UK steelmakers' power costs £47m more than competitors

8 October 2019

UK steelmakers are paying over 50% more for electricity than their European competitors, according to a report.

The energy price gap between the UK steel producers and their European counterparts is estimated to cost the industry an additional £47m compared to Germany and £55m compared to France this year. 

Trade group UK Steel has called for the UK government to close the price gap to prevent the “persistently high” electricity costs of steel production from “damaging the competitiveness” of the UK industry. 

report on the energy price gap by UK Steel revealed the UK pays 62% more for electricity than Germany and 80% more than in France. The difference in prices has remained despite wholesale prices dropping in the past year.

In 2019-20, British Steel producers have paid £50 per megawatt-hour (MWh) for electricity, whereas steel producers in Germany and France paid significantly less at £31/MWh and £28/MWh.

The process of converting raw materials into steel requires a large amount of energy and electricity makes up to 20% of the costs – the largest cost after raw materials. 

UK Steel called on the government to increase cost exemptions for the industry.

Gareth Stace, director general at UK Steel, said: “Our new report plainly demonstrates that UK steelmakers face systemically and persistently higher electricity prices than our competitors. Electricity is one of the biggest costs for the steel industry and it damages our competitiveness that we are consistently forced to pay significantly more. 

“This year, the disparity has cost the steel industry £47 million, at a time where the sector is already facing wider market uncertainties and trading difficulties. This is not the time to be cautious, but the time to be bold. The government must act now to provide that level playing field the sector desperately needs.”

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