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Molten glass flows through chutes before being shaped into bottles at manufacturer Encirc’s plant in north-west England, where energy-intensive operations are under pressure from soaring power prices weighing heavily on British industry.
“We’re paying a lot more energy costs than our European competitors,” said Oliver Harry, head of corporate affairs at Encirc, which produces more than a third of the UK’s glass bottles.
The UK has some of the highest energy prices in Europe, largely due to its dependence on natural gas and the costs associated with the transition to renewable energy, which are passed on to consumers.
Government data show that the country recorded the highest industrial electricity prices in Europe in 2024.
Standing beside the searing heat of the factory’s two vast furnaces, Harry cautioned: “We’re already seeing an increase in imports into the UK as customers turn to cheap, more unsustainable glass producers”, particularly from China and Turkey.
More Action Needed
Across energy-intensive sectors—including steel, chemicals, glass and cement — businesses argue that existing government support falls short of what is required to maintain competitiveness.
The government has announced that from April it will increase discounts on electricity network charges to 90 per cent, a move expected to save around £420 million ($570 million) annually for the UK’s largest energy users.
“Lowering bills is central to every decision we make,” a government spokesperson told Agence France-Presse.
However, the steel industry, already weakened by the closure of traditional coal-fired blast furnaces, insists that further measures are necessary.
“The industry still faces industrial power prices almost 40 per cent higher than in France and Germany,” said Gareth Stace, director general of UK Steel.
The organisation has called for stronger safeguards, similar to those in France, Italy, Spain, and the UAE, to shield heavy industry from higher wholesale electricity costs.
Decarbonisation Challenges
Electricity remains costly in the UK partly because more than a quarter of its power generation still relies on gas, the price of which surged following Russia’s 2022 invasion of Ukraine.
Although wholesale prices have eased since then, they remain comparatively high.
Under the liberalised electricity market, the final power station brought online to meet demand determines the price paid to all generators — and in the UK, that facility is typically gas-fired.
“In France, nuclear sets the price fairly often and nuclear is cheaper … so it’s not always the same expensive gas that sets the price,” said Sam Fankhauser, professor of economics and climate change policy at University of Oxford.
In other countries, “there’s moments in the day where somebody cheaper sets the price and in the UK, those moments don’t exist” because a gas plant almost always sets the price, he added.
At Encirc’s Elton factory, where bottles move along conveyor belts to be filled and labelled, executives say energy costs are closely linked to the drive towards decarbonisation.
By the end of the decade, “we’re going to be producing glass bottles that are 80 per cent reduced carbon,” Harry said.
“The UK managed to decarbonise the grid phenomenally because of the exit of coal,” noted Gregor Singer, professor at the London School of Economics.
“It’s really unfortunate that this gas price shock came now, exactly at that point where you sort of exited coal but you don’t quite have enough renewables yet.”
“In the medium to long run… it’s almost guaranteed that prices are coming down,” he added.
