UK Government unveils major electricity cost cuts for heavy industry
UK Government unveils major electricity cost cuts for heavy industry
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In a significant move to strengthen British industry and improve global competitiveness, the UK Government has launched a consultation to increase electricity network charge discounts for energy-intensive businesses from 60% to 90%, a measure expected to save firms up to £420 million a year starting in 2026.
The announcement, part of the Government’s recently unveiled Modern Industrial Strategy, is designed to level the playing field for UK manufacturers in high-energy sectors such as steel, ceramics, glass, and chemicals. Around 500 of the UK’s most energy-intensive companies, including British Steel and INEOS, stand to benefit from the plan.
“This government is on the side of British industry. When we make promises we deliver on them,” said Business Secretary Jonathan Reynolds.
“That’s why we’re wasting no time in powering ahead with our plans to tackle energy costs for great British businesses and level the playing field.”
The measure, known as the Network Charging Compensation (NCC) scheme, is part of the broader British Industry Supercharger package, which aims to bring industrial electricity prices closer to those in Europe. The proposals could see firms pay around £7 less per megawatt hour (MWh) for electricity, bringing UK industrial energy prices in line with countries such as France and Germany.
“This landmark new support will meet a longstanding need from industry which other governments shirked – paving the way for new investment and job creation at the heart of our Plan for Change,” Reynolds added.
The announcement comes as UK manufacturing shows strong signs of recovery, with new data from Make UK and BDO revealing that the sector has returned to pre-pandemic levels in all regions, creating 12,000 jobs in the year to March 2024. A recent Deloitte CFO survey also named the UK as one of the top global locations for investment.
Gareth Stace, Director General of UK Steel and Chair of the Energy Intensive Users Group, welcomed the move: “Increasing network charge compensation under the Government’s Supercharger scheme is a very welcome and much-needed step towards achieving competitive electricity prices for the UK’s steel sector and other foundation industries.
These reforms reflect solutions that UK Steel has long advocated… While more still needs to be done, this is meaningful progress.”
The Government also confirmed that it will double the application window for the NCC scheme from one month to two, as it seeks industry feedback through a four-week consultation period launched today.
This follows other recent support initiatives for energy-intensive businesses, including the upcoming British Industrial Competitiveness Scheme, which is set to launch in 2027 and aims to reduce electricity costs by up to 25% for more than 7,000 firms. It will do so by exempting companies from green levies like the Renewables Obligation, Feed-in Tariffs, and the Capacity Market.
To further streamline infrastructure and investment readiness, the Connections Accelerator Service, due by the end of 2025, will reduce grid access delays for major projects. New powers proposed in the Planning and Infrastructure Bill could also allow the government to reserve grid capacity for strategically important industries.
On a visit to Sheffield to promote the initiative, Investment Minister Baroness Gustafsson toured Special Melted Products, a firm currently benefitting from the existing 60% discount. The visit coincided with news of a major investment by Taiwanese manufacturer Walsin Lihwa, which is expected to create over 200 skilled jobs by 2028.
With energy costs long cited as a barrier to investment and growth, today’s announcement represents a pivotal step toward securing the future of British heavy industry, improving competitiveness, and driving the Plan for Change forward.
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