Energy UK Warns Industrial Strategy Fails to Cut Power Costs

Key Points

• Energy UK, the trade body representing Britain’s energy industry, has warned that the Government’s Modern Industrial Strategy is not going far enough to reduce electricity costs for businesses.
• A new report titled “Industrial Strategy: Where next?” calls for sharper focus on building an electrified economy backed by stronger domestic supply chains and clearer regulation.
• The British Industrial Competitiveness Scheme, expected to cut costs for around 10,000 businesses across eight sectors, has been branded a “sticking plaster solution”.
• High electricity prices remain one of the largest barriers preventing firms from switching from fossil fuels to electric alternatives.
• Ongoing conflict in the Middle East has added further pressure on energy costs for manufacturers and energy-intensive businesses.
• Energy UK is calling for faster reform of the grid connections process for both generation and demand.
• The trade body wants accelerated planning reforms and simplified environmental permitting to speed up approval times.
• Developing sectors such as hydrogen, low-carbon heat and carbon capture need consistent policy and clearer market pipelines, according to the report.
• The Government is being urged to deliver its Clean Energy Jobs Plan and close gaps in skills funding.
• Adam Berman, Director of Policy and Advocacy at Energy UK, says the strategy “must evolve and go much further”.

Westminster (Britain Today News) July 30, 2026 – Britain’s industrial strategy must go further to cut electricity costs, speed up grid connections and unlock the full economic benefits of electrification, Energy UK has warned in a new report examining the Government’s flagship economic policy.

The trade body, which represents companies across the UK’s energy sector, said the Modern Industrial Strategy identified many of the structural problems facing British businesses but argued that several measures introduced so far have gone only a limited way towards removing the barriers to investment, productivity and long-term growth.

What Does Energy UK’s New Report Say About the Industrial Strategy?

The report, titled Industrial Strategy: Where next?, calls for a sharper focus on creating an electrified economy supported by stronger domestic supply chains, clearer regulation and a more competitive energy system.

According to the report, the current strategy has made progress in identifying the challenges facing UK industry but has not gone far enough in delivering the systemic changes needed to make electrification genuinely competitive. The document sets out a series of recommendations designed to build on existing policy while addressing what Energy UK describes as gaps that continue to hold back business investment.

Why Are High Electricity Prices Such a Major Barrier for UK Businesses?

Energy UK said high electricity prices remain one of the biggest obstacles facing businesses considering a switch from fossil fuels to electric technologies. The trade body argues that until this cost gap is addressed, many firms will continue to have little financial incentive to move away from fossil fuel-based processes, regardless of the environmental or long-term economic benefits of doing so.

The association said more firms will struggle to electrify, decarbonise and remain internationally competitive unless the Government tackles the cost gap between electricity and fossil fuels. This point sits at the heart of the report’s central argument: that electrification cannot become mainstream across British industry while electricity remains significantly more expensive than alternative energy sources for many business users.

Is the British Industrial Competitiveness Scheme Enough to Solve the Problem?

The British Industrial Competitiveness Scheme is expected to reduce electricity costs for around 10,000 businesses across eight sectors by removing some policy costs from bills. This scheme represents one of the Government’s key interventions aimed at easing the cost burden on industrial energy users.

However, the report describes the measure as a “sticking plaster solution” because it does not address the underlying causes of high electricity prices and leaves most of the economy without support. This is a striking characterisation from the trade body, suggesting that while the scheme may offer short-term relief to a limited number of businesses, it fails to tackle the deeper structural issues driving up costs across the wider economy.

How Has the Middle East Conflict Affected UK Energy Costs?

Energy costs have also remained elevated because of the continuing conflict in the Middle East, adding further pressure to manufacturers and other energy-intensive businesses. This geopolitical dimension underlines how international events beyond the Government’s direct control continue to compound the domestic challenges facing UK industry, making the case for structural reform even more pressing according to the trade body.

What Changes Does Energy UK Want to the Grid Connections Process?

The trade body has called for faster reform of the grid connections process covering both generation and demand. Businesses seeking to expand factories, install electric equipment or build new infrastructure can face lengthy waits for sufficient network capacity, while renewable energy projects continue to compete for places in the connections queue.

This backlog has become one of the most frequently cited barriers to industrial growth and clean energy deployment in the UK, with many projects reportedly facing delays of several years before securing the necessary grid capacity to proceed.

Why Does Energy UK Say the Whole Economy Must Be Considered, Not Just Power Generation?

Energy UK said the system must consider the needs of the whole economy rather than focusing only on power generation. The trade body’s position is that grid planning and investment decisions have historically prioritised generation capacity, while insufficient attention has been paid to the demand side of the equation, including the needs of businesses looking to electrify their operations.

What Planning and Permitting Reforms Are Being Called For?

The report also urges ministers to accelerate planning reforms and simplify environmental permitting to reduce approval times for energy and industrial projects. Lengthy planning processes and complex permitting requirements have long been identified as contributing factors to delays in delivering both new energy infrastructure and industrial developments across the UK.

What Has Adam Berman Said About the Need for Reform?

Adam Berman, Director of Policy and Advocacy at Energy UK, said:

“Systemic economic problems with growth, productivity, and competitiveness require a systemic solution. The Industrial Strategy has provided some piecemeal solutions, but it must evolve and go much further.”

He added:

“That means narrowing focus and tackling the cost of electricity head-on. It means a recognition that as other countries accelerate toward an electrified economy, capturing the value chain of electrified technologies will put the UK at the forefront of the industries of the future.”

Mr Berman’s comments reflect the trade body’s broader concern that without decisive action on electricity costs, the UK risks falling behind international competitors who are moving more quickly to capture the economic opportunities presented by electrification.

What Support Do Emerging Sectors Like Hydrogen and Carbon Capture Need?

Developing sectors including hydrogen, low-carbon heat and carbon capture need consistent policy, clearer market pipelines and greater confidence that demand will emerge, the report added. Energy UK argues that without this certainty, investors and businesses operating in these emerging fields will continue to face difficulty committing to long-term projects, slowing the pace at which these technologies can scale up and become commercially viable.
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What Is Being Asked of the Government on Skills and Jobs?

The Government is also being pressed to deliver its Clean Energy Jobs Plan, close gaps in skills funding and make the training system easier for businesses to navigate. Energy UK’s report highlights workforce development as a critical, if sometimes overlooked, component of the broader industrial strategy, warning that skills shortages could otherwise become a bottleneck to delivering the UK’s electrification ambitions.

How Could Public Funding Be Used More Effectively?

Public funding should be used more strategically to unlock private investment in supply chains where support could have the greatest economic impact, the report states. Energy UK said a stronger industrial strategy could turn electrification into a source of economic growth rather than another cost for businesses.

This final recommendation encapsulates the trade body’s overarching message: that with the right structural reforms, targeted public investment and a clearer regulatory framework, electrification need not be viewed as a financial burden on British industry but rather as an opportunity to drive growth, productivity and competitiveness across the wider economy in the years ahead.