High electricity prices threaten steel sector

Posted on 31 Oct 2019 and read 526 times
High electricity prices threaten steel sectorOver two years after the Conservative Party said in its 2017 manifesto that it would deliver the lowest energy costs in Europe, a new report published this month by UK Steel (which represents the steel industry and part of Make UK) shows that UK steel-makers still face electricity prices 80% higher than those of their direct competitors in France and 61% higher than those in Germany.

The Energy Price Gap: A New Power Deal for UK Steel shows that electricity prices paid by British steel producers today stand at £50/MWhr, compared to £31/MWhr in Germany and just £28/MWhr in France.

It says: “Steel production is a highly energy-intensive process, with electricity representing up to 20% of the costs of converting the basic raw materials into steel. For some steel-makers, energy represents a bigger proportion of costs than labour.

“This is the fourth year that UK Steel has conducted this research, and despite significant drops in the wholesale cost, the price difference still persists.

"The disparity with German power prices will cost the sector £47 million this year; UK steel companies have committed to re-invest all of this back into production facilities, should Government take action to level the playing field.”

Gareth Stace, UK Steel’s director general (www.makeuk.org), said: “Our new report plainly demonstrates that UK steel-makers face systemically and persistently higher electricity prices than our competitors.

"The Government must act now to provide that level playing field the sector desperately needs.

"We have put forward nine clear-cut recommendations to close the price gap; these can easily be adopted by the Government to provide the British steel sector with the best possible foundation to thrive.

“Every proposal has been implemented by EU governments, showing that they could easily be introduced here too.

“Governments elsewhere in Europe recognise the critical importance of competitively priced energy for steel production and have acted decisively to deliver it. It is high time that the UK Government does the same.”

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