British Industrial Competitiveness Scheme (BICS): changes to the Renewables Obligation (Scotland) Order 2009

2. Introduction

The Scottish Government is committed to maintaining a competitive and resilient industrial base, but persistently high electricity prices have increasingly undermined investment, productivity and employment, particularly in manufacturing. While the long‑term solution to energy security and affordability lies in the transition to clean power, as set out in the Clean Power 2030 Action Plan, there is a clear need to address the immediate cost pressures facing industry and stifling growth.

Last June, the UK Government’s Modern Industrial Strategy announced the new BICS designed to bring British electricity costs more in line with other economies in Europe. BICS will support eligible manufacturing frontier industries within ‘IS-8’ manufacturing sectors, and manufacturing foundational industries which provide key inputs to the frontier industries, who meet a certain threshold of electricity intensity. It will do this by exempting them from paying the indirect costs of three schemes:

• The Renewables Obligation (and Renewables Obligation Scotland) and Feed-in Tariffs (which require electricity suppliers to make payments to support generation of electricity from renewable sources) from April 2027; and
• The Capacity Market (which requires electricity suppliers to make payments to ensure the UK has adequate electricity capacity) from October 2027.
• The operation of both the Feed in Tariffs and the Capacity Market are fully reserved to Westminster. Therefore this consultation covers changes to the Renewables Obligation Scotland only.

Decisions on the operation of BICS, including eligibility are reserved to Westminster. The UK Government previously consulted on the proposed approach to identifying eligible businesses for the scheme and published their response on 16 April: British Industrial Competitiveness Scheme: consultation on regulatory changes and scheme delivery - GOV.UK.

The UK Government also launched a subsequent consultation on detailed BICS scheme design.

This consultation seeks feedback on the proposed regulatory changes to implement a Renewables Obligation exemption for BICS eligible businesses in relation to the Renewables Obligation Scotland (ROS).