DBT outlines detail on BICS exemption, including 2026 rebate for eligible businesses

Business eligibility

DBT announced that it expanded the scheme to cover 10,000 businesses, up 3,000 from the original number. DBT updated the eligible Standard Industrial Classification (SIC) 4-digit codes as part of the consultation process, approving 39 of the 49 considered. It also added a further 41, bringing the total to 80 eligible codes. These additions include the casting of iron and steel, manufacture of optical instruments, and manufacture of electricity distribution and control apparatus. The electricity intensity test thresholds government used for setting the eligible SIC codes are lower than those used for energy intensive industries at:

• 0.9% for manufacturing frontier industries
• 2.7% for manufacturing foundational industries

Businesses wanting to determine whether they produce an eligible product should refer to the final list of eligible six-digit harmonised system (HS6) codes. They’ll need to provide evidence of the eligible products they manufacture, with DBT to outline the requirements in the coming months. Government is considering a minimum annual consumption of 3.5MWh to be eligible for the scheme. DBT intends to publish an online checker to help businesses self-assess their eligibility.

Exemption and funding

DBT will determine eligibility on a site-by-site basis, depending on the proportion of electricity consumed by eligible production processes. It’ll award a 50% exemption to those using between 25% and 50% of consumption at the site for eligible processes. Sites using 50% or more of their consumption for eligible processes will get a 100% discount.

These exemptions will be for the costs of the Renewables Obligation (RO), Capacity Market (CM), and Feed-in Tariff (FiT). The RO and FiT exemptions will apply from April 2027, with the CM exemption set to commence from the start of the CM delivery year (October 2027). DBT estimates the value at around £35-40/MWh; our analysis suggests this is a conservative estimate.

Government stated that other consumers’ bills won’t go up because of the scheme, as it will be funded through a combination of changes within the energy system and Exchequer funding, with full detail to be set out in Budget 2026. This includes removal of the Carbon Price Support (CPS), which adds carbon costs to fossil-fuel fired wholesale energy costs.

Eligible businesses will also receive a rebate for the costs they would have paid, had the scheme been in operation from April 2026. The Government will publish further details on this separately.

Next steps

The Government will consult on the enduring scheme and supplier processes in the future. DBT is currently designing the application process for businesses, and it anticipates that they’ll be able, predominately, to make their applications online. The DBT proposes inviting information from businesses to support eligibility assessment between 1 October and 30 November 2026. DBT then plans to confirm all eligible businesses by 8 January 2027. DBT proposes introducing a two year certificate validity period and expects to ask businesses to confirm their eligibility in a mandatory yearly declaration.

DBT anticipates another consultation and associated guidance on the detail, and will also undertake a scheme review in 2030.

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