In the 2026/27 financial year, British steel producers will pay significantly more for electricity than European and international competitors, which will further undermine the competitiveness of the industry, the UK Steel association said on October 19.
According to the UK Steel report, the electricity costs of British metallurgists are expected to be 91 pounds per MWh. For comparison: in France — 61 pounds, in Germany — 79 pounds. Prices in the UK will also be 125% higher than in the Canadian province of Alberta, 68% higher than in Vietnam, and 71% higher than in Turkey.
The difference with France alone is estimated to cost British steel companies an additional 66 million pounds in fiscal year 2026/27. UK Steel estimates that the cumulative additional costs due to this gap have reached 917 million pounds since the 2017/18 financial year.
The Association proposes to introduce a mechanism for adjusting wholesale electricity prices. It was developed by the consulting company Baringa based on independent modeling. The mechanism will make it possible to compensate energy-intensive industries for costs when wholesale prices in the UK exceed the European benchmark. If domestic prices fall below this level, companies, on the contrary, will transfer funds back.
UK Steel estimates that from 2026 to 2030, the mechanism will cost about 51 million pounds annually — about 42 pence per year per household in the UK. The association predicts that in 2031-2035, the scheme will bring an average of 13 million pounds of net benefit annually.
The proposal can be implemented within the framework of current regulation while work continues on a long-term reform of the electricity market, UK Steel said.
"British steelmakers have to compete with their hands tied behind their backs," said Peter Brennan, CEO of UK Steel. According to him, expensive electricity hinders investments and threatens jobs.
Electricity is becoming increasingly important as British steel mills switch to less carbon-intensive production methods. UK Steel also called for a change in network fee compensation and increased access to electricity benefits for companies across the steel supply chain.
In recent years, the British steel industry has been declining: production and capacity have suffered due to declining competitiveness. High energy prices have increased the costs of local producers for work and investment, and made it more difficult to compete for orders with foreign suppliers.
Author: Annalisa Villa