A new report released today from UK Steel shows the significant electricity price disparity the UK Steel sector faces compared to its European counterparts, with the sector facing an extra £54m of energy costs compared to German steelmakers. Over the last five years the price disparity has cost the sector £254 million, or 130% of annual capital investment.
Closing the Gap shows the huge structural barrier faced by the UK steel sector as it faces the core challenges of adapting to a trading environment outside the EU, looks to recover in the aftermath of the pandemic, and embarks upon the major challenge of decarbonisation. The report makes a powerful argument for the UK Government to put forward a bold programme of support for the sector to level the playing field.
Consistently higher UK electricity prices increase production costs, reduce available capital and deter inward investment, severely reducing the sector’s ability to invest in decarbonisation and transition to CO2 free steel production.
Gareth Stace, UK Steel Director said:
“Our new report plainly demonstrates UK steelmakers face systemic disadvantages in higher electricity prices than our competitors. Electricity is one of the biggest costs for the steel industry, it undermines our competitiveness and it damages our ability to invest when we are consistently forced to pay significantly more than our closest competitors.
“This year, the disparity has cost the UK steel industry £54 million. That’s another £54 million which should have been invested in the sector, modernising and making it more competitive, on top of the £200 million of additional costs just since 2016.
“And the issue is becoming even more urgent with the growing need to rapidly decarbonise. All options available to us will hugely increase electricity consumption across the sector – how on earth can companies attract massive investment for such a transition in a country with the highest industrial power prices in Europe?”
“Government needs to be bold and decisive. We have put forward six easily implemented measures to provide the British steel sector with the best possible foundation to thrive. To provide valuable jobs, to boost the UK economy, and to ensure we continue to be a great trading nation.