UK Steel published its annual electricity price report this week. According to its calculations, UK steel producers are paying up to £22/MWh more for electricity than their French and German steel companies. Specifically, UK Steel’s analysis finds that they typically face an average electricity price in 2024/25 of £66/MWh, compared to the estimated German price of £50/MWh and French price of £43/MWh. This
means UK steelmakers pay up to 50% more than their main competitors.
The electricity price gap was previously caused by higher policy and network charges, but previous Governments have taken measures to reduce this gap and the EIUG has welcomed them. However, the disparity is now primarily driven by higher wholesale costs in Great Britain and this continues to put other energy intensive industries at a competitive disadvantage as well.
The Labour Party’s manifesto recognised this stating that “British industry is also held back by high electricity costs, which has often made investing here uncompetitive. Labour’s clean energy mission will drive down those bills, making British businesses internationally competitive while our National Wealth Fund supports the most energy intensive sectors to decarbonise”.
The EIUG agrees with the report’s recommendations to:
- Increase the compensation rate of the network charges compensation scheme from 60% to 90% to match the French and German levels;
- Continue to assess options under REMA to lower wholesale prices, such as establishing a green power pool, introducing an ARENH-type arrangement or an Iberian exemption;
- Track and publish industrial energy prices disparities between countries, as the previous Labour Government used to do.
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