MPA welcomes electricity network compensation in UK

MPA welcomes electricity network compensation in UK
25 October 2023

UK producers of cement and lime have welcomed the government's plans to boost UK competitiveness through compensating for high network charges as part of the ‘British Industry Supercharger’.

The Mineral Products Association (MPA), which represents UK cement and lime manufacturers, says the network charges compensation announced by the Department for Business and Trade will ease electricity costs and narrow the disparity between the UK and EU industrial electricity prices. Combined with other elements of the Supercharger proposals, this goes some way towards supporting the industry’s ability to compete with overseas manufacturers, says the MPA.

The British Industry Supercharger comprises three measures, aimed at creating a more competitive and sustainable industrial sector:

  • increasing the existing energy-intensive industries renewable levy exemption scheme from 85 per cent to 100 per cent
  • introducing a 100 per cent exemption from the costs of the capacity market
  • compensating 60 per cent of the charges incurred by the industry’s use of the electricity grid via a network charging compensation scheme.

The total package is expected to save eligible businesses GBP24-31/MWh (US$29.23-37.76/MWh).

Dr Diana Casey, executive director for energy and climate change at the MPA, said: “After lengthy discussions exploring the challenges faced by cement and lime producers, and the knock-on impact for the UK economy as a whole, we are pleased that the Department for Business and Trade has acted quickly to achieve a major step forward for the industry.

“The cost of electricity is considered a contributing factor to increasing imports of cement into the UK, which have slowly crept up by about one percentage point per year until 2021 and 2022 when they shot up by four percentage points per year.

“Fair electricity prices will be absolutely critical for cement and lime producers to continue to decarbonise in line with our roadmaps, especially the transition to carbon capture, usage and storage, which will significantly increase power demand. If electricity prices are not competitive, they could be a barrier to producers delivering on our net zero commitments.

“Even with the new Supercharger measures, in the UK we still pay more than competitors in the EU for electricity and that disparity puts cement and lime producers at a disadvantage. Although today’s action is a real breakthrough, we look forward to continuing the dialogue with government to ensure cement and lime producers can remain competitive.”

Published under Cement News