It is critical the next UK government tackles energy prices after new data showed the UK’s electricity wholesale price over the past three months is more than double the cost of French and Spanish electricity, says UK Steel.
With an impending switch to EAF steelmaking in the UK, it is expected the steel sector’s electricity consumption will roughly double, making electricity price “paramount”, UK Steel says in a note seen by Kallanish. Price data show that UK producers faced average wholesale prices of almost £66 ($84) per MWh in the past three months compared to France’s £27/MWh and Spain’s £28/MWh.
High electricity consumption can represent up to 180% of steel producers’ Gross Value Added (GVA) in the UK. The previous government introduced the British Industrial Supercharger in April, which reduced policy costs – such as renewable levies and the Capacity Market levy – and partly lowered network charges. “However, UK steelmakers still face substantially higher wholesale costs than key competitors and network charges ten times higher than in France,” UK Steel notes.
“We must not lose sight of how important electricity costs are in the move to green steel as we fully switch to electric arc furnace technology to secure steel for our nation,” says UK Steel energy and climate change policy manager Frank Aaskov. “The UK steel industry cannot continue to face electricity prices that are more than double what our main European competitors benefit from.”
“For the UK steel industry to prosper and deliver on its decarbonisation targets, a new Government must deliver the lowest electricity prices in Europe,” he adds.
Adam Smith Poland
