UK Businesses Pay 81% More For Electricity Bills Than The French Thanks To Net Zero Policies
The Adam Smith Institute’s (ASI) Electricity Tracker reveals that UK industrial electricity prices are 81% higher than in France.
These high industrial electricity prices mean that, in the UK, a large car factory, like Nissan, might spend £35m a year on electricity. In France, they would pay £19m.
With sky-high prices, it’s no surprise that output in the UK’s most energy-intensive sectors - including steel, chemicals and paper - has collapsed by 33% since 2021.
The UK's high prices are primarily caused by a toxic cocktail of low nuclear capacity, outdated pricing and Net Zero subsidies.
To cut electricity prices, the ASI is calling for a radical overhaul of energy policy, including reforming nuclear regulations, abolishing wind subsidies and ending the ban on North Sea oil and fracking.
The Adam Smith Institute’s (ASI) Electricity Tracker reveals a staggering divergence in industrial energy costs between the UK and its nearest neighbour, where electricity prices are now 81% higher than in France. The price disparity creates a massive competitive disadvantage for UK manufacturing. For a major site like the Nissan factory in Sunderland, the electricity bill is estimated at £35 million per year. If that same factory were located across the Channel, it would pay just £19 million - a saving of £16 million annually that could otherwise be used for investment, wages, or R&D.
These figures confirm a broader trend, captured by the Office for National Statistics (ONS), which reveals that output in the UK’s most energy-intensive sectors - including steel, chemicals and paper - has collapsed by 33% since 2021. This de-industrialisation has pushed production in these foundational industries to its lowest level since records began in 1990. While our neighbors leverage stable, lower-cost power, British heavy industry is being systematically hollowed out by surging electricity costs.
These high household and industrial electricity prices are primarily caused by a toxic cocktail of low nuclear capacity, outdated national pricing, and the mounting hidden costs of Net Zero subsidies.
Since 1998, the UK’s nuclear output has collapsed by 60%. While France maintained a robust, standardized nuclear fleet, UK gold-plating and red tape have turned construction into a bureaucratic nightmare. At Hinkley Point C, the Office for Nuclear Regulation (ONR) mandated over 7,000 design changes, driving costs to record levels.
The UK’s ban on fracking and the move to block new North Sea licenses have forced the country to import up to 63% of its gas. Had the UK kept pace with Norway’s production levels since 2010, total output would be 210% of current levels, adding 0.5% to GDP and improving national security.
Additionally, the UK’s heavy reliance on intermittent wind power has not lowered bills. Instead, taxpayers are hit three times. First, by direct subsidies, second, by curtailment payments, where wind farms are paid to turn off during oversupply, which further inflates the final bill for consumers, and third, because it drives up the cost of still-necessary gas backup.
To restore energy sanity and lower bills for UK businesses and families, the ASI outlines several urgent recommendations:
Abolish wind subsidies, phasing out the Contracts for Difference (CfD) and Renewables Obligation (RO) schemes to reduce price volatility.
Immediately lift the ban on fracking and end the moratorium on North Sea drilling licenses.
Deregulate nuclear by replacing the 'As Low as Reasonably Practicable' (ALARP) principle with a "proven design" fast-track, allowing the UK to build reactors already successfully deployed in South Korea and France.
Shift to locational electricity pricing to incentivise power generation closer to where it is actually needed.
Scrap the Carbon Price Support tax to immediately reduce total bills by £1.3 billion.
Cheap and abundant energy is the lifeblood of a thriving economy. Unless we abandon the self-inflicted wounds of our current Net Zero framework and make it easier to build nuclear and extract gas, British households and businesses will continue to be out-competed and impoverished by our neighbours
Commenting on the findings, Mitchell Palmer, Economist at the Adam Smith Institute, said:
“Recent ASI research has shown how much of a drag high energy prices are on British growth. In particular, they undermine the survival of traditional British industries, such as advanced manufacturing and chemicals, and the growth of new sectors, such as AI data centres. Unfortunately, these new figures confirm that the situation is not getting better. Decades of mistaken energy policy consensus continue to wreak havoc on British industry.”
ENDS
Notes to editors:
Mitchell Palmer is an Economist at the Adam Smith Institute, based in London. He concurrently serves as a Senior Policy Advisor at the New Zealand Parliament.
He previously worked as a Ministerial Advisor (special advisor) to the Deputy Prime Minister of New Zealand, whom he advised on fiscal policy and microeconomics. He has also worked in economic consulting in New Zealand and at a think tank in Singapore.
Mitchell holds a first-class degree in History and Economics from the University of Oxford (New College). While at Oxford, he was made a Hayek Fellow of the Mont Pelerin Society. He also studied at Yale-NUS College in Singapore.
For any further details on the methodology, or to arrange an interview, please contact press@adamsmith.org / +44 7584778207
The full tracker is available here.
The Adam Smith Institute (ASI) has recently released its Growth Agenda, which, along with other policy areas, outlines how deregulating energy could boost UK GDP.
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