Electricity costs put UK steelmakers in worst position in three years against EU rivals
Summary
British steelmakers face much higher electricity costs compared to European competitors, mainly due to high gas prices caused by global conflicts. This puts UK steel companies at a disadvantage and challenges government efforts to boost manufacturing in the country.Key Facts
- UK steelmakers pay nearly £30 more per megawatt hour (MWh) for electricity than French steelmakers, the highest gap in three years.
- High UK electricity prices are linked to heavy reliance on gas for power, which sets electricity prices even for cheaper sources like wind and solar.
- Global gas prices rose after the US-Israeli conflict with Iran impacted supply routes, such as the Strait of Hormuz.
- France’s electricity costs are lower because they use mostly nuclear power; Germany relies more on coal.
- The UK exports about 75% of its steel to the EU, making price differences important for competitiveness.
- Government removed many extra charges on electricity for industry last year but prices remain high.
- UK Steel group suggests direct subsidies or price caps to reduce costs, estimating a subsidy cost of about £51 million yearly.
- The government recently announced job plans in key industries and efforts to reduce electricity bills by up to 25% for manufacturers.
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