British steel producers have expressed concern over rising electricity prices with European rivals, warning that the escalating war in the Middle East has pushed UK electricity costs to levels that threaten the industry’s survival and could derail the Government’s Steel Strategy.
In its response to the Government’s publication today of the findings of the consultation on the British Industrial Competitiveness Scheme (BICS), trade body UK Steel offered cautious praise with a strong warning: while the new scheme will bring meaningful relief to parts of the steel supply chain, it does nothing to tackle the crippling shop electricity costs that are weighing on steelmakers themselves.
The numbers make grim reading for anyone invested in Britain’s heavy industrial wealth. UK steelmakers are now paying up to 77% more for electricity than their counterparts in France and Germany, a yawning gap that has widened from around 25% in a matter of months. Indicative industrial prices for 2026 put the UK at around £84 per megawatt hour, compared to around £48 in France and £65 in Germany.
The fall is measured in tens of millions. Without the intervention, UK Steel calculates that the industry will bear £82 million more in annual electricity costs compared to operations in France, a burden that threatens to halt decarbonisation projects, bleed order books from continental rivals and undermine the credibility of the Government’s Steel Strategy.
BICS itself is widely accepted for what it has to offer. This program will significantly reduce electricity bills in parts of the steel supply chain and energy-consuming goods that have so far been outside of existing support structures. For companies that were previously ineligible for any relief, it represents an important and overdue lifeline.
The sticking point is that steelmakers themselves are already benefiting from similar support through the British Industry Supercharger, which leaves the underlying competitive challenge untouched. That challenge has been brought into sharp relief by the war in the Middle East, which has sent electricity and gas prices soaring and exposed the UK’s structural dependence on gas-driven electricity prices.
Frank Aaskov, UK Steel’s Director of Energy and Climate Policy, said the plan was a useful step but failed to address an important issue.
“BICS will bring welcome relief to parts of the steel supply chain and producers who are not covered by the current programs and reduce their energy bills,” he said. “But they won’t reduce electricity prices for the steel producers themselves, who are always exposed to very high electricity costs.”
Aaskov added that the deterioration was rapid and severe. “That problem has worsened in recent months. As a result of the war in the Middle East, UK steelmakers are now paying around 80% more for electricity than their competitors in France and Germany, up from around 25% previously. This is despite existing support and reflects the UK’s continued exposure to gas-driven electricity prices.”
The industry body is pushing ministers to move forward, advocating for a way to restore prices along the lines proposed by consultant Baringa. Such a measure, UK Steel says, could restructure the energy costs of British industries and those competing on the continent and restore the investment confidence the sector urgently needs.
“To make the Steel Strategy a success and deliver the government’s ambitions for industrialization and decarbonisation, additional measures are necessary,” said Aaskov. “That means targeted action to bring wholesale electricity prices in line with our European competitors giving the industry the confidence to invest.”
For SME suppliers woven through the steel value chain, from master builders to downstream manufacturers, the stakes are high. A weak domestic steel industry could also return to thousands of small firms whose orders depend on healthy demand from large producers. The question now facing Westminster is whether a partial fix is enough, or whether strong intervention in prices is the only reliable way to keep British steel in the game.
