The UK-based trade association UK Steel has published a report on industrial electricity prices demonstrating that a sizable gap remains between what UK steelmakers and their European competitors pay.
As the UK steel industry is aiming to switch fully to electric arc furnaces, electricity prices have become even more crucial to the industry’s competitiveness, profitability and future success. With a switch to electric arc furnaces, it is expected that the UK steel industry’s electricity consumption, which is equivalent to 800,000 homes, will roughly double. The switch to EAFs will likely result in the UK’s total territorial greenhouse gas emissions decreasing by over two percent.
According to the report, the average electricity price faced by UK steelmakers in 2024-25 is £66/MWh compared to the German price of £50/MWh and the French price of £43/MWh. This indicates a price disparity of £16/MWh and £22/MWh, respectively, driven by higher UK wholesale electricity costs and partly greater network charges amid the UK’s reliance on natural gas power generation.
The report calls for action on electricity prices, needed to make a success of the switch to EAFs, increase the profitability of UK steelmaking, and improve the industry’s competitiveness, recommending: compensating the industry for 90 percent of its network charges, matching French/German support levels, undertaking wholesale market reforms and discounting locational pricing models, and tracking industrial energy price disparities between countries.
