Electricity prices are a barrier to decarbonisation, UK steel industry says

UK steel manufacturers currently pay 61% more for electricity than their competitors in Germany and 51% more than in France, new report finds

Pathway to COP26 report

Electricity prices are stopping UK steel production from decarbonising.

A new report by the trade association UK Steel suggests that current electricity prices feel like a barrier to decarbonisation strategies.

The analysis shows that UK steel producers have to pay nearly 61% more for electricity than their counterparts in Germany and almost 51% more than in France.

The authors of the report estimated that electricity prices have risen from an average of £20 per MWh that was between 2015 and 2020 to £34 per MWh this year.

That translates to an extra £90 million expenditure this year for UK steelmakers and a total cost of £345 million over six years, the equivalent of almost two years capital investment in the sector, the trade association said.

Gareth Stace, Director General of UK Steel, said: “The UK steel sector is a big user of power, consuming as much electricity as 800,000 homes annually.

“We are also highly trade-intensive, importing 70% of our steel needs and exporting 45% of everything we make.

The UK’s disproportionately high electricity prices have a hugely negative impact on the sector’s ability to compete, trade, attract inward investment and ultimately be sustainable in the long term.”

If you enjoyed this story you can sign up to our weekly email for Energy Live News – and if you’re interested in hearing more about the journey to net zero by 2050, you can also sign up to the future Net Zero newsletter. 

Latest Podcast