UK Steel has openly supported elements of the latest UK Industrial Strategy but states: “we are not out of the trenches yet.”

According to the UK Industrial Strategy, the Government will implement three key recommendations from UK Steel. They are:

  • Increasing the Network Charging Compensation to 90% from 60% starting 2026, in order to reduce power prices by an estimated £6.50/MWh and save the steel industry £14.5m per year (according to UK Steel).
  • Continuing the indirect compensation scheme, which compensates the steel industry for the carbon taxes paid via electricity bills, stopping a £20/MWh increase.
  • Introducing the British Industrial Competitiveness Scheme from 2027, which will provide an exemption for Renewables Obligation, Feed-in Tariffs and Capacity Market, for less electricity-intensive businesses.

Gareth Stace, director general at UK Steel, said: “The Government has rightly taken action to reduce industrial electricity prices and modelled its new policies on UK Steel’s solutions.

“UK power prices have for too long damaged the profitability and growth of the steel industry hand over fist, driving away investment and opportunities decarbonise our production.”

However, UK Steel also highlighted that a price disparity with the European energy market will remain, estimating a £10-£16 per MWh difference between European electricity costs to continue.

In response, UK Steel has proposed the introduction of a two-way contract-for-difference to peg wholesale prices to those in France and Germany, in collaboration with energy consultancy Baringa. It is hoped this project will eradicate the price disparity.

Stace concluded: "The Industrial Strategy is a step in the right direction towards competitive electricity prices and a better, more effective business landscape, but we are climbing slowly up the foothills of the mountain we need to climb.

“This is an important milestone, but we are not out of the trenches yet. The Industrial Strategy must be the first of many changes if we are to fully unlock the potential of the UK steel industry to back the growth and stability of our economy.”