UK Steel demands government confirms energy support extension

UK Steel has called on the government to confirm an extension and improvement of the Energy Bill Relief Scheme (EBRS) beyond March to ensure domestic steel industry competitiveness next year. This come as electricity prices have risen to over £1,500/MWh ($1,855) this week, over 30 times the historical average, the steelmakers’ organisation says.

“Massive electricity price spikes this week have all but broken the Energy Bill Relief Scheme, which aims to shield industry from sustained unsustainable price levels,” UK Steel director general Gareth Stace says in a note sent to Kallanish. This has forced some steel companies to cease production at key times during the day.

“A long-term solution will be found in infrastructure investment and fundamental market reform, but in the interim we need a bridging solution that ensures UK steel producers can make steel at the same cost as their European competitors,” Stace continues.

“The steel sector is looking to the Government to announce that it will continue to cap electricity and gas prices for vulnerable sectors, such as steelmakers, when it publishes its review of the EBRS, expected before the end of the year. Critically, the price cap must be updated to reflect new market conditions and actions being taken in competitor countries,” Stace comments.

The German government is already planning a scheme for all of 2023, where it will guarantee wholesale electricity prices at €130/MWh, well below the UK’s cap of £211/MWh. This should be matched by the UK government, Stace observes. A failure to extend EBRS could result next year in reduced production, shrinking market share and increased imports, he concludes.

Adam Smith Poland