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Electricity bills to be slashed for over 7,000 UK businesses by green levy cuts
25/6/2025
News
Under the UK government’s new Industrial Strategy, electricity costs for over 7,000 businesses will be cut up to 25% through removal of renewables levies by 2027. The move is welcomed as British manufacturers currently pay some of the highest electricity prices in the world – two or three times more than competitors in the US and China; and also higher than most European businesses.
The Industrial Strategy sets out a 10-year plan to boost investment, create skilled jobs and tackles two key challenges facing UK industry – high electricity prices and long waits for grid connections.
From 2027, the new British Industrial Competitiveness Scheme aims to cut electricity costs by up to £40/MWh for over 7,000 electricity-intensive businesses in key manufacturing sectors like automotive, aerospace and chemicals.
After sustained lobbying of government, these power-hungry firms, which support over 300,000 skilled jobs, will be made almost entirely exempt from paying levies such as the Renewables Obligation, Feed-in Tariffs and the Capacity market – ‘helping level the playing field and make them more internationally competitive,’ according to the government press release.
The government aims to increase support for the most energy intensive firms – like steel, chemicals, ceramics and glass – by covering more of the electricity network charges they normally have to pay through the British Industry Supercharger. Currently these businesses get a 60% discount on those charges, but from 2026, that will increase to 90%.
A new Connections Accelerator Service has also been announced to streamline grid access for major investment projects. The energy sector, local authorities, Welsh and Scottish Governments, trade unions and industry will collaborate to design the service, which is expected to start operating at the end of 2025. Facilitating these new powers under the Planning and infrastructure Bill, which is currently before parliament, could also allow the government to reserve grid capacity for strategically important projects.
Secretary of State for Energy and Net Zero Ed Miliband welcomed the forthcoming reduction of industry energy costs, and said: ‘For too long high electricity costs have held back British businesses, as a result of our reliance on gas sold on volatile international markets. As part of our modern industrial strategy we’re unlocking the potential of British industry by slashing industrial electricity prices in key sectors.’
Business Secretary Jonathan Reynolds told BBC Wales that the government’s new industrial strategy would give significant support with energy prices when Tata’s new electric furnace in Port Talbot is expected to become operational in early 2028.
The Supercharger and British Industrial Competitiveness Scheme will be funded through reforms to the energy system. The government claims this will reduce costs and free up funding ‘without raising household bills or taxes’. It intends to use additional funds from ‘the strengthening of UK carbon pricing’, as a result of linking with the EU carbon market and the emissions trading systems, as part of a new agreement with the European Union.
