Post: Government plans to cut energy costs for industry

Government plans to cut energy costs for industry

More than 7,000 British businesses could see electricity bills reduced by up to 25% from 2027 by exempting them from some green energy levies, according to the government’s new industrial strategy.

Published on 23 June, the Industrial Strategy sets out a ten-year plan to boost investment, create good skilled jobs and make Britain the best place to do business by tackling two of the biggest barriers facing UK industry: high electricity prices and long waits for grid connections.

From 2027, the new British Industrial Competitiveness Scheme will reduce electricity costs by up to £40/MWh for over 7,000 electricity-intensive businesses in selected manufacturing sectors. This will be achieved by exempting eligible businesses from paying levies such as the Renewables Obligation, Feed-in Tariffs and the Capacity Market. Eligibility and further details on the exemptions will be determined following consultation, which will be launched shortly.

The government is also increasing support for the most energy-intensive firms, such as steel, chemicals, and glass, by covering more of the electricity network charges they normally have to pay through the British Industry Supercharger. These businesses currently get a 60% discount on those charges, but from 2026, that will increase to 90%. This means their electricity bills will go down, helping them stay competitive, protect jobs, and invest in the future.

The government will also deliver a new Connections Accelerator Service to streamline grid access for major investment projects

Other measures include:

• increasing British Business Bank financial capacity to £25.6B. This includes an additional £4B for Industrial Strategy Sectors
• reducing regulatory burdens by cutting the administrative costs of regulation for business by 25% and reduce the number of regulators
• boosting R&D spending to £22.6B per year by 2029-30 to drive innovation across the IS-8, with more than £2bn for AI over the Spending Review, and £2.8bn for advanced manufacturing over the next ten years
• revolutionising public procurement and reducing barriers for new entrants and SMEs to bolster domestic competitiveness.
• delivering AI Growth Zones to attract investment in AI infrastructure in strategic locations across the UK

 The same day the government published the Clean Energy Industries Sector Plan, with the government targeting at least a doubling of current investment levels across clean energy industries to over £30B per year by 2035. As part of this plan, Great British Energy will have an additional £700M to help build manufacturing facilities for key components for the clean power revolution like floating offshore platforms, electric cables, and cutting-edge hydrogen infrastructure. 

Additional sector plans covering Advanced Manufacturing, Creative Industries, Digital and Technologies and Professional and Business Services were also issued.