Ministers are contemplating a move to lower the soaring industrial energy prices for British businesses to be on par with what companies in France and Germany pay, as part of the industrial strategy.

Sky News has learned that proposals to enhance energy price competitiveness are a focal point in the final discussions between the Department for Business and Trade and the Treasury before the industrial strategy's release on Monday.

Industrial electricity prices in the UK are the highest in the G7 and are 46% above the median for the 32 member states of the International Energy Agency, which represent 75% of global demand.

High Prices in Comparison

In 2023, UK businesses paid £258 per megawatt-hour for electricity, while France and Germany paid £178 and £177, respectively, according to IEA data. To match these prices, a reduction of around 27% is needed, costing several billion pounds.

Earlier this month, Nissan mentioned that UK energy prices make its Sunderland plant the most expensive globally.

Extending Relief

While some energy-intensive industries receive relief through the energy supercharger scheme, there is currently no support for manufacturers. Ministers are considering introducing a similar scheme to aid the 200,000 manufacturing businesses in the UK.

Cutting network costs entirely could lead to more than a 20% reduction in electricity prices.

Central Demand

Lowering prices, especially for electricity, has been the primary request of business and industry groups, with Make UK warning that high prices are making businesses uncompetitive and risking the deindustrialization of the UK.

Wholesale gas is the main driver of high electricity costs in the UK, setting the price in the market even when renewables supply the majority of energy.

Additional Charges

Wholesale prices make up around 39% of bills, with operating costs, network charges, and VAT contributing to the rest. Business groups have called for a reduction in these additional charges and policy costs to lower overall electricity prices.

The industrial strategy will address energy prices as a central issue, but no final policy decisions have been made yet.

The strategy will outline plans to support sectors with high-growth potential, including advanced manufacturing, life sciences, defense, and creative industries.