UK steel manufacturers have paid 25 per cent more for their electricity than European competitors over the past five years, industry officials have revealed.
The energy intensive industry is now calling for reductions in charges to remain competitive after the price gulf between the UK, Germany and France reached more than a quarter of a billion pounds.
It can account for 20 per cent of the production process, and is up to 86 per cent more than mills across the North Sea, and 62 per cent above those across the Channel.
UK Steel director-general Gareth Stace said: “Our new report plainly demonstrates UK steelmakers face systemic disadvantages in higher electricity prices than our competitors.
“Electricity is one of the biggest costs for the steel industry, it undermines our competitiveness and it damages our ability to invest when we are consistently forced to pay significantly more than our closest competitors.
“This year, the disparity has cost the UK steel industry £54 million – that’s another £54 million which should have been invested in the sector, modernising and making it more competitive, on top of the £200 million of additional costs already incurred since 2016.”
The UK produces 7.2 million tonnes of steel a year, 71 per cent of the demand, with more than 30,000 employed directly, the majority in Yorkshire and the Humber and Wales.
The disparity has widened despite wholesale prices dropping.
Community steelworkers’ union general secretary Roy Rickhuss said: “Over the last five years, this has cost over a quarter of a billion pounds.
“This is on top of existing disadvantages for the UK steel sector such as the dumping of cheap steel from outside the EU.
“It’s time to act, and to level the playing field.”
One of those disadvantaged is British Steel, with operations in Scunthorpe and Teesside.
A British Steel spokesman said: “We’re investing heavily in new technology in our drive to reduce emissions, support clean growth and protect and create new jobs. To remain competitive and become sustainable, we need to be operating on a level playing field regarding electricity charges.
“Each year we spend millions of pounds more on electricity than many of our European competitors. We therefore ask the UK Government to close the gap and reduce the charges we face.
“Steel is vital to modern economies and over the coming decades global demand is expected to grow to meet rising social and economic need. It’s the world’s most recycled material and our products can play a central role in transitioning to a low-carbon, circular economy. We can also play a significant role in the economic recovery of the UK. A reduction in electricity charges will enable us to make an even greater contribution by allowing us to further invest in our people and our operations.”
British Steel is part of the Zero Carbon Humber movement, but that focuses on hydrogen fuel switching from gas and carbon capture.
It has some self-generation, but the scale means there is still a heavy reliance on the grid.
Speaking to Business Live’s sister site, The Mirror, Labour MP for Newport East Jessica Morden, who chairs the All Party Parliamentary Group on steel, said: “UK steel producers – including those in my constituency – have been burdened by sky-high industrial electricity prices for far too long.
“These costs are a huge barrier to competitiveness for our industry – especially when you compare electricity prices here to the much lower equivalent costs faced by French and German counterparts.
“UK Steel’s new ‘Closing The Gap’ report serves as a powerful reminder to the UK Government to take action and give our steel industry what it so clearly needs – a level playing field.”
A government spokeswoman said: “We remain committed to supporting a sustainable and competitive long-term future for steel making in the UK.
“We want to increase industrial energy efficiency and reduce the costs of electricity production for steel manufacturers, and have ongoing discussions with the industry on this issue.
“We have already provided more than £1.5 billion in relief for electricity costs for energy-intensive industries, including steel since 2013, and created a specific £250 million Clean Steel Fund to support decarbonisation.”
Source: Business Live