Thousandsof businesses may see significant cuts in their energy bills according to new proposals.
The UK government has launched a comprehensive 10-year Industrial Strategy aimed at reducing energy costs for businesses and transforming the renewable energy sector. The strategy, unveiled in mid-2025, is designed to boost industrial competitiveness, support manufacturing growth, and drive the country towards a net-zero economy.
### Energy Cost Reductions for Businesses
A key component of the strategy is the British Industrial Competitiveness Scheme, scheduled to commence in 2027. This initiative is set to cut electricity bills for energy-intensive manufacturers by up to £40 per megawatt-hour, potentially reducing their electricity bills by 25%. Eligible firms will be exempt from payments like the Renewables Obligation, Feed-in Tariffs, and the Capacity Market, easing their overall energy expense burden.
About 500 of the most energy-intensive companies will benefit from the British Industry Supercharger scheme, which increases electricity network charge discounts from 60% to 90% starting in 2026. This scheme targets sectors like steel, ceramics, and glass that are critical to the UK’s manufacturing supply chains.
It's worth noting that these initiatives will be financed through energy system reforms rather than taxpayer money or increased household bills, maintaining fiscal discipline while fostering growth. The government will also introduce a Connections Accelerator Service by the end of 2025 to speed up access to the electricity grid for new factories and large projects, minimising delays for industrial expansion and modernization.
### Changes to Renewable Energy Schemes
The strategy supports a doubling of clean energy investments to over £30 billion annually by 2035. The government is investing an additional £700 million through Great British Energy to develop clean energy supply chains, focusing on job creation and economic growth in coastal and industrial heartland communities.
The focus is on harnessing the UK’s strengths as a coastal nation and scientific leader to establish a robust domestic clean energy sector that underpins the Industrial Strategy goals. This plan is backed by strong commitments to expand offshore wind and other renewable energy infrastructure in key regions like Port Talbot, supporting local economies and advancing net-zero targets.
### A Focus on AI and Productivity
Policies which stimulate the uptake of AI, especially within the energy and industrial sectors, are expected to help create a dynamic market for new innovations. The UK government's industrial strategy also includes plans to use AI to drive productivity.
### Looking Ahead
The government hopes these measures will deliver long-term certainty and direction for businesses to invest, innovate, and create jobs. Prime Minister Keir Starmer views these plans as a turning point for Britain's economy and a break from past short-termism.
However, it's worth noting that the HS2 project, a major infrastructure project, is expected to be delayed beyond its 2033 deadline. Despite this, the government remains committed to its industrial strategy and the transformation of the UK's energy and industrial sectors.
[1] Government's Connections Accelerator Service: https://www.gov.uk/government/publications/connections-accelerator-service/connections-accelerator-service [2] Government's Clean Energy Industries Sector Deal: https://www.gov.uk/government/publications/clean-energy-industries-sector-deal/clean-energy-industries-sector-deal [3] Government's Net Zero Strategy: Build Back Greener: https://www.gov.uk/government/publications/net-zero-strategy-build-back-greener/net-zero-strategy-build-back-greener
- The British Industrial Competitiveness Scheme, which will commence in 2027, is an innovation aimed at cutting electricity bills for energy-intensive businesses, reducing their costs and fostering growth in the industry without relying on taxpayer money or increased household bills.
- The UK government's policy on renewable energy focuses on doubling clean energy investments, with a commitment to expand offshore wind and other renewable energy infrastructure in key regions like Port Talbot, underpinning the Industrial Strategy goals and driving job creation and economic growth.
- The government's focus on AI, particularly within the energy and industrial sectors, represents an effort to drive productivity, creating a dynamic market for new innovations and contributing to the transformation of the UK's energy and industrial sectors as part of the comprehensive 10-year Industrial Strategy.
