Could cheaper electricity unlock the next wave of UK industrial investment?
A recent Government announcement launched a new scheme that could slash electricity bills by up to 25% for over 10,000 manufacturers from April 2027. The British Industrial Competitiveness Scheme (BICS) will exempt successful applicants from certain policy costs.
Reduced operating costs is an obvious and immediate benefit for individual companies, but what are the implications for UK business as a whole?
One potential extra benefit is that it will change the equation for investment in automation, robotics, digitalisation and electrification. Many of these technologies also increase electricity consumption, making energy cost an important factor in manufacturers’ investment decisions.
Turning energy savings into productivity
A discount of up to 25% in energy costs will not automatically mean a manufacturer will have capital to invest in new technology. But for small manufacturers on tight margins, the scheme could tip the balance on planned investment.
Small and micro businesses account for 98% of BICS targets. For them, a new robot, production line or digitalisation project is a big decision with high expectations for ROI. Lowering energy costs would give these manufacturers more flexibility to justify the spend needed to scale up.
In turn, automation technology can unlock further savings. For example, by increasing throughput with the same workforce, or reducing unplanned downtime.
Will cutting bills accelerate electrification?
Like productivity, BCIS could also improve the economics of decarbonisation by making it more affordable to electrify processes that previously relied on fossil fuels. Cutting bills strengthens the business case for new electrically powered technologies. It also influences how new facilities and processes are designed and powered from the outset.
BCIS doesn’t mean manufacturers should focus less on energy efficiency. As more processes become electrified, understanding how electricity is consumed becomes more important. Onsite solar, battery storage, energy monitoring and more efficient equipment can all help manufacturers manage their energy use and costs.
What does this mean for supply chain?
Looking at the wider supply chain, one manufacturer’s saving can quickly become an order for its suppliers. This extends the reach of BICS beyond eligible companies to cover machine builders, solutions providers and system integrators. As such, BICS is an exciting prospect for UK manufacturing as a whole.
It is a scheme that can help UK industry to improve productivity, compete internationally and reduce emissions.
