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

4. Implementing an ROS exemption for BICS eligible businesses

Changing the methodology and scope for setting the RO in Scotland

The methodology for setting the obligation level in respect of electricity supplied in Scotland is set out in the Renewables Obligation (Scotland) Order 2009 (the ROS Order 2009). This requires Scottish Ministers to carry out two specified calculations (referred to as Calculation A and Calculation B) to determine the total obligation (in terms of the number of Scottish Renewables Obligation Certificates (SROCs) likely to be issued) and then carry out a further calculation to determine the obligation level that applies to electricity supplied in Scotland (in terms of SROCs per MWh supplied).

To implement the RO exemption for BICS eligible businesses, in line with the changes proposed in the UKG consultation, the Scottish Government proposes to:

ii) maintain the current rules for using either Calculation A or Calculation B to set the total obligation.

ii) amend the estimate of total electricity supplied used to calculate the obligation level in Scotland by removing the amount of electricity we estimate will be supplied to exempt BICS exempt businesses and Energy Intensive Industries (EIIs) exempt businesses.

This would result in a proportionately higher obligation for other bill payers (including non BICS exempt businesses, non EII exempt businesses and domestic bill payers) to counterbalance the exemption for eligible BICS businesses. However, this redistributed cost will be offset through a combination of changes within the energy system (such as those recently made to inflation indexation of the Renewables Obligation and Feed in Tariff) and UK Exchequer funding. This will ensure domestic and non-domestic electricity consumers do not see an increase in their electricity bills from this scheme. UK Exchequer funding arrangements for the scheme and bill impacts will be provided in the Impact Assessment that will be published alongside the legislation in the Autumn.

This should ensure that demand for SROCs will continue to exceed supply and therefore should not affect the value of the SROC.

In addition to amending the calculation of the obligation level as set out above, the Scottish Government proposes, working with DESNZ, to adjust the scope of the Renewables Obligation Scotland in the ROS Order 2009 so that the obligation level (SROCs/MWh rate) would be applied to:

• 100% of electricity provided to non-BICS exempt businesses and non-EII exempt businesses
• 0% of the electricity supplied to BICS exempt businesses as covered by the BICS exemption (subject to pro-rating)

In practice, and subject to the agreement of Scottish Ministers, the Department for Energy Security and Net Zero (DESNZ) undertakes the calculation of the Renewables Obligation on behalf of the Scottish Government, drawing on agreed assumptions about expected generation from Scottish stations.