Source · Select Committees · Energy Security and Net Zero Committee
Recommendation 30
30
Accepted in Part
Industrial energy cost support insufficient and too slow, needing urgent extension to SMEs.
Conclusion
We welcome support to reduce industrial energy costs in the Industrial Strategy but this does not go far or fast enough. Support for just a limited number of businesses underestimates the scale of the challenge and we are concerned that many businesses will not survive until support is introduced in 2027. The Government’s plans for funding these schemes are vague and there is an urgent need to extend support to SMEs. (Conclusion, Paragraph 107)
Government Response Summary
The government acknowledges the challenges and states that the new British Industrial Competitiveness Scheme (BICS) will reduce electricity costs for up to 7,000 businesses and be available to eligible businesses regardless of size, addressing the call for SME support. It also highlights other support schemes, reiterating its targeted approach.
Government Response
Accepted in Part
HM Government
Accepted in Part
The Government understands the scale and depth of challenge that high industrial electricity prices present to UK business and is standing firm alongside industry to provide robust support. The Government is providing a range of support that includes plans to increase the level of the discount on electricity network charges from 60% to 90% under the Network Charging Compensation Scheme (NCCS), supporting around 550 of the most energy-intensive firms, who receive support through the British Industry Supercharger. In addition, the Government is also conducting a review of support under the Energy- Intensive Industries Compensation Scheme alongside delivering the new British Industrial Competitiveness Scheme (BICS) that will reduce electricity costs by up to £40 per MWh for up to 7,000 businesses. Regarding the number of businesses supported by these schemes, the Government has taken decisions to target support where it will have maximum impact. The British Industry Supercharger provides relief to c. 550 foundational Energy Intensive Industries (EIIs) in the UK from renewable energy levies, including those for Contracts for Difference (CfD), Renewables Obligation (RO), and Feed-in Tariffs (FiT), as well as support by exemption from the electricity Capacity Market charges and the Network Charging Compensation Scheme. BICS targets businesses in manufacturing frontier industries and manufacturing foundational industries in their supplies chains, as these have been identified by the Industrial Strategy as sectors with high potential to drive economic growth. Within those industries, BICS will target businesses above a certain threshold of electricity intensity as these businesses are particularly affected by high electricity costs. As a result, the Government is providing direct support towards firms that collectively support over 300,000 skilled jobs. The Government recognises the urgency of addressing high electricity costs. We are bringing in the uplift to the Supercharger from April 2026. For BICS, the 2027 launch date for the scheme reflects a number of factors. These include the need to pass legislation to put BICS into effect and statutory requirements to consult stakeholders before making changes to schemes covered by BICS. DBT will also need to work with and electricity suppliers and delivery bodies in the energy system and allow sufficient time for them to make the necessary changes to implement BICS. These schemes are the primary focus for the Government to tackle high business electricity costs. Regarding an opt-in energy bills discount scheme for businesses, the Government will continue to assess ways to support business with high energy costs and will engage with Make UK and other stakeholders on alternative approaches. In addition to these initiatives, the Connections Accelerator Service (CAS) will help demand projects connect to the grid, prioritising those that create high-quality jobs and bring the greatest economic value. By working with key investors, the Government has already safeguarded £30bn in investment and the CAS will expand that support to more projects with similar potential. Finally, the Government is supporting the development of the UK Corporate Power Purchase Agreement (CPPA) market. The Government will issue a call for evidence this year on developing and improving the CPPA market for industry that could service as a potential route for energy consumers to secure more stable, long-term electricity prices. Regarding support for small businesses, BICS will be available to businesses in eligible industries that meet the electricity-intensity threshold, regardless of size.