UK steelmakers face up to 25% higher power costs than European rivals, industry group says
UK Steel warns the electricity price gap will add about £26 million a year to industry bills and threatens jobs, investment and decarbonisation plans
UK steelmakers are paying as much as 25% more for electricity than counterparts in France and Germany this year, a report by industry trade group UK Steel said, placing additional strain on an already pressured sector.
The trade body estimated the higher power prices will add about £26 million to annual operating costs for UK producers and said the gap leaves the industry with “a hand tied behind its back.” Gareth Stace, director-general of UK Steel, said uncompetitive power prices pose a threat to jobs, future investment and the industry's Net Zero ambitions.
The report, released as UK and US officials renewed talks over steel tariffs, highlights energy costs as a core competitiveness issue for UK heavy industry. Steel exporters also face a separate external headwind: the United States has applied 25% tariffs on some UK steel imports since March, measures that have prompted diplomatic and commercial engagement ahead of a planned visit by US President Donald Trump to the United Kingdom.
UK Steel framed the electricity price disadvantage as a structural problem rather than a short-term spike, saying the disparity with France and Germany undermines the sector’s ability to invest in decarbonisation and to compete on price. The group did not provide a breakdown attributing the cost gap to specific factors in its public summary.
Steel production is energy intensive, and electricity costs constitute a major share of operating expenses, particularly for producers using electric arc furnace technology. The trade group's analysis compares headline power costs but notes that when combined with other factors — such as tariffs, carbon pricing and supply-chain disruptions — the cumulative effect raises the bar for UK competitiveness.
Industry representatives have for years urged government intervention to close competitiveness gaps with European neighbours, citing measures such as targeted energy support, compensation schemes for energy-intensive industries, or regulatory changes to reduce policy-related overheads. UK Steel’s latest figures increase pressure on ministers to outline policies that would address the differential.
The reactivation of US-UK talks on steel tariffs adds a diplomatic dimension to the industry’s concerns. Tariffs in place since March have raised costs for exporters and complicated trade flows. UK officials and industry groups have said engagement with the US will be necessary to resolve trade frictions while securing market access and protecting domestic capacity.
The combination of higher domestic power prices and external tariffs is likely to feature in discussions between industry leaders and policy makers. UK Steel has called for measures to improve price competitiveness and to safeguard investment that supports both employment and the transition to lower-carbon steelmaking.
Officials at the Department for Business and Trade and at the Department for Energy Security and Net Zero did not provide immediate comments in response to the report. The government has previously said it recognises the importance of energy-intensive industries to the UK economy and has pointed to schemes aimed at reducing exposure to volatile energy markets.
Trade groups and companies will be watching whether the government and regulators propose concrete steps to narrow the electricity price gap, and whether ongoing talks with the United States yield any easing of tariffs that could relieve pressure on exporters.
For the steel sector, the coming months will be a test of how policy, international trade dynamics and energy markets combine to shape the industry’s near-term prospects. UK Steel’s report frames higher domestic electricity prices as a key variable that could determine whether the sector can retain jobs, attract investment and meet its decarbonisation targets.
The report was published on Sept. 14, 2025, as industry groups and government officials prepare for further dialogues on trade and industrial support measures ahead of high-level diplomatic visits later this month.