Paying for BICS Support? Know what you’re signing up for
If you're considering paying for support with your BICS submission, make sure you know what that support could end up costing before you sign anything.
With submissions opening on 1st October and just a two-month window to prepare and submit an application, many manufacturers will be looking for expert help to navigate what can be a complex and time-consuming process. Getting the right support could be invaluable, but it's equally important to understand how you'll be charged for it and what you're committing to.
If the fee is percentage-based and linked to the savings your business receives through BICS, don't look at the percentage in isolation. Work out what it means in pounds and pence and how long the fee will apply. A percentage that looks relatively small on paper could become a significant cost, particularly if it's applied to your BICS savings over several years.
Look beyond the percentage
An arrangement with little or no upfront cost can understandably look attractive, particularly where the provider only gets paid if the business benefits from the scheme.
Where we would encourage businesses to look more closely is when that fee is calculated as a percentage of the savings achieved. A percentage can appear relatively modest when it is written into an agreement, but the figure can look quite different when it is converted into an actual cost.
“If a business achieved savings of £100,000 and had agreed a 20% fee, the cost would be £20,000.” advises Liam Conway, Greenfields Energy Group’s Managing Director. “If the same percentage is applied to savings over several years, the overall amount paid to the provider will become considerably higher”.
“Take a 5-year return rate, on those terms, businesses would end up paying £120,000 in share fees. That is poor value, so you should carefully weigh the total potential cost against what you’re getting in return”.
Understand the whole agreement
The percentage itself is only part of what businesses should be looking at. It is equally important to understand what the provider is going to do, how long they will provide that support and what obligations remain once an application has been completed.
Before signing an agreement, we would suggest establishing how the fee is calculated, whether it applies to one year or several years of savings, whether there are minimum or additional charges and how long you are committed to the provider. It is also worth being clear about what ongoing support is included, what happens if the circumstances of the business change and whether there are any conditions attached to ending the agreement.
If the total cost isn’t immediately clear from the paperwork, that should be a red flag. Some suppliers deliberately keep pricing opaque, making it difficult to understand what you’ll pay in different scenarios. Always ask for clear, worked examples based on different levels of usage and savings. You should be able to see, in plain terms, what your costs could look like before you commit — not after.
Percentage-based fees need proper scrutiny
There is nothing inherently wrong with a percentage-based fee and, depending on the circumstances, some businesses may decide that this is the right way to access the support they need.
The important point is not to assume that a success-based arrangement is automatically good value because there is little or nothing to pay upfront. For businesses with significant energy consumption, the financial benefit available through BICS could be substantial, which means even a relatively small percentage could translate into a sizeable fee over the course of an agreement.
Taking a little time to work through those figures before committing can give you a much clearer picture of what you are agreeing to.
Start by understanding whether your business could be eligible
Before deciding what support you need or entering into a commercial agreement, the sensible starting point is to establish whether your business could qualify for BICS and, if so, what that financial benefit could look like.
Our BICS Eligibility Checker helps businesses get an initial understanding of their potential eligibility. It provides a straightforward place to start before you consider the next steps and what level of external support, if any, you may require.
BICS could provide valuable savings for eligible businesses, but as with any commercial arrangement linked to those savings, it is worth understanding the detail before signing anything. Work out what the fee could mean in pounds and pence, look at how long you are committing for and make sure the support being provided justifies the potential cost.
Could your business qualify for BICS?
Use our BICS Eligibility Checker to get an initial indication of your potential eligibility before deciding what to do next. It takes just a few minutes to complete and provides an initial indication of your likely eligibility and an estimate of the potential financial benefit to your business, including any retrospective payment and ongoing electricity cost savings.
For more information on the scheme, visit our BICS Resource Hub, where you’ll find our Guide to BICS, on-demand webinar, latest updates and practical resources to help manufacturers understand the scheme and prepare for the application process.
If you need further support, our manufacturing energy specialists can review your position in more detail and support you through the application process. Book a free 15-minute BICS Eligibility Review with one of our specialists.