UK MANUFACTURERSs are struggling with high energy bills, with energy-intensive industries warning that government support is not enough to keep them competitive.
At glass bottle maker Encirc’s plant in northwest England, operations are under pressure from high energy prices. “We’re paying a lot more energy costs than our European competitors,” said Oliver Harry, head of corporate affairs at Encirc, which makes over a third of the UK’s glass bottles.
Britain has some of the highest energy prices in Europe, driven by its reliance on natural gas and the costs of transitioning to renewables, which are passed on to bills. The country’s industrial electricity prices were also the highest in Europe in 2024, according to the latest annual government data.
Standing near the plant’s two large furnaces, Harry said: “We’re already seeing an increase in imports into the UK as customers turn to cheap, more unsustainable glass producers”, notably from China and Turkey.
Across energy-intensive sectors including steel, chemicals, glass and cement, companies say government support does not go far enough.
The government said it will increase discounts on electricity network charges to 90 per cent from April, saving around 500 of the UK’s biggest energy users a cumulative £420 million ($570 million) per year in electricity bills.
“Lowering bills is central to every decision we make,” a government spokesperson told AFP.
The steel sector says the measures do not address the wider gap with European competitors. “The industry still faces industrial power prices almost 40 per cent higher than in France and Germany,” Gareth Stace, director general of the steel trade body, UK Steel, told AFP.
The organisation has called for stronger protections similar to those in France, Italy, Spain and the UAE to shield heavy industry from high wholesale power costs.
Electricity costs in the UK remain high in part because more than a quarter of its power still comes from gas, which surged in price after Russia’s 2022 invasion of Ukraine. Although wholesale prices have fallen since then, they remain elevated.
Under the UK’s liberalised electricity market, the last power station switched on to meet demand sets the price for all generators, and that station is usually gas-powered.
“In France, nuclear sets the price fairly often and nuclear is cheaper ... so it’s not always the same expensive gas that sets the price,” said Sam Frankhauser, professor of economics and climate change policy at Oxford University.
In other countries, he said, “there’s moments in the day where somebody cheaper sets the price and in the UK, those moments don’t exist” because it is almost always a natural gas plant setting the price.
Encirc executives said energy costs are closely linked to the push to decarbonise. By the end of the decade, “we’re going to be producing glass bottles that are 80 per cent reduced carbon,” Harry said.
“The UK managed to decarbonise the grid phenomenally because of the exit of coal,” said Gregor Singer, professor at the London School of Economics.
“It’s really unfortunate that this gas price shock came now, exactly at that point where you sort of exited coal but you don’t quite have enough renewables yet.”
“In the medium to long run... it’s almost guaranteed that prices are coming down,” he said.
(With inputs from AFP)
