Britain’s industrial strategy must go further to cut electricity costs, speed up grid connections and unlock the full economic benefits of electrification, Energy UK has warned.
The trade body said the Modern Industrial Strategy identified many of the structural problems facing British businesses but several measures have gone only a limited way towards removing the barriers to investment, productivity and long-term growth.
Its new report, Industrial Strategy: Where next?, calls for a sharper focus on creating an electrified economy supported by stronger domestic supply chains, clearer regulation and a more competitive energy system.
Energy UK said high electricity prices remain one of the biggest obstacles facing businesses considering a switch from fossil fuels to electric technologies.
The British Industrial Competitiveness Scheme is expected to reduce electricity costs for around 10,000 businesses across eight sectors by removing some policy costs from bills. However, the report describes the measure as a “sticking plaster solution” because it does not address the underlying causes of high electricity prices and leaves most of the economy without support.
Energy costs have also remained elevated because of the continuing conflict in the Middle East, adding further pressure to manufacturers and other energy-intensive businesses.
The association said more firms will struggle to electrify, decarbonise and remain internationally competitive unless the Government tackles the cost gap between electricity and fossil fuels.
It also called for faster reform of the grid connections process covering both generation and demand.
Businesses seeking to expand factories, install electric equipment or build new infrastructure can face lengthy waits for sufficient network capacity, while renewable energy projects continue to compete for places in the connections queue.
Energy UK said the system must consider the needs of the whole economy rather than focusing only on power generation. The report also urges ministers to accelerate planning reforms and simplify environmental permitting to reduce approval times for energy and industrial projects.
Adam Berman, Director of Policy and Advocacy at Energy UK, said: “Systemic economic problems with growth, productivity, and competitiveness require a systemic solution. The Industrial Strategy has provided some piecemeal solutions, but it must evolve and go much further.
“That means narrowing focus and tackling the cost of electricity head-on. It means a recognition that as other countries accelerate toward an electrified economy, capturing the value chain of electrified technologies will put the UK at the forefront of the industries of the future.”
Developing sectors including hydrogen, low-carbon heat and carbon capture need consistent policy, clearer market pipelines and greater confidence that demand will emerge, it added.
The Government is also being pressed to deliver its Clean Energy Jobs Plan, close gaps in skills funding and make the training system easier for businesses to navigate.
Public funding should be used more strategically to unlock private investment in supply chains where support could have the greatest economic impact. Energy UK said a stronger industrial strategy could turn electrification into a source of economic growth rather than another cost for businesses.
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