Powering Down Prosperity: Britain's Industrial Electricity Bill Is a Self-Inflicted Wound

There is a number that ought to feature in every Treasury paper, every growth speech and every question at Prime Minister's Questions, and yet it is rarely spoken aloud: the price of a megawatt-hour of electricity for a British factory. By the Government's own comparative analyses and independent assessments from bodies such as the IEA, UK industrial electricity prices have in recent years run at several times those paid by industrial users in the United States and China, and materially above those in France, where decades of nuclear investment still pay a dividend. For energy-intensive industries — chemicals, ceramics, steel, glass, paper — electricity is not a line item. It is the business.

Ministers of both parties have professed devotion to 'reindustrialising' Britain, levelling up left-behind towns and securing high-value manufacturing jobs. You cannot reindustrialise a country that has priced its factories out of the global market.

How Britain Arrived at the Top of the Table

The causes are not mysterious. Britain's industrial electricity price is built from layers of policy: carbon pricing that applies more aggressively than on the Continent, a renewables obligation and contracts-for-difference that socialise the cost of net zero investment through bills, network charges, and — until recent reforms — the notorious demand charges that penalised firms simply for being connected. Add the gas-price exposure that follows from intermittent generation needing fossil backup, and you have a price signal that tells any energy-intensive investor one thing: build elsewhere.

The consequences are visible in the industrial landscape. Aluminium smelting has all but vanished from these shores. Chemical plants and refineries have announced closures or curtailments. Steelmaking has been restructured around subsidies rather than competitiveness. Each closure is mourned in a press release; none is traced back to the cumulative pricing decisions that made it rational.

The Sovereignty Question

Here is the uncomfortable truth for a trading nation: energy is not merely a commodity but a strategic input, and a country that cannot produce affordable power cannot guarantee its own industrial base in a crisis. The war in Ukraine demonstrated this for gas; the coming decade will demonstrate it for electricity. Germany learned the hard way what dependence on Russian hydrocarbons cost. Britain risks a quieter dependency — not on an adversary's pipelines, but on the goodwill of foreign supply chains for the goods we no longer find it economic to make.

Conservatives should be unsentimental about this. It is not the state's job to prop up every legacy industry indefinitely. But there is a difference between letting uncompetitive firms fail and rigging the market against competitive ones. British manufacturers are, by and large, efficient. They are simply paying a tax their competitors do not pay — one levied not by Parliament but by the accumulated architecture of climate policy, network charging and market design.

The Standard Defence — and Its Weakness

The counter-case runs as follows: fossil fuels are volatile, the green transition is inevitable, and the costs are an investment in future cheap renewable power. Some of this is fair. Renewables have indeed become cheaper at the point of generation, and long-run system costs may fall.

But the argument elides the present for the future. The system costs of intermittency — storage, grid reinforcement, backup capacity — are real, rising and largely billed to users now, while the promised cheap-power future remains perpetually over the horizon. And 'the transition is inevitable' is an observation, not a policy: the question is at what pace and with what protections for the industries that employ our constituents. France generates cleaner electricity per head than Britain and sells it to its factories for less. The choice is not between green and growth; it is between competent and incompetent system design.

What a Serious Government Would Do

The remedy is not mysterious. Align carbon costs with the EU ETS or compensate them fully for trade-exposed industry, as other European governments already do. Reform network charging so that location and demand are rewarded rather than punished. Accelerate grid connections and dispatchable capacity — nuclear included — so that the price signal stops screaming 'leave'. And subject every element of the net zero cost stack to a transparent industrial-competitiveness test before it lands on bills.

A government that boasts about growth while defending the developed world's highest industrial electricity prices is asking voters to believe two contradictory things at once. Energy pricing is the economic sovereignty question of the decade — and Britain is currently answering it wrong.