Government must address high electricity prices to deliver low-carbon industry and spark growth

• New work from the Aldersgate Group explains how the UK government can deliver industrial decarbonisation in a way that maximises growth opportunities across the country.
• The report shows that success will depend on delivering support for dispersed industrial sites, addressing high electricity prices, improving resource efficiency, and implementing demand-side measures.
• It highlights that 2025 is a crucial year to address policy gaps and secure significant benefits for the UK economy. Inaction threatens competitiveness and undermines economic growth. 

Today, the Aldersgate Group publishes a new report setting out how the government should address policy gaps currently slowing the UK’s efforts to decarbonise industry and increase competitiveness. It sets out that we are approaching a unique opportunity to ensure a number of plans support industrial decarbonisation.

Decarbonising UK industry effectively is crucial to future growth, with the sector and its wider supply chain contributing £152 billion in Gross Added Value to the economy and supporting over 1.4 million jobs across the country [1]. By addressing challenges blocking progress, the government can ensure that the UK secures these growth opportunities.

The report calls for decisive action to address the UK’s high industrial electricity prices relative to international competitors. As it expands out renewable capacity, government should prioritise interventions on Power Purchase Agreements [2], the British Industry Supercharger [3], and reduced costs allocated to electricity. This should be supplemented by capex support and the development of a business model to drive industrial electrification [4].

In addition, a focus will be needed on dispersed industrial sites, which may face challenges in accessing both electricity and wider infrastructure. Coordination between local area energy and growth plans, and support on finance and skills, must be delivered to support these businesses as they decarbonise.

Demand-side measures that create a robust market for low-carbon industrial products [5] will also be crucial. By utilising public procurement, implementing rigorous mandatory product standards, and embedding sustainability in upcoming initiatives such as the Infrastructure Strategy and housebuilding targets, the UK can ensure this market grows [6]. This should be accompanied by clear efforts to increase resource and energy efficiency [7].

Rachel Solomon Williams, Executive Director at the Aldersgate Group, said: “Industrial decarbonisation offers significant economic opportunities for the UK, and the government must put the right policy environment in place to ensure these are delivered. Complex challenges such as high electricity prices, access to infrastructure and power, and circularity, must all be solved to develop a competitive low carbon industrial sector. Now is the time to ensure that these sectors are put in a position to thrive as part of a low carbon economy as the government sets out its industrial strategy and wider decarbonisation plans.”

Notes to editors
[1] Aldersgate Group, 2025, Next steps for UK industrial decarbonisation policy in 2025 – In this report UK industry covers multiple sub-sectors including iron and steel, chemicals, cement and lime, food and drink, glass, paper, other minerals (such as ceramics), non-ferrous metals, vehicles and other industry.

[2] Aldersgate Group, 2025, Next steps for UK industrial decarbonisation policy in 2025 – Power Purchase Agreements: The government could further support the clean PPA market by underwriting PPAs and providing support with guidance and standardised contracts. Without such action, the use of PPAs will continue to be limited to certain businesses.

[3] Aldersgate Group, 2025, Next steps for UK industrial decarbonisation policy in 2025 – British Industry Supercharger: the BIS reduces network charges and provides exemptions from electricity costs for businesses in some energy-intensive sectors. The government could further increase the maximum exemption from 60% to 90%, bringing UK network charges closer to those in key European countries.

[4] Aldersgate Group and UKERC, 2025, Electrifying industry and distribution networks: considerations for policymakers – Research by the UK Energy Research Centre (UKERC) found that, without significant investment, increased electricity demand across all sectors could be significantly constrained by distribution network capacity by 2030. 42% of large industrial sites could be constrained in 2030, increasing to 77% in 2050.

[5] CISL, 2023, The role of demand-led innovation in supporting decarbonisation in foundation industries: Challenges, opportunities and policy implications – Guaranteed downstream demand for low-carbon goods could support more rapid cost reductions through learning-by-doing and market competition effects. Modelling by Cambridge Econometrics found that demand-led innovation for cement would bring down prices faster and lead to higher output and employment with minimal trade-offs, despite prices being initially more expensive.

[6] UK Steel, 2024, UK Steel Sector calls on government to unlock multi-billion pound opportunity in procurement reforms – UK Steel estimates that offshore wind will need around 25 million tonnes of steel, equating to a potential £21 billion market for UK steel out to 2050.

[7] National Infrastructure Commission, 2025, Electricity distribution networks: creating capacity for the future – The National Infrastructure Commission highlighted that heavy industry could have a role in managing energy system flexibility and that overall demand flexibility could reduce the cost of distribution network investment by around 15%, cumulatively saving £6.7-7.9 billion by 2050.