The steel sector in the UK faces an uphill battle in competitiveness due to high electricity costs, according to UK-based trade association UK Steel, due to the fact that UK-based steelmakers currently pay up to 50 percent more for electricity compared to their peers in Germany and France. Stating that steel is the cornerstone of key government priorities such as renewable energy projects, infrastructure expansion and national defense, UK Steel claims that, without decisive action by the government, the UK steel industry’s ability to compete will be crippled.
According to the report released by UK Steel on the issue, the average electricity price faced by UK steelmakers for 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 £16-22/MWh, meaning the industry is paying £37-50 million more for its electricity than its European competitors. On the other hand, the government covering 60 percent of electricity network charges is insufficient, the trade association claims.
To address the issues facing the steel industry, UK Steel demands several actions from the government, emphasizing that the issues at hand will only continue to grow as the sector transitions to cleaner EAF technology, which is a more electricity-intensive steel production model.
UK Steel’s possible solutions for the current situation the steel sector is going through include increasing compensation for network charges to 90 percent, the same as Germany and France, reforming the wholesale electricity market, and rejecting locational pricing models that could disadvantage steelmakers based on their geographic location.
