Green steel plan hit by electricity shortage

British Steel’s ambitions to switch to producing “green steel” have been hit after National Grid told the struggling steelmaker that it will not have access to a new electricity connection until 2032.
The company, owned by Chinese conglomerate Jingye, wants to close the blast furnaces at its Victorian works in Scunthorpe this year and had hoped to switch to cleaner electric arc furnace (EAF) production by 2025.
However, industry sources say National Grid has made it clear that the electricity connection needed to make that plan a reality will not be available for another eight years. Demand for new connections has surged as the UK seeks to decarbonise the wider economy.
Without it, British Steel would need to import semi-finished steel for manufacturing in the UK, as a stop-gap measure to avoid making its entire 4,500-strong workforce redundant. The closure of the blast furnace is already set to lead to 2,000 job losses.
Frantic talks are understood to be taking place in order to thrash out a solution. National Grid has proposed making a connection available in 2029, according to sources familiar with negotiations. No agreement has been reached.
Earlier this year, a select committee of MPs found that the demand for new connections equates to more than double the amount of power generation required to meet net-zero targets.
“We recognise the significance of this project and are working closely with all of the key parties involved to explore options to find a connection date that meets British Steel’s requirements,” said a National Grid spokesman.
Even on an accelerated timetable, there are concerns that the interim measures may become permanent, and that two planned EAFs — one in Scunthorpe and another in British Steel’s mothballed Teesside plant — will never be built. EAF production reduces carbon emissions by 75 per cent compared to blast furnaces.
Failure to return steelmaking to Teesside would be a blow to the region’s Tory mayor Lord (Ben) Houchen, who has this weekend written to the main three steel unions — Community, GMB and Unite — seeking crunch talks over the “existential crisis” in Britain’s steel sector.
“I appreciate that we may not be politically aligned, but this is above politics,” he said, adding that the switch to electric arc furnaces is “the only way we can protect the industry in the long term and make it more financially sustainable”.
The Tory government was said to be willing to offer state aid to retain blast furnace production ahead of the switchover to EAF. However, sources said the Labour administration is not willing to fund the industry’s losses, having refused to do so at the Tata steelworks in Port Talbot.
British Steel, which also operates rolling mills in Teesside and Skinningrove, North Yorkshire, is currently losing an estimated £800,000 a day keeping the blast furnaces running in Scunthorpe.
Houchen advocates keeping blast furnaces running until the new electric-arc furnaces are commissioned — and blames the Treasury for its refusal to bankroll the losses.
“[Business secretary] Jonathan Reynolds, in my experience, is a sensible politician who understands the issues but has had his hands tied by the Treasury, who seem unwilling to properly back a common-sense transition that supports existing jobs and allows for a positive transition to new, sustainable jobs,” he said.
A government spokesperson said: “This government will simply not allow the end of steelmaking in the UK. That’s why we’ve committed to £2.5 billion of investment to rebuild the UK steel industry. We’re working across government, in partnership with trade unions and businesses, to secure a green steel transition that’s right for the workforce and safeguards the future of the steel industry.”
British Steel declined to comment.