British Industrial Competitiveness Scheme (BICS): Renewables Obligation - business regulatory impact assessment

Executive summary

This BRIA assesses proposed amendments to the Renewables Obligation (Scotland) Order 2009, which are required to enable implementation of the UK Government's British Industrial Competitiveness Scheme (BICS) in Scotland. The proposed changes will exempt eligible businesses from paying the indirect costs of the Renewables Obligation Scotland (ROS), and amend the methodology used to calculate the annual obligation level to account for that exemption.

The amendments are intended to support the competitiveness of strategically important manufacturing sectors by reducing their electricity costs. Without these amendments, eligible businesses in Scotland would not benefit from the support available to equivalent businesses elsewhere in Great Britain, creating a competitive disadvantage.

The Renewables Obligation was introduced to support renewable electricity generation at a time when renewable technologies faced significantly higher costs. Although the scheme closed to new generation in 2017, support payments continue to be made to accredited generators and are largely funded through levies on electricity bills. The value of the scheme is forecast to exceed £8.5 billion per year across the UK in 2025/26^[1][2], a cost borne by consumers through their energy bills.

High industrial electricity prices are recognised as a challenge to investment, productivity and growth in energy-intensive sectors. Policy costs associated with electricity bills are significantly higher in Great Britain than in many international competitor economies. To address this, the UK Government is implementing BICS to reduce electricity costs for eligible manufacturing businesses.

The primary beneficiaries of the proposal will be eligible manufacturing businesses operating within the Industrial Strategy's IS-8 sectors and associated foundational industries. These businesses are expected to see reductions in electricity costs of between £35 and £40 per megawatt hour.^[3]

Assessment of Impacts

Non-eligible businesses and domestic consumers may be affected through the redistribution of ROS costs. However, wider UK Government system measures, including changes to RO indexation, removal of Carbon Price Support from April 2028 and Exchequer funding, are expected to offset this. As a result, the UK Government anticipate no increase in electricity costs for non-eligible consumers.

The proposed amendments are expected to have a positive impact on eligible businesses through lower electricity costs and improved competitiveness. The measures are intended to support investment, productivity and growth in strategically important manufacturing sectors and help maintain a competitive industrial base in Scotland.

The measures are not expected to increase Scotland's attractiveness as a destination for renewable energy investment relative to the rest of Great Britain because equivalent legislative changes are being made to the Renewables Obligation scheme in England and Wales.

Engagement Undertaken

The Scottish Government undertook a public consultation between 16 and 30 June 2026 and received nine valid responses. Engagement was also undertaken with relevant Scottish Government policy teams, UK Government, and industry bodies throughout the policy development process.

Implementation

Subject to Parliamentary approval, the amendments will take effect from 1 April 2027. Responsibility for operating BICS will remain with the Department for Business, Innovation, Science and Trade (BIST), while management and administration of all RO schemes will continue to be the responsibility of Ofgem.