Post: UK manufacturers face higher energy costs than US

UK manufacturers face higher energy costs than US

A report commissioned by think tank Civitas has found that Britain’s manufacturers are being placed at a significant competitive disadvantage by energy costs far above those faced by international rivals, new research has found.

According to a recent report, electricity accounts for 70% of manufacturers’ direct energy expenditure, with gas representing a further 20%.

In 2024, UK manufacturers paid £16.6B directly for energy; at US energy prices, that bill would have been £5.2B. The report compared the UK with 10 major manufacturing nations and trading partners and found that industrial electricity prices in Britain are four times higher than in the US and six times higher than in China. The disparity also exists within Europe, with UK industrial electricity costs reportedly double those in France and 70%–75% higher than in Germany and Italy. Gas prices are similarly uncompetitive, with UK industrial gas costing five times more than in the US and 14%–20% more than in Japan, China and Germany.

For manufacturers already facing pressure from labour, materials and other operating costs, the differential represents a substantial additional burden and is contributing to deindustrialisation and offshoring.

The report also examines the relationship between energy prices and the UK’s decarbonisation strategy. Britain has made one of the most aggressive moves among the countries studied to reduce fossil-fuel generation. Between 2000 and 2024, electricity generated from fossil fuels fell by 68%. But the authors argue that the UK’s higher energy costs are not an unavoidable consequence of pursuing net zero. It argues that there is scope to reduce UK energy costs without compromising the country’s 2050 net-zero target through better planning, changing regulatory mechanisms and making best use of our exceptional energy resources.

GridBeyond’s head of demand response UK, Shawn Duckett said:

“For energy-intensive businesses, electricity is no longer a passive overhead. Wholesale prices can fluctuate significantly within short timeframes, and peak price events can materially increase operating costs. Production schedules are often built around static operating parameters, historic assumptions or manual decision-making, which means valuable opportunities to reduce costs, avoid price peaks or earn flexibility revenue can be missed.

“At GridBeyond we help businesses across the UK and Ireland to reduce exposure to high and volatile energy prices. Using advanced solver-based optimisation, digital twin technology, AI forecasting and automated control FlexPilot identifies when and how a site can shift, reduce or optimise energy use while respecting operational and asset-level constraints. The core proposition is to unlock maximum energy flexibility without impacting production, safety or stability.”