Post: Make UK calls for urgent energy reform

Make UK calls for urgent energy reform

Make UK has urged the government to scrap a series of “regressive” net zero levies on bills, arguing this is “the most direct and impactful way to improve industrial competitiveness”. provide manufacturers with wind-farm style electricity deals, known as contracts for difference (CfDs), which would fix their electricity price at a set level.

Dramatically cut energy costs for high energy users amid warnings bills are pushing Britain towards “de-industrialisation”.

Its report, Tackling Electricity Prices For Manufacturers, published on 2 June, notes that industrial electricity prices in the UK are four times higher than in the US and 46% above the global average. The average price faced by UK steelmakers for 2024-25 is £66/MWh compared to German prices of £50/MWh and French prices of £43/MWh. Make UK said unless this disparity is addressed, the upcoming industrial strategy risks being fatally flawed.

Make UK recommends:

Removing regressive policy levies from electricity bills and committing to rule out further levies: This should include removing the costs of the Renewables Obligation, Feed-in Tariffs, Contracts for Difference, Capacity Market, and Climate Change Levy. Make UK and Flint Global analysis indicates that this could save manufacturers up to 15% of their electricity bills. It would also deliver measurable economic growth.

Introducing a targeted and complementary policy for wholesale costs through the creation of a demand-side Contracts for Difference (CfD) mechanism: A one year, demand-side Contract for Difference (CfD) tailored specifically to the needs of UK manufacturers. To restore cost competitiveness with EU peers this should have a strike price set at £56/MWh. This would equate to a 24% discount compared to the Office for Budget Responsibility’s forecast wholesale electricity price, which translates into a 10% reduction in retail prices paid by manufacturers. If lower energy prices were sustained, this would generate a medium-term boost to GDP of around 0.05% (equivalent to around £1.4B a year).

Make UK said the impact of these measures would be GDP-wide. Every £10 reduction per MWh in energy bills across manufacturing boosts the economy by £800M (0.03%) a year if sustained over the medium term. Every £10/MWh bill reduction would bring greater tax revenue too, of around £300M a year.

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