British steelmakers are facing their highest electricity cost disadvantage against French rivals in three years, with a premium of almost £30 per megawatt hour (MWh). This figure, based on analysis by the lobby group UK Steel, marks a significant increase.
The surge in global gas prices, attributed to the US-Israeli war on Iran and Iran's subsequent closure of the Strait of Hormuz, has been cited as a cause for the rising costs. Analysts suggest the UK's reliance on gas for power generation, particularly for cleaner steelmaking processes using electric arc furnaces, contributes to its high electricity prices.
The director general of UK Steel, Peter Brennan, stated that direct subsidies are the only viable option to support steelmakers. The lobby group has proposed a price cap estimated to cost approximately £51 million annually, with the government covering the difference when prices exceed the cap.
A government spokesperson highlighted measures to reduce electricity bills for manufacturing businesses by up to 25% and cut costs for electricity-intensive businesses by around £1 billion per year. These actions are part of the prime minister's pledge to reindustrialise Britain.