Supporting industrial competitiveness

One of the most significant policies currently in development is the British Industrial Competitiveness Scheme (BICS), led by the Department for Business and Trade. The scheme builds on previous support for Energy Intensive Industries but extends eligibility to a wider range of progressive manufacturing sectors, including aerospace, electric vehicle production and parts of their supply chains.

BICS is designed to reduce electricity costs by exempting eligible businesses from certain policy-related charges, specifically the Renewables Obligation (RO), Feed-in Tariffs (FiT) and Capacity Market (CM). Together, these charges typically add around £35–£40/MWh to electricity bills. While the scheme offers meaningful relief, it is more limited than earlier support mechanisms, as it does not include exemptions from network charges.

Eligibility criteria are still being finalised but are expected to be based on sector definitions and, potentially, energy intensity tests. Registration is expected later in 2026, with exemptions due to take effect from April 2027, subject to legislation. As BICS is an exemption scheme rather than one funded by a separate levy, costs removed from eligible businesses will be redistributed across the remaining consumer base, creating upward pressure on bills for those outside the scheme.

Nuclear RAB: Funding new nuclear capacity

Another key cost component affecting business consumers is the Nuclear Regulatory Asset Base (RAB) mechanism, introduced to support the financing of new nuclear projects, starting with Sizewell C. Unlike renewable support schemes, which recover costs once generation begins, the RAB model allows costs to be recovered during construction, reducing financing risk and overall project costs.

For consumers, this means a new levy appearing on electricity bills. Charges began in late 2025 and vary seasonally, reflecting demand patterns. Current rates are around £3.60/MWh in winter, rising to approximately £4.70/MWh in summer. Over the medium to long term, costs are forecast to increase to £5–£6/MWh by 2027–28 and potentially

around £10/MWh in the early 2030s, depending on construction timelines. Energy intensive industries are exempt, but there are currently no exemptions for charities or most other business users.

Network charges and a step-change in costs

Transmission Network Use of System (TNUoS) charges have also seen a sharp increase from April 2026. Fixed standing charges have risen significantly across many bands, in some cases by over 100% year on year. This reflects the scale of investment required to modernise the electricity grid to accommodate renewable generation, electrification of heat and transport, and rising demand from data centres and digital infrastructure.

While variable charges have fallen in some regions, the majority of network costs are recovered through fixed charges, making the overall impact substantial and ongoing for many businesses.

Moving to half-hourly settlement

Finally, the transition to market-wide half-hourly settlement represents a major structural change for the electricity market. By 2027, all meters – including legacy meters – will be settled on a half-hourly basis. This will improve accuracy, reduce billing delays and reconciliation issues, and simplify contracting structures. Over time, it should also expand access to more flexible and market-linked pricing options for business consumers.

What this means for UK businesses

Taken together, these regulatory changes point to a period of structural cost pressure and market reform for UK business energy users. While schemes such as BICS are intended to support competitiveness in strategically important sectors, they also shift costs elsewhere in the system. At the same time, long-term investments in nuclear generation and grid infrastructure are beginning to flow directly into bills.

Alongside these cost impacts, market reforms such as half-hourly settlement are modernising the way electricity is priced, billed and managed. For businesses, this creates both challenges and opportunities: higher fixed charges and policy costs on one hand, but greater transparency, more accurate billing and increased access to flexible procurement options on the other.

As these changes continue to unfold, understanding how regulatory costs are evolving — and how they interact with consumption patterns and contract structures — will be increasingly important for managing energy risk and maintaining control over long-term energy spend.