Powering Progress: How the UK’s Industrial Strategy Is Reshaping Energy Costs and Competitiveness

In June, the UK Government unveiled its long-anticipated Modern Industrial Strategy, outlining a bold 10-year plan to strengthen British industry, accelerate innovation, and address key challenges facing manufacturers. In this article, Luke Gott, Senior Consultant, Energy Tax at Ryan, dives into the details of the comprehensive package of support.

Energy Support at a Glance

From reducing industrial electricity costs and accelerating grid connections, to boosting research and development (R&D) investment and enhancing export competitiveness, energy-intensive UK businesses will benefit significantly from the proposed updates.

• More savings - Financial relief is increased for those already benefiting under the existing Energy Intensive Industries (EII) exemption scheme, as the Network Charging Compensation (NCC) scheme’s benefit is increasing from 60% to 90%, significantly reducing electricity network costs for eligible EII businesses.
• Greater certainty - Continued support under the EII compensation scheme has been announced, ensuring ongoing support for energy efficiency, decarbonisation, and innovation in high-energy-use sectors.
• New opportunities - A new British Industrial Competitiveness Scheme (2027–2030) will offer significant electricity reductions for eligible industries, alongside greater market stability and faster grid connections.

Energy Tax Relief

Energy tax relief continues to be a critical issue, as UK industrial electricity prices remain among the highest in the developed world—nearly double the European average for energy-intensive businesses in 2024. While gas prices are relatively aligned, the electricity cost gap continues to undermine the competitiveness of UK industry and its appeal to global investors. In response, the government is taking decisive steps to reduce energy costs and reinforce support for energy-intensive sectors.

Reduced Electricity Costs

The government will be launching the British Industrial Competitiveness Scheme in 2027, which will reduce electricity costs by approximately £35–40/MWh through 2030. Eligible businesses—particularly those in IS-8 sectors like automotive, aerospace, and foundational industries such as chemicals—will be exempt from paying the Renewables Obligation (RO), feed-in tariffs (FIT), and Capacity Market charges. This will reduce UK electricity prices, bringing them closer to those in other major European economies.

Enhanced Support for Energy-Intensive Industries (EII)

Starting in 2026, the NCC scheme benefit will increase from 60% to 90%, supporting around 500 businesses. The existing EII exemption scheme will continue, with a review planned by the end of 2025 to align with the rollout of the UK Carbon Border Adjustment Mechanism (CBAM) in 2027. This alignment will help ensure the scheme complements CBAM’s objective of levelling the carbon cost playing field between domestic producers and imports, supporting UK manufacturers’ competitiveness as they transition to net zero.

Grid Connection Reforms

Launching late 2025 will be a Connections Accelerator Service to fast-track grid access for high-impact projects. The government will also introduce new powers via the Planning and Infrastructure Bill to prioritise grid capacity for strategic investments. Ofgem’s upcoming review will propose stronger incentives for network companies to deliver timely, customer-focused connections. Additionally, pending regulatory approval, more than £60 billion in transmission infrastructure investment is planned for 2026–2031.

Long-Term Market Stability

Finally, the government will be supporting the growth of the Corporate Power Purchase Agreements (CPPA) market to help businesses secure stable, long-term electricity prices. They will also explore the UK's participation in the EU’s internal electricity market and link emissions trading systems to enable CBAM exemptions and improve export competitiveness.

Partner with Ryan

With this exciting announcement, expert guidance is more crucial than ever to help UK manufacturers in energy-intensive industries seize new opportunities and maximise energy tax relief savings.

Partner with Ryan’s experienced consultants to stay ahead of upcoming changes and continue unlocking substantial savings through current energy relief schemes.

Contact our specialist energy tax team today to discover which schemes you qualify for and learn how the latest Modern Industrial Strategy could impact your business.