UK steel industry is losing to European rivals due to exorbitant electricity prices

In the 2026/27 financial year, UK steelmakers will pay significantly more for electricity than their competitors in the EU and other countries, which threatens the sector’s competitiveness. This was reported by Eurometal, citing a statement from the industry association UK Steel.

According to the UK Steel report, the forecast electricity cost for British steelmakers will be £91/MWh. By comparison, this figure is estimated at £61/MWh in France and £79/MWh in Germany. In addition, UK prices are expected to be 125% higher than in the Canadian province of Alberta, 68% higher than in Vietnam and 71% higher than in Turkey.

The price gap with France alone will add £66 million in additional costs for British companies in 2026/27. According to UK Steel estimates, the industry’s cumulative additional costs due to the price gap since 2017/18 have already reached £917 million.

To solve the problem, UK Steel proposes introducing a wholesale electricity price rebalancing mechanism developed on the basis of modelling by the consulting company Baringa. The initiative provides for compensation to energy-intensive enterprises during periods when UK wholesale prices exceed the European benchmark, and reverse payments if domestic prices fall below this level.

Implementing the mechanism in 2026-2030 will cost about £51 million per year (approximately 42 pence per household). In 2031-2035, the scheme is expected to deliver an average net profit of £13 million annually.

UK Steel Director General Peter Brennan noted that high electricity costs undermine investment attractiveness and employment in the industry. This issue is becoming critical amid the transition of British steelmakers to low-carbon production technologies. The association calls for reforming network charges and extending electricity relief to the entire supply chain.

As GMK Center reported earlier, the UK government published indicative figures for calculating the national Carbon Border Adjustment Mechanism (CBAM), which will come into force in 2027. An analysis of this data shows that the British system will be much softer and cheaper for importers of steel products compared to the EU mechanism.

Courtesy: https://gmk.center/en/news