Scottish Government Response to British Industrial Competitiveness Scheme: Consultation on Regulatory Changes and Scheme Delivery

Scottish Government response to the consultation questions

Please note, the findings below should be interpreted with care and are not necessarily representative of broader stakeholder opinion.

Question 1 – Do you agree with the proposal to amend the ROS order to exempt BICS-eligible businesses from up to 100% (subject to pro-rating) of ROS costs passed onto them by electricity suppliers?

Consultation response

This question received 9 responses.

67% of respondents agreed with the proposal, 22% disagreed, and 11% neither agreed nor disagreed.

5 respondents provided a free text response.

All respondents who provided a free text response raised concerns about the exemption as proposed. These concerns were shared both by respondents who generally supported the exemption and by those who were more critical of it. The most common concern was its redistributive effect: exempting eligible businesses from ROS costs would not remove those costs, but instead shift them onto businesses that remain within the scheme.

The interaction between the exemption and behind-the-meter solar and private wire arrangements was also flagged, with the argument made that the proposal as drafted creates a disincentive to invest in on-site renewable generation, contradicting the Solar Roadmap.

Some respondents argued that the proposed amendment is mainly an administrative change, intended to reflect within Scottish legislation a policy decision that has already been made by the UK Government. They noted that the ROS has historically followed the RO on cost allocation, and maintaining consistency across Great Britain is the only reasonable approach.

Scottish Government response

The Scottish Government welcomes the support of the majority of respondents who agreed that the exemption from ROS costs will support the competitiveness of Scottish manufacturing businesses and investment. The Scottish Government will proceed with the regulatory changes to exempt BICS eligible businesses from up to 100% (subject to pro-rating) of ROS costs passed onto them by electricity suppliers.

We also recognise the concerns raised by some respondents around the redistributive effect of the scheme. While this scheme does move costs onto non-eligible businesses and domestic consumers, those additional costs will be offset through a combination of changes within the energy system (such as those recently made to inflation indexation of RO/FITs)^[1], removal of Carbon Price Support from April 2028^[2] and Exchequer funding. This will ensure domestic and non-domestic electricity consumers do not see an increase in their electricity bills as a consequence of the introduction of this scheme.

We will continue working closely with the UK Government to support an orderly implementation from 2027.

Question 2 – Do you agree with the proposed changes to the arrangements for setting the obligation level for Scotland for 2027 to 2028, including the proposal to publish an adjusted obligation level, which accounts for the BICS exemption before 1 April 2027?

Consultation response

This question received 9 responses.

44% of respondents agreed with the proposal, 11% disagreed, and 44% neither agreed nor disagreed.

5 respondents provided a free text response.

Several respondents agreed that publishing the adjusted obligation level before 1 April 2027 is necessary to avoid suppliers incorporating higher risk premiums into tariffs to hedge against regulatory uncertainty. The point was made that suppliers are already selling 2027/28 contracts and cannot accurately reflect the relevant changes in customer pricing until it is clear which customers will be treated as BICS-exempt and which obligation level will apply. Calls were made for both the unadjusted and adjusted obligation levels to be published in a single notice by 1 November 2026, with underlying eligibility data made available to suppliers with sufficient lead time.

Some respondents also raised concern that the proposed arrangements present a fundamental difficulty in that suppliers and respondents are being asked to act on an adjusted obligation level before the information needed to assess its full implications is available. This concern took two related forms: first, there should be a commitment from the UK Government to publish impact assessments before the amending Order is made; and second, that publishing two obligation levels simultaneously without clarity on which will ultimately apply creates avoidable uncertainty for suppliers in pricing and compliance decisions.

Scottish Government response

The Scottish Government will proceed with the proposed arrangements for setting the ROS obligation level for Scotland for 2027 to 2028. The legislative changes, which give effect to BICS, will not be in place in time to be taken into account for the 2027 to 2028 obligation level. With the consent of the Scottish Government, an indicative obligation level for 2027 to 2028 will be calculated by the UK Government using the current ROS rules and published by 1 October 2026 with the final adjusted obligation level published, as soon as possible, before 1 April 2027.

The Scottish Government expects amendments to existing secondary legislation establishing the ROS to be in force by the end of 2026, subject to parliamentary approval. If in the unlikely event, parliamentary approval for the legislative changes to the ROS exemption are delayed beyond 31 March 2027, the obligation level published on 1 October 2026 will remain the obligation level for 2027 to 2028.