The BICS Year 1 additional payment, explained

Last updated 31 July 2026.

The BICS additional payment is a one-off sum, funded by the Exchequer and delivered as a credit on your electricity bill, and it is available only to businesses identified as eligible in the first year of the scheme. There is no later route to it.

What it covers

The payment reaches back further than most people expect. It covers the support your business would have been entitled to had BICS been in operation from April 2026, a full year before the exemptions themselves begin. The RO and FiT exemptions start in April 2027 and the Capacity Market exemption follows in October 2027, so the additional payment is, in effect, the government settling up for the year in between.

How it is calculated

DBT has confirmed the formula in outline. The payment is worked out from your historical estimated electricity consumption, multiplied by a government-set average discount rate, multiplied by your banded pro-rating percentage.

That last term is the one to pay attention to. The same 25, 50 or 100 per cent band that sets your ongoing exemption also sizes this payment. A site that lands in the 50 per cent band rather than the 100 per cent band does not just halve its annual exemption. It halves a lump sum it will never have another chance at. If your site is anywhere near a band boundary, model both outcomes before you submit.

When and how it arrives

The government has indicated the payment will be made on launch of the scheme in April 2027, as a single lump sum delivered as a bill credit through your electricity supplier. Where a business's billing position makes a credit unsuitable, DBT has said it will work with the supplier and the business to find an alternative mechanism. The exact payment date has not been published.

Because it arrives through your supplier, it sits alongside the pass-through question: how the relief appears in your price is at your supplier's discretion, and you will be asked to confirm the value you actually received in your annual declaration. It is worth asking your supplier in writing now how RO, FiT and Capacity Market costs appear in your contract.

Why Year 1 is the only year that matters

The application window opens on 1 October 2026 and closes on 30 November, with no late entry to Year 1. Businesses that become eligible in later years get the ongoing exemption. They do not get the additional payment. For a mid-sized manufacturer, that makes the difference between applying in autumn 2026 and applying in 2027 worth tens of thousands of pounds on its own.

What is not yet published

Three things: the government-set discount rate, the historical reference period the consumption estimate is drawn from, and the precise payment date. DBT has committed to the structure but not the numbers. When guidance publishes them, this page will be updated.

What to do now

The payment is sized on your consumption and your band, so the work that protects it is the same work the application needs anyway: map your meters to your sites, establish your eligible production share, and check the supplier contract. The businesses that get this payment in full are the ones whose evidence is ready when the window opens, not the ones who start on 1 October.

For a fixed-fee readiness audit covering exactly this: /bics-readiness-audit

Related: Pro-rating bands explained · MPAN mapping: what you need before 1 October · Excluded by your SIC code? The appeals route

Sources: the April 2026 backdating and the payment-on-launch commitment are from the Government response on scheme eligibility and approach, 16 April 2026. The bill credit mechanism, calculation basis, Year 1 exclusivity and pass-through position are from the Government response on regulatory changes and scheme delivery, 8 July 2026. The discount rate, reference period and exact payment date have not been published at the time of writing.

Anthony Salasidis, Meridian Trade Advisory. If you think I have got something wrong, tell me and I will correct it.