BAR SUPPORTS INDUSTRY CALLS FOR CUTS TO ENERGY COSTS

The British Association of Reinforcement (BAR) has welcomed the UK Steel report, ‘Industrial Competitiveness: Electricity prices faced by UK steelmakers’, that forwards recommendations to address the significant disparity in the price of electricity between UK and its European competitors. This disparity is seriously undermining the competitiveness and financial viability of the UK steel industry.

Energy costs for the UK steel industry are amongst the highest in Europe. UK steel companies pay £113 per megawatt/hour (MWh) compared with their French and German competitors who pay £61 MWh. That is a price gap of £52 MWh.

Steel reinforcement manufacture and fabrication are energy intensive, particularly manufacture. In the UK reinforcement is manufactured using the electric arc furnace (EAF) process which uses 100% recycled scrap metal to make new steel products. The EAF process is low carbon, producing around a sixth of the CO2 emissions compared with the traditional blast furnace method. However, it does use more electricity and so significantly increases the energy bills for companies wanting to reduce their CO2 manufacturing impact.

Steve Elliott, BAR Chairman explained: “Much of the UK energy costs are increased by decarbonisation initiatives. BAR members have made significant investment to reduce their energy emissions and consumption but their reward is the continuation of an unfair playing field that gives their competitors a distinct advantage.”

The UK Steel report four recommendations to address the price disparity:

• Implement the British Industry Supercharger package by April 2024. This will reduce electricity prices by £29/MWh, leaving a price disparity of £24/MWh.
• Compensate the UK steel industry for 90% of its network charges, matching French/German support levels rather than just the proposed 60% compensation
• Undertake wholesale market reforms, which could include splitting the wholesale market
• Track industrial energy price disparities between countries
Elliott said: “We fully support UK Steel in its objectives of demonstrating the need to address the energy price gap between the UK and Europe. The Government often states that it supports the UK steel industry. Now is the time to prove that it really does.”

The UK Steel report can be downloaded at uksteel.org/electricity2023