generation
2. Feed-in Tariffs (FiT): Supporting small-scale renewable generation
3. Capacity Market (CM): Ensuring adequate electricity generation capacity

The consultation explores whether these exemptions should be 100% or partial. Current modelling suggests the combined relief will reduce eligible businesses’ electricity costs by £35-40 per MWh.

Crucially, BICS doesn’t cover:

• Wholesale electricity costs
• Network charges
• Other policy costs like the Climate Change Levy
• Transmission or distribution charges

Strategic Implications for Manufacturing Investment

BICS represents more than immediate cost relief; it signals long-term government commitment to manufacturing competitiveness. The scheme’s eight-year duration (2027-2035) provides sufficient certainty for major capital investment decisions.

For multinational manufacturers comparing UK facilities with European alternatives, BICS narrows the energy cost gap significantly. Combined with the UK’s skilled workforce, regulatory environment, and market access, this cost reduction could tip location decisions towards British facilities.

The scheme also aligns with the government’s net-zero objectives by supporting the transition to clean industrial processes. Many eligible frontier industries, particularly in clean energy and advanced manufacturing, are essential for achieving carbon neutrality by 2050.

Preparing Your Business for BICS

Manufacturing directors should take immediate action to position their businesses for BICS eligibility:

Conduct Sector Analysis: Review your primary SIC codes against the published lists. If you operate across multiple codes, identify which represent your core manufacturing activities.

Document Manufacturing Credentials: Compile evidence of genuine manufacturing activity, including production processes, employment in manufacturing roles, and value-added activities beyond simple assembly.

Analyse Electricity Usage Patterns: Gather detailed consumption data, peak demand profiles, and electricity costs as percentages of turnover. This data will be crucial for the intensity assessment.

Supply Chain Mapping: If you’re not in a frontier industry, document how your products supply IS-8 sectors. The government may require evidence of these commercial relationships.

Engage with Trade Associations: Industry bodies like Make UK, UK Steel, and sector-specific associations are actively engaging with the consultation. Their submissions will influence final criteria.

Maximising Your BICS Application Success

When applications open in April 2027, successful applicants will likely demonstrate:

• Clear manufacturing activity with significant UK-based production
• Genuine electricity intensity that impacts business competitiveness
• Strong commercial case for how BICS support enables continued UK investment
• Robust data supporting eligibility claims across all criteria

The government has emphasised that BICS aims to support businesses that genuinely contribute to UK industrial competitiveness and economic growth. Applications should clearly articulate how energy cost relief will maintain or expand UK manufacturing capacity.

Industry Response and Advocacy

Manufacturing associations are pushing for scheme improvements during the consultation period. Make UK advocates for bringing the scheme forward from 2027, expanding eligibility to all manufacturers, and ensuring the relief is sufficient to restore competitiveness with European facilities.

UK Steel highlights that even with BICS, British manufacturers may still face higher costs than European competitors. They recommend additional measures to fully close the competitiveness gap.

These industry responses suggest the final scheme may be more generous than current proposals, particularly for businesses that can demonstrate significant employment and investment in UK manufacturing.

The Broader Industrial Strategy Context

BICS forms part of the government’s wider Modern Industrial Strategy, which identifies the IS-8 sectors as crucial for future economic growth. The scheme’s design reflects this strategic focus, concentrating support on industries deemed essential for UK competitiveness in the global economy.

This strategic alignment suggests BICS is not merely a temporary support measure but part of a long-term industrial policy framework. Businesses in eligible sectors can expect continued government focus on competitiveness challenges and investment support.

For manufacturing directors, BICS represents both immediate cost relief and validation that their sectors remain government priorities for industrial policy support.

BICS eligibility will ultimately determine which UK manufacturers can compete effectively in global markets over the next decade. Manufacturing leaders should engage actively with the consultation process, prepare robust applications, and position their businesses within the government’s strategic industrial framework.

The scheme’s success in maintaining UK manufacturing competitiveness will depend on both appropriate eligibility criteria and sufficient relief to materially impact investment decisions. For eligible businesses, BICS represents a critical opportunity to secure cost-competitive operations and continued UK-based manufacturing investment.

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Michael Ashworth is Editorial Director at LeanIQ, providing strategic analysis and insights for UK manufacturing leaders. For consultation responses and detailed sector analysis, visit leaniq.co.uk.