The EIUG welcomes the confirmation that Government will be increasing the compensation rate of the network charging compensation scheme from 60% to 90% in April 2026. Energy intensive industries in the UK are under severe competitive pressure due to high industrial electricity prices. The uplift is expected to reduce industrial electricity prices via the grid by £7/MWh and reduce the electricity price disparities with other countries.
It does not mean that UK industrial electricity prices are now similar to other countries though, as prices remain higher in the UK. As UK Steel set out in its report Closing the Power Gap: “The principal driver of the price gap is Great Britain’s higher wholesale electricity prices”, after the uplift and existing compensation and exemptions are taken into account.
Moreover, not all businesses in eligible sectors can access this scheme and other energy cost relief schemes and the EIUG calls on Government to reduce or scrap the business-level test. The Government could also have started the increase earlier as the commitment was announced in the Industrial Strategy.
Nevertheless, the uplift provides additional price relief, further reducing the competitive gap with comparable neighbouring countries and delivers on one of Government’s commitments in the Industrial Strategy.
Arjan Geveke, Director of the EIUG said; “High industrial electricity prices are putting vital British energy intensive industries at a competitive disadvantage, but the uplift of the compensation rate of the network charging compensation scheme provides welcome additional price relief”.
The Network Charging Compensation Scheme is part of a package of government measures to help Britain’s Energy Intensive Industries (EIIs) remain competitive in the global market. This scheme offers EIIs compensation on network charging costs for using the GB electricity grid, including Transmission Network Use of System, Distribution Use of System and Balancing Services Use of System charges