Net Zero-fuelled power prices are threat to UK industry
A surge in electricity prices, worsened by Britain's Net Zero drive, has thrown the future of UK industry into doubt and left the wider economy vulnerable, a new banking report has warned.Successive governments have run down North Sea oil and gas capabilities that could have eased the transition to green energy, it said. That has left consumers and businesses footing the bill.And it means UK industry faces electricity prices that are 50 per cent more expensive than in Germany and France and four times as expensive as in the US.'The UK is facing an energy dilemma,' according to the report, published by Santander as part of its recent global annual outlook.'Its industries pay far more for electricity than their international competitors, a disadvantage that erodes competitiveness and threatens to accelerate deindustrialisation.' The analysis suggests there have been flaws in the strategy to cut energy costs by shifting from oil and gas to solar and wind power. It notes the UK 'could use its natural gas resources to back up renewables', just as Germany is firing up old coal power stations when it faces energy shortages.'But successive governments have backed away from offshore oil and gas leasing and recently closed the last coal plant in its pursuit of decarbonising all sectors of the economy to reach the target of Net Zero by 2050.' Green dream: Successive governments have run down North Sea oil and gas capabilities that could have eased the transition to green energySolar and wind power are 'far less reliable than other sources of energy', the report says, noting the need for backup when the sun does not shine and the wind does not blow. And the increasing use of renewables is not bringing prices down. 'Renewables accounted for just over half of all electricity production in the UK last year; but while the technology has become cheaper, bills have not fallen,' Santander said. That is partly because of the high costs of 'land, labour and capital' needed to develop the technology.High energy costs pose a big problem for energy-intensive firms in sectors such as paper, petrochemicals, metals and glass.Official figures this year showed their combined output fell by a third between 2021 and 2024.The Government has set out a series of measures to cut energy costs for firms and households. But the bank says these 'are only shifting higher electricity costs on to other energy consumers or to taxpayers and are not a permanent cure to the problem'.'The UK is becoming ever-more reliant on the service sector to drive economic growth, leaving it with an ever-worsening trade imbalance and more vulnerable to global shocks,' the report says.'High industrial electricity costs threaten the future of the industrial sector in the UK and a failure to act could lead to job losses, decreased competitiveness and slower economic growth.'DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you
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Net Zero-fuelled power prices are threat to UK industry
