11 October 2023
The Government has today published the Network Charging Compensation scheme. This follows the announcement of the Industrial Supercharger Scheme in February and a consultation with industry on network charges.
Today’s announcement confirms that Government will compensate industry for 60% of the network charges it faces.
UK Steel Director General, Gareth Stace, said:
“UK steelmakers have consistently faced higher electricity prices than their European competitors, harming our competitiveness and ability to attract investment to decarbonise. Today, the Government is taking another step towards addressing this by compensating steelmakers for high grid connection costs.
“There is a shared ambition between the Government and industry for the British steel sector to transition to Net Zero, clearly demonstrated by the recent steel sector investment announcement from the Government. We know that a competitive business landscape, including electricity prices, is just as essential as capital investment in our sector. The two go hand in hand.
“While it is clearly disappointing that a disparity in electricity prices will remain after partially compensating the steel industry for its network charges, we look forward to working with Government to address this and deliver competitive industrial power prices.”
About UK Steel: UK Steel is the trade association for the UK steel industry. It represents all the country’s steelmakers and most downstream steel processors.
About the Network Charge Compensation scheme:
- The Government announced its British Industrial Supercharger in February, outlining how it would 1) increase exemption levels for renewable levies, 2) fully exempt industry from Capacity Market levies, and 3) compensate industry for up to 90% of network charges.
- In publishing the response to its consultation on the Network Charging Compensation Scheme, the Government confirmed that it will compensate industry for 60% of the network charges it faces.
- Network charges include charges to connect to the transmission network (TNUoS), charges to connect to the distribution network (DUoS), and charges to balance the grid (BSUoS).
- Other European governments exempt their energy intensive industries from 80-90% of their network charges.
The UK steel sector:
- Produced 6Mt of crude steel in 2022, around 70% of the UK’s annual requirement (annual demand of 8.9Mt).
- Employs 39,800 people directly in the UK and supports a further 50,000 in supply chains.
- The median steel sector salary is £39,637, 43% higher than the UK national median and 56% higher than the regional median in Wales, Yorkshire, and Humberside, where its jobs are concentrated.
- Directly contributes £2.9 billion to UK GDP and supports a further £3.8 billion. Directly contributes £4 billion to the UK’s balance of trade.
- 96% of steel used in construction and infrastructure in the UK is recovered and recycled to be used again and again.
For further information about the steel industry, please see the 2023 press pack or the 2023 UK Steel Key Statistics report.