About us
Consumer Scotland is the statutory body for consumers in Scotland. Established by the Consumer Scotland Act 2020, we are accountable to the Scottish Parliament. The Act defines consumers as individuals and small businesses that purchase, use or receive in Scotland goods or services supplied by a business, profession, not for profit enterprise, or public body.
Our purpose is to improve outcomes for current and future consumers, and our strategic objectives are:
- to enhance understanding and awareness of consumer issues by strengthening the evidence base
- to serve the needs and aspirations of current and future consumers by inspiring and influencing the public, private and third sectors
- to enable the active participation of consumers in a fairer economy by improving access to information and support
Consumer Scotland uses data, research and analysis to inform our work on the key issues facing consumers in Scotland. In conjunction with that evidence base we seek a consumer perspective through the application of the consumer principles of access, choice, safety, information, fairness, representation, sustainability and redress. The Consumer Principles are based on frameworks that have been developed over time by both UK and international consumer organisations. Reviewing policy against these principles enables the development of more consumer-focused policy and practice, and ultimately the delivery of better consumer outcomes.
Our response
Consumer Scotland welcomes the opportunity to respond on behalf of domestic and small business consumers in Scotland to the Scottish Government’s consultation on amendments to the Renewables Obligation (Scotland) Order 2009, the need for which arises from the planned introduction of the British Industrial Competitiveness Scheme (BICS).
The Renewables Obligation (RO) and Renewables Obligation (Scotland) (RO(S)) schemes were introduced in England and Wales and Scotland, respectively, to support investment in early, large-scale renewable electricity generation in Great Britain. The schemes provide enhanced revenue certainty to eligible new and existing electricity generators that were accredited between 2002 and 2017 under the relevant scheme for the nation in which the generator is located, and collectively support c. 35 GW of installed capacity across Great Britain. Although they are legally distinct instruments, mechanistically the RO and RO(S) are closely aligned: under both schemes, eligible generators are credited with a technology specific number of tradeable green certificates (Renewables Obligation Certificates (ROCs)) for each MWh of electricity they generate over the 20-year lifetime of the subsidy, and electricity suppliers in Great Britain are required to buy a defined number of ROCs for each MWh of electricity they supply in each scheme year (or alternatively, to make buy-out payments to ‘top-up’ their contribution towards the subsidy to the level required by government). The costs arising from both schemes are also recovered by suppliers through electricity bills as a volumetric charge on domestic and non-domestic electricity consumers across Great Britain. Under the UK Government’s British Industry Supercharger scheme, some Energy Intensive Industries (EIIs) are exempt from these charges.
BICS is a UK Government policy which is due to be implemented in April 2027 and aims to support eligible manufacturing businesses that government has deemed strategically important to the United Kingdom’s economic growth, national security, and global competitiveness. The scheme forms part of the government’s Modern Industrial Strategy6 and is intended to reduce electricity costs for eligible businesses by exempting them from some or all of the costs associated with the RO, RO(S), Feed-in Tariff (FIT),7 and Capacity Market (CM)8 schemes.
To qualify for BICS, the UK Government has set out that businesses will need to pass a series of tests:
Sector-Level Test: BICS will be open to eligible manufacturing frontier industries within the ‘IS-8’ manufacturing sectors set out in the Modern Industrial Strategy (e.g. advanced manufacturing, chemicals, life sciences, metals), and manufacturing foundational industries which provide key inputs to those frontier industries. For manufacturing frontier industries, defined Standard Industrial Classification (SIC) codes with an electricity intensity (as calculated by dividing electricity consumption by Gross Value Added (GVA)) of more than 0.9% will be eligible. For manufacturing foundational industries, defined SIC codes with an electricity intensity of more than 2.7% will be eligible.
Business-Level Test: Manufacturing products which are eligible for BICS support will be identified using Harmonised System (HS) codes, with businesses applying for BICS required to provide evidence of the eligible products that they manufacture. As many eligible businesses will often produce a mixture of both eligible and ineligible products, the extent to which any particular manufacturing site will be exempted from the costs of the RO, RO(S), FIT, and CM schemes will be pro-rated, based on the proportion of its total electricity consumption that is used to undertake eligible manufacturing. As such, eligible businesses where eligible manufacturing accounts for less than 25% of a site’s electricity consumption will receive no relief for that site; eligible businesses with between 25% and 50% eligible electricity consumption at a given site will receive a 50% exemption to the relevant scheme costs incurred at that site; and eligible businesses with 50% or more eligible electricity consumption at a given site will receive 100% exemption for that site.
The costs of the RO, RO(S), FIT, and CM schemes themselves are not intended to be reduced by the introduction of BICS. Rather, the proposed exemptions are intended to alter how those costs are recovered between different classes of electricity consumer, with a greater proportion of scheme costs met by non-BICS eligible demand than has historically been the case. The amendments proposed in the Scottish Government’s consultation are therefore not intended to reduce the aggregate costs of the RO(S), but rather to enable qualifying businesses across Great Britain to be exempted from up to 100% of the RO(S) costs that would otherwise be passed through to them by electricity suppliers. However, to the extent that a proportion of RO(S) scheme costs would no longer be paid by eligible businesses, the proposals would result in those costs instead falling to be recovered from the wider electricity customer base in Great Britain, pursuant to the RO(S) scheme’s overall design (as modified by the UK Government’s November 2025 decision to fund 75% of domestic consumer contributions to the RO and RO(S) schemes from general taxation between April 2026 and March 2029).
Consumer Scotland’s statutory remit is to represent the interests of domestic and small business consumers in Scotland. In responding to this consultation, we therefore consider these proposals through the lens of consumer outcomes, fairness, transparency, and the likely implications for the consumers we represent. For the avoidance of doubt, we do not seek to represent the interests of businesses that may qualify for support under BICS, nor do we take a position on the wider industrial strategy objectives that the scheme is intended to achieve.
Consumer Scotland recognises that the proposals set out in the consultation will have opposing distributional implications for eligible and non-eligible demand customers across Great Britain. Because the proposed amendments do not reduce the overall costs associated with supporting renewable generation under the RO(S), but serve to reallocate a proportion of those costs away from eligible businesses, in practice they mean that:
- domestic consumers
- small business consumers and other non-exempt electricity consumers
- taxpayers
will fund a larger share of the relevant scheme costs than would otherwise be the case.
Against that background, we note that neither the present consultation nor the recent UK Government consultation on BICS-related amendments to the allocation of costs arising from the RO, FiT and CM18 has been accompanied by analysis quantifying the distributional impacts of the proposals on the wider electricity consumer base in Great Britain, with previous analysis noting only that eligible businesses could see their eligible costs reduce by up to £35-40/MWh when the avoided costs of the RO, RO(S), FiT and CM are taken in aggregate.
For the avoidance of doubt, we do not consider the absence of such analysis to be a sufficient reason not to proceed with the proposed amendments to the RO(S), and we recognise that the relevant assumptions and scheme design choices sit with UK Government. However, we remind Scottish Government that the consequential amendments to the RO(S) required to implement the British Industry Supercharger scheme were similarly presented for consultation absent an assessment of their distributional impacts, despite such impacts having been assessed in respect of analogous changes to the RO that were being progressed in parallel by UK Government. It is self-evident that greater transparency regarding the expected distributional impacts of such reforms would allow for a better understanding of their implications on affected parties at an earlier stage of policy development, and in our view it is important that such omissions do not become a trend should further amendments be required to the RO(S) in future.
Do you agree with the proposal to amend the ROS order to exempt BICS-eligible businesses from up to 100% (subject to pro-rating) of ROS costs passed onto them by electricity suppliers? Please provide reasons for your response.
The objectives, scope and delivery mechanism of the BICS are matters reserved to the UK Government and have already been consulted on during the development of the Scheme. The present consultation therefore only concerns the consequential administrative amendments required to the Renewables Obligation (Scotland) Order 2009 to facilitate implementation of that policy decision within the Scottish legislative framework. The relevant question for the purposes of this consultation is therefore not whether industrial policy should be funded in whole or in part by non-eligible demand customers, but whether the RO(S) should continue to operate consistently with the wider framework of cost allocation across Great Britain.
In considering this, we give particular weight to the longstanding relationship between the RO and RO(S): Scottish Government itself has previously described the RO and RO(S) as delivering a consistent approach across Great Britain, and has noted the preference of suppliers, generators, and the scheme administrator for continued alignment. This principle of alignment is also reflected in previous amendments to the allocation of costs arising from the RO(S) – most recently, to accommodate changes to cost allocation associated with the introduction of the British Industry Supercharger. Precedent therefore illustrates that consequential amendments to the RO(S) in response to reserved policy decisions are neither novel nor unprecedented.
The current proposals are consistent with this broader approach, and while we do not consider alignment as an end in itself, in our view the relevant consideration is whether there is a compelling evidence-based rationale for the allocation of RO(S) costs to diverge from the wider framework through which broader government policy is intended to operate. We have not identified – nor does the present consultation surface – any such compelling basis upon which the RO(S) should diverge from the wider framework being established to implement the BICS: the proposed amendments are principally administrative and consequential in nature, intended to give effect within the Scottish legislative framework to a policy decision that has already been taken elsewhere. In those circumstances, continued alignment between the RO and RO(S) appears to represent the appropriate approach, despite its negative implications for the costs faced by non-eligible demand. Against that background, Consumer Scotland therefore agrees with the proposal to amend the RO(S) Order as set out in the consultation.
Do you agree with the proposed changes to the arrangements for setting the obligation level for Scotland for 2027 to 2028, including the proposal to publish an adjusted obligation level, which accounts for the BICS exemption before 1 April 2027? Please provide reasons for your response, including whether you consider the notice period to be sufficient.
Consumer Scotland recognises that changes to the arrangements for setting the 2027-2028 obligation level are a necessary consequence of the introduction of the BICS and the resulting exemption of qualifying businesses from a proportion of RO(S) costs. The proposed publication of an adjusted obligation level before the start of the relevant obligation period would ensure that the obligation level reflects the revised basis on which RO(S) scheme costs will be recovered, and give suppliers improved visibility of cost allocation across non eligible demand. To the extent that the proposed arrangements support continued consistency between the RO and RO(S) schemes and facilitate orderly implementation of the wider BICS policy, they should therefore allow suppliers to administer their obligations and mitigate any negative operational and/or commercial implications arising from the introduction of unnecessary complexity or uncertainty ahead of cost redistribution taking effect.
Consumer Scotland does not, however, take a detailed view on the proposed methodology for calculating the adjusted obligation level, nor on whether the specific notice period proposed is optimal. These are primarily technical implementation matters and while we have not seen evidence suggesting that the proposed approach would give rise to material consumer detriment, we have no substantive comments on the detail of the proposals.