High industrial electricity prices are slowing down efforts to electrify and decarbonise parts of industry, according to a report.
The research by University College London (UCL) and published by the Aldersgate Group said the UK has “significantly higher industrial electricity prices than European competitors”.
It said seizing the opportunity offered by the rapidly declining policy costs of renewables must now be a priority.
Key recommendations include enabling an acceleration in investment in the cheapest forms of mature renewable energy such as onshore wind, accompanied by a predictable, rising carbon price to reduce investor risk. The report also urges an integrated approach to network development, funding, and pricing.
Michael Grubb, Professor of Energy and Climate Change at UCL Institute for Sustainable Resources, said: “The UK electricity system has already undergone part of its low carbon transition. Thanks in large part to carbon pricing, coal is no longer significant – and that in itself reduces the impact of carbon costs on UK electricity prices.
“But industry is still carrying the legacy cost of building up renewables, which are part of the larger energy transition. Those costs could be spread more evenly, and in particular, reforms are needed to ensure that industry can benefit both from access to the now-cheap renewables, and from smoother participation in the capacity market.”