The UK-based trade association UK Steel has proposed developing a new mechanism to fully address uncompetitive electricity prices faced by the UK’s steel industry, which are up to 50 percent higher than in Germany and France. Therefore, the association stated that new policy solutions are essential to delivering affordable energy, securing industry competitiveness, and strengthening the UK’s steel production.
Like many steel-producing countries such as France, Italy, Spain and the UAE, UK Steel recommends introducing a mechanism to protect energy-intensive industries from high wholesale prices. The proposed mechanism will: provide price parity with the lowest-cost European competitors by fixing electricity prices for the steel sector, increasing global competitiveness; protect against price volatility, enabling long-term planning and investment in low-carbon technologies such as electric arc furnaces; and share risk and reward, with the sector paying back the government when prices fall below the agreed strike price.
Noting that the proposed mechanism is a practical and future-focused solution to support the UK steel sector and drive its green transition, UK Steel stated that the mechanism will be essential to the government’s Steel Strategy in order to create a more competitive business landscape for the steel industry, attract investment, and enable wider decarbonization.
