UK steelmakers like us pay up to 50% more for our power than our competitors in France and Germany.
And unlike many steel-producing countries - such as France, Italy, Spain, and the UAE - Britain does not have a mechanism to protect energy-intensive industries (EIIs) from high wholesale prices.
A new report from our trade body, UK Steel, says timely Government action is required to deliver affordable energy, secure industry competitiveness, and strengthen the UK’s steel production – thereby enhancing economic resilience and national security.
The study recommends introducing a mechanism which will:
1. Provide price parity with the lowest-cost European competitors by fixing electricity prices for the steel sector, increasing global competitiveness
2. Protect against price volatility, enabling long-term planning and investment in low-carbon technologies such as Electric Arc Furnaces
3. Share risk and reward, with the sector paying back the Government when prices fall below the agreed strike price
Frank Aaskov, Director, Energy and Climate Change Policy at UK Steel, said: “The British steel industry is at a severe competitive disadvantage due to long-term high electricity costs. The UK is an outlier as European competitors benefit from government wholesale price mechanisms that shield them from high power prices.
“As part of the (Government) Steel Strategy, uncompetitive electricity prices must be addressed to ensure the steel industry can thrive, secure thousands of jobs, and safeguard national steel production as geopolitical turbulence increases.
“We cannot have electricity prices tying one hand behind our back any longer. To attract investment, compete internationally, decarbonise, and protect jobs, the sector needs a practical, market-driven solution that ensures the UK remains a viable place for steel production. A successful Steel Strategy can deliver this, from as early as next year.”
The UK Government is currently creating a long-term Steel Strategy and has pledged up to £2.5 billion worth of support for the industry.
And Lisa Coulson, i1fun’s Strategy and Marketing Director, said: “The UK needs a competitive and thriving steel industry to underpin economic growth and the transition to net zero. However, until robust action is taken on energy prices we will remain at a major competitive disadvantage.
“We need to compete on a level playing field so it’s imperative the Government’s Steel Strategy supports this by ending uncompetitive electricity prices.”
Read the UK Steel report