
This issue should be one of the first challenges for the Steel Industry Council
UK steelmakers will have to fight to compete due to high electricity costs. According to the UK Steel Industry Association, this issue should be the first challenge for the Steel Industry Council.
As steel is a cornerstone of government priorities, such as renewable energy projects, infrastructure expansion, and national defence, UK Steel noted the need for decisive action by the authorities.
As noted, British steelmakers currently pay 50% more for electricity than their counterparts in Germany and France. This leads to a price difference of up to £22/MW.
According to Britain Steel, this significant difference in costs is due to the country’s high electricity prices, grid connection fees and dependence on natural gas. Since 2016, the association estimates that this gap will cost UK producers £7 807 million compared to their French competitors and £7 697 million compared to their German competitors.
As the industry switches to electric arc furnaces, the problem will only get worse. Without action to address it, these costs will hurt profits, deter investment and threaten the industry’s ability to meet its emissions reduction targets.
UK Steel has called on the government to take the following steps:
- Increase compensation for network costs by up to 90%, bringing it in line with levels in Germany and France.
- wholesale electricity market reforms, for example, by considering the UK to adopt the French Arena tariff (regulating access to existing nuclear power);
- Abandon the local pricing model (REMA), which could put steel producers at a disadvantage.
Earlier, UK Steel CEO Garrett Stace told The Independent that the UK steel industry is in as bad shape now as it was during the 2016 crisis, when many smaller players went into administration during a slump in steel prices. I left. He also predicted to challenge 2025.
The government could change what UK steelmakers pay for grid connections. He is also concerned about the proposed local power pricing zone, which could increase costs for steelmakers.
According to Stace, the combination of these factors, plus high carbon costs, bodes poorly for the sector when it comes to attracting investment.
Earlier this year, the UK government established a new Steel Industry Council to advise on the recovery of the steel industry and develop a future strategy for the sector.