UK Steel: £30/MWh Gap With France Is Widest in Three Years

By Daniel Okafor

British steelmakers now pay almost £30 per megawatt hour more for electricity than their French counterparts. That is the widest gap in three years, according to analysis by the lobby group UK Steel.

The cause sits upstream from the furnaces. The US-Israeli war on Iran drove a surge in global gas prices. Gas sets the marginal price of power in Britain more often than in France, so the shock landed harder on UK industrial bills. The result: British steel producers have slipped further behind European rivals on energy costs, and the disadvantage is now the largest since 2022.

What does the £30 premium mean in practice?

Electricity is not a side expense for steelmaking. It powers electric arc furnaces, drives rolling mills and runs continuous operations that cannot simply switch off when prices spike. A near-£30 per MWh premium compounds across every hour of production.

The comparison with France matters because French power leans heavily on nuclear generation, which insulates its industrial users from gas price swings. British prices move with gas. When the Iran conflict pushed global gas markets up, the UK price response outran the French one, and the premium widened to its three-year high.

UK Steel, the industry lobby group that produced the analysis, framed the finding as evidence of a structural problem rather than a temporary squeeze. The group has argued repeatedly that British industrial electricity prices leave domestic steel producers competing with one hand tied.

Why did the gap widen now?

The trigger was geopolitical, not domestic. The war between the United States, Israel and Iran sent global gas prices surging. Britain's electricity market prices power off the marginal generator, which is frequently a gas-fired plant. France's market does not respond the same way, because nuclear output dominates its supply mix.

The sequence runs in four steps:

• Conflict in the Middle East raised global gas prices.
• UK wholesale power prices, tied to gas, rose in step.
• French prices, buffered by nuclear, rose less.
• The British-French premium climbed to almost £30 per MWh, its highest level in three years.

Steel is a globally traded commodity with thin margins. Producers cannot pass higher power costs to customers when rivals in France, or elsewhere in the EU, make the same product on cheaper electricity. Every pound of premium goes straight to the cost line.

How does this compare with recent years?

Three years is the operative timescale. UK Steel's analysis found the current premium is the highest since the gap last peaked, which places the present disadvantage beyond anything British producers have faced through the recent stretch of energy volatility.

That record matters for timing. British steel has spent recent years contracting capacity and closing sites while governments debated industrial energy relief. A widening cost gap at this moment tests whether existing support measures are enough to keep remaining capacity competitive against French and broader EU producers.

What happens next?

The premium tracks gas, and gas tracks the war. If the conflict eases and gas prices fall, the gap should narrow from its three-year high. If it persists, UK Steel's figures give the industry a concrete number — almost £30 per MWh — to press government for stronger relief on industrial electricity costs.

Either way, the analysis confirms that Britain's steel producers entered this period in their weakest competitive position on energy since 2022, and the next move in the Middle East will price their power along with it.