British companies are paying the highest electricity prices of anywhere in the developed world, official data has shown.
The cost of power for industrial businesses has jumped 124pc in just five years, according to the Government’s figures, catapulting the UK to the top of international league tables.
It is now about 50pc more expensive than in Germany and France, and four times as expensive as in the US.
The figures will fuel concerns about the future of UK industry amid warnings that high energy prices are crippling domestic manufacturers.
They underline the challenge facing Ed Miliband, the Energy Secretary, who wants industrial businesses to switch away from gas to electricity-powered processes.
Frank Aaskov, the director of energy at lobby group UK Steel, said: “High industrial electricity prices have for too long damaged the competitiveness of UK steelmaking, and many in the wider manufacturing sector will be feeling the same pressure our steel companies do.
“The Government should tackle steep electricity costs and make the UK a fruitful place to invest, while enabling growth and improving competitiveness.”
The electricity price paid by UK industrial users per kilowatt hour rose to 25.85p in 2023, the data show. That compares to 10.43p as recently as five years earlier and 8.89p a decade ago.
It also far outstripped European rivals and allies such as the US and Canada. The equivalent price was 17.84p in France, 17.71p in Germany and 6.48p in the US.
Across all the 31 member countries of the International Energy Agency, which collates the data, the median price was 17.70p per kilowatt hour, with Britain’s price higher than any other country.
It comes after paper and packaging giant DS Smith told The Telegraph that high power prices risked becoming a barrier to investment, while steel producers – including Tata, the owner of Port Talbot – have warned ministers they “must deliver” more competitive prices.
Yet many manufacturers are being encouraged to ditch industrial processes that use fossil fuels such as natural gas and switch over to electricity, as part of efforts to reach net zero carbon emissions.
For example, Tata is in the process of closing its last blast furnace and transitioning to an electric arc furnace.
Meanwhile, heavily polluting businesses must pay for any carbon emissions that exceed a legally allowed threshold.
Despite this, a report by UK Steel this month described the electricity price as “a barrier to growth, competitiveness and profitability”.
Successive governments have attempted to bring down Britain’s power costs, with the Conservatives most recently introducing the “supercharger” discount for energy-intensive businesses such as steel producers and glass makers.
The supercharger strips out the majority of network costs and green levies. However, even after this huge discount UK Steel said power remained roughly twice as expensive as in Germany.
It blamed the disparity on the UK’s electricity generation mix being “more dependent on gas”, with high natural gas prices pushing up UK power prices.
The UK generated 33.7pc of its power using gas in 2023, compared to 17.1pc in Germany and just 5.9pc in nuclear-dominated France.
In the UK, wind was in second, generating 28.7pc. But the wholesale price of electricity is set by the most expensive method needed to meet demand.
Because renewables such as wind and solar currently do not meet this demand on their own, it almost always tracks the price of gas.
For example, on late Thursday afternoon, gas was still being burned to generate 20pc of Britain’s power, while 35.6pc and 10.7pc were generated by wind and solar respectively.
Against this backdrop, the Government has previously considered trying to decouple gas from the electricity price so that companies could instead pay a lower rate linked to renewables.
But in a consultation published in March on reforms to the electricity market, the Department for Energy Security and Net Zero said it had dropped the proposal.
It said this was “on the basis that they would not deliver benefits for consumers and fail in our assessment against our criteria of deliverability and investor confidence”.
The Department for Energy Security and Net Zero was contacted for comment.
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