The Starmer government has promised it would reduce industrial users’ electricity bills by up to 25% from 2027 as part of its energy strategy, due to be released this week.
How the cuts will be implemented has not been made clear for the time being, except a statement saying energy intensive industries will be made exempt from certain levies, such as the Renewables Obligation. The mechanism obliges electricity distributors to source part of their electricity from wind and solar installations, per government plans to reduce the country’s reliance on hydrocarbons.
The UK has the highest energy costs in the developed world because of successive governments’ efforts to shift the economy from hydrocarbons to wind, solar, and batteries that require heavy subsidization through a combination of incentives and higher taxes, including carbon taxes on gas generators.
Earlier this month, a British manufacturing industry association warned this was becoming an existential problem for British industry. “If we do not address the issue of high industrial energy costs in the UK as a priority, we risk the security of our country,” the chief executive of Make UK said, as quoted by Reuters, in early June. “We will fail to attract investment in the manufacturing sector and will rapidly enter a phase of renewed de-industrialisation,” Stephen Phipson added.
“Tackling energy costs and fixing skills has been the single biggest ask of us from businesses and the greatest challenge they have faced – this government has listened,” Starmer’s Business Secretary, Jonathan Reynolds, said in a statement, as quoted by Reuters.
Make UK welcomed the move, saying it was a “giant and much needed step forward”. Meanwhile, the Starmer government has also pledged billions for nuclear energy in recognition that the net-zero drive needs baseload power in addition to wind and solar, which are dependent on the weather.
Source: By Irina Slav from Oilprice.com