Electricity costs leave UK steelmakers in worst position against EU rivals in three years
Gas surge widens the gap
Higher global gas prices have increased the electricity cost disadvantage facing British steelmakers. The wholesale gas price sets the electricity price even when power comes from cheaper sources such as wind or solar.
Europe matters to exporters
The EU is a key market for British manufactured products. About 75% of exported UK steel goes there, with those exports worth about £3bn. The analysis found the premium British steelmakers pay over French counterparts had risen to almost £30 a megawatt hour. The article describes the UK’s position against EU rivals as the worst in three years.
Options to lower power bills
Under Keir Starmer, most government-policy costs added to heavy industry electricity bills were removed last year. Further price reductions could come from building more low-cost renewable power, though that would be difficult in the short term, or from direct subsidies. Brennan said British steelmakers were competing “with one hand tied behind their backs.” He said electricity prices remained much higher than those faced by European and global competitors, and that the gap with France was worsening.
Industry plans still developing
Brennan also argued that the government could not rebuild British manufacturing while steelmakers paid substantially more for electricity than competitors. Reindustrialisation is a stated national priority for the government.
Key points
- The premium over French steelmakers has reached almost £30 a megawatt hour.
- Higher global gas prices have widened the electricity cost gap for UK steelmakers.
- About 75% of UK steel exports go to the EU, worth around £3bn.
- More renewables or direct subsidies are cited as ways to lower costs further.