Regulatory Bulletin: Costs, competitiveness & customer advocacy

Where things stand now

The government has confirmed that BICS will target manufacturing frontier industries within the Industrial Strategy’s growth sectors, as well as manufacturing foundational industries that support those sectors. Eligibility will be determined using a combination of Standard Industrial Classification (SIC) codes and product-level Harmonised System (HS) codes², alongside sector-specific electricity intensity thresholds. Support will be calculated at site level, based on the proportion of electricity used for eligible manufacturing activity. The scheme is expected to reduce electricity costs by around £35–£40/MWh for eligible businesses and has been expanded to cover more than 10,000 firms across the UK.

Recap of key features

BICS is intended to:

• lower electricity costs for qualifying businesses

• improve the UK’s competitiveness relative to other European markets

• support strategic industries central to the UK’s Industrial Strategy

• reduce cost pressure by removing specific policy levies from qualifying consumption

Timing and backdating

BICS is expected to come into effect from April 2027. Recognising the need for earlier support, the government has confirmed that an additional payment will be made in 2027 to reflect the support eligible businesses would have received from April 2026.

What customers and TPIs should do now

While further detail on implementation is still being developed, we encourage manufacturing customers and TPIs to begin early engagement to:

• assess whether their sector and electricity intensity may fall within the eligibility criteria

• understand the potential scale of benefit

• begin preparing the data and evidence likely to be required for eligibility assessment Early engagement will help organisations prepare for what could be a meaningful reduction in electricity costs once the scheme becomes operational. Shell Energy will continue to track developments closely and provide further updates as implementation details are finalised.

What is changing

Looking ahead, non-commodity costs are expected to continue to rise as the energy system evolves and new infrastructure and policy mechanisms are introduced. This creates a number of structural challenges:

• Increasing cost pressure: rising network and policy costs are pushing overall electricity prices higher, even in scenarios where wholesale prices stabilise or fall.

• Limited predictability: many cost components are set through separate processes, with differing timelines and limited forward visibility. This makes it harder for businesses to plan and manage energy costs effectively.

• Impact on competitiveness: higher electricity costs are influencing business decisions on investment, electrification and, in some cases, the location of operations.

Our perspective

At Shell Energy, we have undertaken detailed analysis to better understand how these costs are evolving and what they may mean for different types of business customers. This includes examining how costs may develop over time, how they affect different consumption profiles and how emerging policy interventions, such as the British Industrial Competitiveness Scheme, may influence the overall cost position. While no single policy will address all cost pressures, there is increasing focus across government and regulators on affordability, transparency and the long-term design of the cost framework. This area is still evolving, and stakeholder perspectives will play an important role in shaping future outcomes.

Engaging with customers on cost and competitiveness

Given the scale and complexity of these developments, we are engaging with customers and their representatives (e.g. trade associations) who are actively involved in discussions around energy costs, competitiveness or regulatory change. This includes organisations that are:

• already engaging with government, regulators or industry bodies

• developing their own views or advocacy positions

• interested in contributing to broader discussions on the future cost framework

Through these discussions, we are sharing insights and analysis to support a more informed and constructive dialogue across the market.

If your organisation is actively involved in this area and would like to understand our analysis in more detail, or explore how to contribute to wider discussions, we would welcome the opportunity to engage. Please reach out to us here.

^{1 https://www.gov.uk/government/consultations/british-industrial-competitiveness-scheme-consultation-on-scheme-eligibility-and-approach/british-industrial-competitiveness-scheme-consultation-on-scheme-eligibility-and-approach}

^{2 Annex A: Standard Industrial Classification (SIC) codes for manufacturing frontier and manufacturing foundational industries - GOV.UK}