Around 370 businesses in energy intensive industries employing an estimated 400,000 workers are set to benefit from lower costs as a result of the rollout this week of the British Industry Supercharger.
The Supercharger, first consulted on by government last year, includes a series of targeted measures designed to bring energy costs for key industries in line with other major economies. Support will be made available to sectors particularly exposed to high electricity costs such as steel, metals, chemicals, cement, glass and paper. Whitehall gives its expected value as between £320 million and £410 million in total savings to UK businesses in 2025.
The Supercharger’s measures will exempt eligible firms completely from costs linked to renewable energy schemes, including the small-scale Feed in Tariff, Contracts for Difference and the Renewables Obligation, as well as from GB Capacity Market costs.
There will also be a 60% reduction in network charges – the costs industrial users pay for their electricity supply.
Taken together, D-ESNZ expects this support to be worth around £24 to £31 per MWh for qualifying firms.
This is the average estimated saving and will mean a British energy-intensive business ends up paying about the same in electricity costs as its competitors in countries in the EU.
Trade Secretary Kemi Badenoch, pictured, said: “This government is backing British industry, and with this unprecedented energy support we’re levelling the playing field for hundreds of businesses in steel, chemicals and other key sectors.
“Energy-intensive industries are vital to our economy. Putting energy-intensive industries on an equal footing with the world’s other major economies is crucial to helping these businesses remain internationally competitive.
“It will also enhance the UK’s appeal as a target for international investment as well as remove barriers on the road to greener technology and a sustainable net zero future.
The Supercharger builds on the government’s Energy Security Strategy, published in 2022, which committed government to taking action to address the UK’s industrial electricity prices, which are higher than those of other comparable countries.
D-ESNZ says it will also form a key part of the government’s wider plans to seize on the potential of new green industries like EV battery manufacturing, where the UK is already a pioneer.
In April 2022, the government extended the Energy Intensive Industries Compensation Scheme by a further three years, and more than doubled its budget. The scheme provides businesses with relief for the costs of the UK Emissions Trading Scheme (ETS) and Carbon Price Support mechanism in their electricity bills.
Ministers say there has been more than £2.5 billion relief since 2013 to EIIs to make electricity costs more competitive. In 2021 alone, they say this relief was worth over £360 million through a mix of compensation and exemption from indirect policy costs.
Industry leaders welcomed the Supercharger. Gareth Stace, director general of UK Steel, said: “UK Steel welcomes the introduction of the British Industrial Supercharger. Uncompetitive electricity prices have for years been a millstone around the steel sector’s neck, hindering its progress and ability to compete.
“We are pleased to see the government taking action to bring the steel industry’s power prices closer to those of our competitors abroad.
Arjan Geveke, Director of the Energy Intensive Users Group said: “The Energy Intensive Users Group welcomes the implementation of the various measures to reduce industrial electricity prices in the ‘British Industry Supercharger’ package.
“For those companies eligible for support, these measures will bring our industrial electricity prices closer to those in other countries and help the competitiveness and decarbonisation of energy intensive industries in Great Britain”.
