Last weekend, the UK parliament was recalled to pass the Steel Industry (Special Measures) Act 2025 in a single day. But there are very many myths and mis-understandings about what this means. Setting aside the irritating self-congratulation of MPs who think working on a Saturday is somehow heroic, in this post I will look at the reasons for the collapse of British Steel, what this Act does, and what we might expect to happen next.
The collapse of British Steel, again
British Steel Ltd was a wholly owned subsidiary of Chinese company Jingye Steel (UK) Holdings Ltd whose ultimate parent is Jingye Group Co Ltd. British Steel originated from the nationalised British Steel Corporation (BSC), formed in 1967, which was privatised as a public limited company, British Steel plc, in 1988. It was once a constituent of the FTSE 100 Index. The company merged with Koninklijke Hoogovens to form Corus Group in 1999, which was itself taken over in March 2007 by the Indian steel operator Tata Steel. In 2016, Tata Steel sold the loss-making part of its business that made “long products” like transport rails and steel sections for construction to private equity firm Greybull Capital for £1, which renamed the business British Steel. The business collapsed in 2019, and was taken over by the government’s insolvency service which sold it to Jingye the following year.
Shortly before publishing its 2023 accounts, Jingye announced plans to close its Scunthorpe blast furnaces and make between 2,000 and 2,700 workers redundant. Overall, the business employs around 3,500 people in the UK across three sites. The decision came after Jingye rejected an offer of £500 million – half of the amount it had sought – from the UK Government for the installation of two electric arc furnaces, which have an estimated cost of about £2 billion.
In the British Steel accounts for the year ending December 2023, prepared on a going concern basis, the preamble states:
“Trading conditions in 2023 were challenging, with falling commodity and steel prices impacting margins. Energy prices remained above historic levels, albeit softening from the highs of 2022.
Operational performance in 2023 was significantly impacted by poor stability of the Company’s blast furnaces, with extended outages resulting in low production and sales volumes. These periods of single blast furnace operation, combined with the inability to implement commensurate reductions in fixed costs drove a significant deterioration in trading EBITDA.
The Company decided to retire the aging Queen Victoria blast furnace in December 2023, having commenced preparations to restart the Queen Bess blast furnace earlier in the year. Queen Bess commenced production in January 2024, returning the business to a two blast furnace operation.”
The accounts go on to say that revenues in 2023 fell by £500 million to £1.2 billion, reflecting lower trading volumes. The Company booked impairments to non-current assets of £33 million in 2023 and £215 million in 2022. The total loss for the year excluding impairments was £192 million in 2023, up from a loss of £152 million in 2022. After tax losses were £227 million versus £367 million in 2022, but despite this, capital investments of over £100 million were made in de-carbonisation and re-structuring plans.
British Steel had access to an external asset-backed receivable lending facility of £50 million and an inter-company loan of £220 million which matured in March 2025. In addition to this, the company uses commodity repos, and had £136 million in short-term uncommitted lending facilities and £100 million investment in its share capital from its parent in 2023. In total, British Steel had £736 million of debt outstanding at the end of December 2023 — up from £630 million the previous year. Almost two thirds of its debt was payable within one year with the remainder due within two years. The company also had a £50 million carbon shortfall under the UK ETS.
The auditors issued a qualified opinion on the accounts, because they were unable to observe the counting of the physical inventories of £46 million included on the balance sheet for 31 December 2021 within the overall inventory total of £534 million. This meant the opening balance for the following year was not verified, and that this has an ongoing impact on the validity of the inventory figures.
The auditors also say that the Company will require further funding from its parent, and while there are commitments in place, they are non-binding and existing parent company loans could be recalled. This creates “a material uncertainty that may cast significant doubt over the Company’s ability to continue as a going concern.”
There is also an extensive fraud disclosure. While such disclosures are a usual part of an auditor’s statement, the length and detail of this one, added to the change of auditors in the past year and the late filings of the 2021 (filed January 2024) and 2022 (filed September 2024) accounts, suggest all was not well from more than just a financial performance perspective. According to The Times newspaper, the previous auditor, Moore Kingston Smith, resigned the British Steel audit after just a year because it was not “commercially possible” to conduct a satisfactory audit at the price Jingye was prepared to pay. The previous year, Mazars had resigned citing similar reasons. The current auditors, MHA, have been in place for two years, and the enhanced fraud disclosures began with Moore Kingston Smith and continued with MHA.
Row over Cumbrian coal
One of the reasons given for the collapse of British Steel relates to its access to coke, a key input in the steelmaking process. This is sensitive because the Government blocked a new coal mine in at Whitehaven in Cumbria for net zero reasons, meaning British Steel had to import coal from Japan. Japan’s coal industry has declined significantly and it does not appear to produce coking coal any more, so it’s likely that the shipment currently being unloaded originated in Australia.
Presumably this Japanese cargo is a stop-gap to supply the furnaces and stop them going out since Jingye had stopped procuring raw materials for the Scunthorpe blast furnaces, possibly in a bid to make the UK entirely reliant on China for virgin steel. Blast furnaces rely on a continuous feed of coke (made from metallurgical coal) to maintain the necessary temperature (over 1,500°C). Without coke, the furnace temperature rapidly drops, causing molten iron and slag inside begin to solidify. Once solid, these materials can clog the hearth and damage the refractory lining.
This is next to impossible to fix – restarting the furnaces would require excavation and removal of solidified materials, which is a huge task and at least partially rebuilding the furnace lining and internal equipment. Full recommissioning could take months, and could cost tens of millions of pounds. For ageing furnaces like those at Scunthorpe, it might not be economically justifiable to restarting after a cold shutdown, meaning any interruption to the coal supplies could trigger permanent closure.
There is some debate over the suitability of the Cumbrian coal for steel-making. This is high-sulphur coal which would normally need blending for use in making steel. High-sulphur coals typically have sulphur contents exceeding 1.0%, whereas low-sulphur coals used in coke production often have sulphur contents below 1.0% and usually below 0.6%. To achieve a blended coal mix with a sulphur content suitable for coke production (generally below 1.0%), the proportion of high-sulphur coal in the blend must be limited.
The Cumbrian mine produces coking coal of between 1.5% and 1.8% sulphur content. The Australian coal which is likely to be in the shipment from Japan is probably low sulphur coal (<0.6%) as this is the typical Australian export quality. On the face of it, it would appear that the Cumbrian coal is unsuitable for use at the Scunthorpe foundry, but it’s not so simple, because high-sulphur coal can be blended with lower sulphur coal and still have an acceptable specification. Typically up to 30% of the blend can have a high sulphur content. This means that some Cumbrian coal could have been used at Scunthorpe, reducing the import requirement.
Row over greening steel
Conventional so-called “virgin” steel is made by melting coking coal, limestone and iron ore in a blast furnace, and then running the resulting molten iron through an oxide furnace to produce steel. To turn iron ore (Fe₂O₃ or Fe₃O₄) into pure iron (Fe), you need a chemical reaction. Coke (carbon) acts as a reductant, in that it strips oxygen from the iron ore, producing molten iron and CO₂. The furnace therefore operates as a reduction reactor, not just a heater. Blast furnaces are also powered by the coke feedstock, which makes them incompatible with net zero targets.
Alternatively, electric arc furnaces can be used which generate heat using high-voltage electric arcs. Electric arc furnaces melt existing steel, typically scrap, using electricity, because they don’t have the same gas-solid reactions, slag chemistry, or residence time needed for reduction of ore. This means they can’t directly use iron ore or coke, needing a ferrous feedstock that’s already metallic.
This is considered an advantage since scrap steel is abundant and relatively cheap. Recycling scrap in EAFs is more energy-efficient and less carbon-intensive than mining and reducing iron ore. It is possible to feed direct reduced iron (“DRI”) or hot briquetted iron into an EAF to supplement scrap. These are processed forms of iron ore made without a blast furnace, but they still require significant upstream processing before being used in an EAF.
In theory an EAF could be modified to process iron ore by adding reductants and changing the operating conditions, but this is not done in practice for a number of reasons. Firstly, EAFs aren’t designed for reduction reactions – they are melting furnaces, not chemical reactors. Blast furnaces operate with a carefully controlled gas-solid reaction column over several metres of depth. Reduction of iron ore requires sustained contact with carbon monoxide (CO) or hydrogen, a countercurrent flow of gases, and stable temperature gradients over time. While technically carbon can be added as a reductant to an EAF to reduce iron oxides, this wouldn’t be efficient or controllable resulting in a poor version of a blast furnace or a smelting reduction reactor.
Secondly, it would be economically inefficient. Ore-to-steel reduction in a blast furnace is thermally integrated with heat from the coke reaction sustaining the process. EAFs would need to supply all energy via electricity which is more expensive than the coal used in UK blast furnaces. Iron ore is not conductive making it difficult to heat directly with electricity. Additional systems would be needed to supply and control reducing gases. At this point it would be simpler and cheaper to use a shaft furnace to make DRI, and then melt that DRI in the EAF.
Modified EAF reduction trials have been tried in lab-scale projects, but they create unstable process conditions, had poor yield and high impurity levels, and
In the specific case of Scunthorpe, fitting EAFs would likely mean a reduced product range, at least initially. It would not be able to produce all the same grades or volumes of steel without major additional investment and potentially a shift in business model. EAFs affect product capability as the feedstock is different resulting in different steel quality. Scunthorpe specialises in long products, including rails (Network Rail is a major buyer), sections and beams, and wire rod for reinforcement and industrial use. Many of these require strict consistency, high strength-to-weight ratios and specific surface and microstructure characteristics. Any facility based around EAFs would need to also include advanced secondary metallurgy, high-quality DRI or virgin scrap is used consistently and the rolling and finishing processes would need to be upgraded.
Without these upgrades (which are not normally proposed for net zero transition projects), the product range would likely reduce to commodity-grade sections and bars, rebar, and mid-grade rod and rail (if specifications allow). British Steel may need to import semi-finished billet or bloom for certain products that EAFs can’t make in-house. Customers such as Network Rail may need to relax tolerances or specifications (unlikely), or find alternative supply chains.
It is interesting to consider the implications…moving to EAF would potentially mean that 30% of the current production could not be made at Scunthorpe any more and would have to be imported, probably from China, India or Turkey. If Chinese imports were used, there would be more GHG emissions associated with the production and there would be additional emissions from shipping. Bulk items such as this are particularly carbon intensive to ship long distances.
ChatGPT estimates current emissions to be 6.0 million tonnes CO₂e/year. Under a future EAF + imports scenario, Scunthorpe would produce c70% of products (lower-spec, EAF-suitable) with 30% of high-spec products imported from China:
Switching Scunthorpe to EAF and importing hard-to-make products would halve total emissions but imports would account for over 2 MtCO₂e/year.
Row over losing “virgin” steel capability
Maintaining a virgin steel production capability is considered important for strategic independence – if the UK loses the capability to produce steel from raw materials, it becomes dependent on imports, including from potentially unstable or hostile regions such as China, India and Turkey. In a crisis or conflict, supply chains could be disrupted, and access to critical materials constrained. Quality could also be compromised.
Virgin steel is often needed for military hardware including tanks, ships, aircraft landing gear, missile casings. Submarine hulls and naval armour often require high-toughness, low-impurity steel, and aerospace forgings need consistent alloying. Defence customers tend to require steel with known provenance, controlled composition, and high integrity all of which domestically produced virgin steel can more reliably provide.
Virgin steel offers tighter tolerances on carbon and alloying elements. Some applications such as high-pressure pipelines and structural beams in critical infrastructure require low-residual steels, which are difficult to guarantee from scrap.
In the energy sector, high quality virgin steel is used in high-pressure pipelines. It is also used in nuclear applications where material traceability and purity are vital – the fraud at the Le Creusot forge took the French nuclear fleet offline while pressure vessels were tested for the presence of excess carbon which can result in steel embrittlement – obviously very undesirable in nuclear pressure vessels.
Reactor pressure vessels operate under extreme pressures and temperatures for decades (40–60+ years). They require low-impurity, high-purity ferritic steel with precisely controlled levels of carbon, phosphorus, sulphur and copper (which also causes embrittlement under neutron irradiation). Scrap steel often contains uncontrolled residual elements such as copper, nickel, tin which can compromise radiation tolerance and fracture resistance even when present in small amounts. Nuclear regulators require full traceability of materials, from the ore to the final forging, something scrap-based steels cannot provide.
If the blast furnaces at the British Steel plant in Scunthorpe close the UK would lose all domestic virgin steel production, becoming the only G7 nation without it. Other countries including the US, France and Germany are maintaining at least a baseline primary steel capacity for strategic purposes, despite having strong net zero commitments in the case of Germany in particular. Using imported steel from potentially hostile nations for building submarine hulls and tanks would be extremely foolish.
However, some of these arguments are spurious since British Steel does not produce military grade steel in the first place. But this does not mean it would be a good idea to lose its blast furnaces. The two most compelling reasons for this are firstly that it is difficult to retrofit EAFs into plant built for blast furnaces, and secondly because blast furnaces are simply useful and provide valuable diversification because they are self-sustaining and do not require a power source – the coal feedstock also powers the furnace meaning there is no reliance on gas or electricity supplies. This is a particular benefit as concerns grow around power grid resilience. Scunthorpe also would have to wait until 2032 to get the grid connection necessary for an EAF.
Ironically, the blast furnaces at Port Talbot were more suited to defence-grade adaptations since the site made flat steel used in automotive, construction and packaging industries and was closer to UK aerospace and energy supply chains. Tata also had greater technical capacity, including R&D. However, a combination of Scunthorpe being the last blast furnaces, and the actions of Jingye in not scheduling feedstock supplies which gives the appearance of trying to harm UK interests, prompted Government action in this case.
A further caveat to all of this, is the nationalisation in 2021 of Sheffield Forgemasters which uses EAF specifically to supply the Ministry of Defence with high quality military grade steel of the type usually produced in a blast furnace. Sheffield is a very specific case where the electric arc furnaces are paired with ladle furnaces and vacuum degassing systems which allow for precise adjustment of alloying elements and the removal of gases such as hydrogen and nitrogen which is essential for defence-grade materials. In addition, the feedstock is not random scrap as in most EAFs. The plant uses known-origin materials, sometimes blending DRI, low-residual scrap, or even virgin pig iron, which allows for the control of impurities such as copper, tin, and phosphorus, which are problematic in standard EAF steel. Finally, Sheffield specialises in forgings, not long or flat products, which go through extensive heat treatment, machining, and testing under defence standards.
While it is theoretically possible to adapt British Steel plant at Scunthorpe to a similar specification, this is unrealistic. The capex requirement for installing an electric arc furnace with full secondary metallurgy and high-integrity casting facilities would be of the order of £500 million to over £1 billion. It would also require significant process change – British Steel is currently a long products, bulk production operation. It does not specialise in ultra-clean, high-integrity forgings or flat products. Re-tooling to support nuclear-grade or submarine-grade steel would require retraining, recertification, and a change in quality philosophy and customer base.
The Scunthorpe site is optimised for volume rails, rods, beams, and construction steel and unlike Sheffield Forgemasters, it has no history of producing defence-critical forgings or operating under MoD contracts. Nationalising Sheffield Forgemasters made more sense as it was already part of the defence supply chain and had unique capabilities including very large forging presses and machining. Under Ministry of Defence ownership it is not expected to be profitable, but to deliver a critical capability.
In summary, much of the hysteria about retaining a virgin steel-making capability for military applications is over-blown. It is worth preserving this capability in general given the self-reliance of the process, but Port Talbot would have been a better candidate for intervention given its superior capabilities. In any case, converting Scunthorpe to EAF makes little sense. It would be more cost-effective to close the site and build an entirely new plant elsewhere using EAF, in a location that has lower electricity grid constraints.
Row over nationalisation and Chinese involvement
Many people, including Labour MPs, are celebrating the “fact” that British Steel has been nationalised. But this is not actually what the Steel Industry (Special Measures) Act 2025 does.
The Act has given the Government powers to direct the operations of the company in order to preserve the act of steelmaking. In fact the pre-amble of the Act explains this: “An Act to make provision about powers to secure the continued and safe use of assets of a steel undertaking.”
Should the owners refuse to comply with the Secretary of State’s directions, then the Government has the powers to take British Steel into pubic ownership:
“4. The powers exercisable by the Secretary of State by virtue of subsection (2) include(for example)—
- entering, using force if necessary, the premises where the specified assets are situated (and the Secretary of State may for that purpose be accompanied by any person);
- preventing the disposal of, or other dealings in respect of, the specified assets;
- taking whatever steps the Secretary of State considers appropriate for the purposes of securing the continued and safe use of the specified assets;
- requiring any person on the premises, or any other person who has dealings with the specified assets or with the steel undertaking, to give whatever assistance the Secretary of State may reasonably require for the purposes of taking those steps.
- The steps that may be taken under subsection (4)(c) include (for example)—
- entering into agreements, including contracts of employment;
- appointing officers of the steel undertaking;
- exercising any function of management;
- the making of loans or the giving of other financial assistance;
- the payment of salaries and other benefits to persons working for the steel undertaking.
- Expenses incurred by the Secretary of State in, or in connection with, the exercise of powers under this section are recoverable as a debt due to the Crown from—
- the steel undertaking, or
- a group undertaking in relation to the steel undertaking.”
The Act also says compensation may be paid to the owners of British Steel in respect of any actions taken by the Government under that Act.
MPs are also fighting over the Chinese ownership in the first place. The owners have been accused of deliberately scaling back the delivery of raw materials to cause a cold shutdown of the blast furnaces to further China’s strategic goals. While China controls a good portion of natural resources, either directly or through strategic alliances around the world, it has an even more dominant position in mineral processing with a 100% share of global refined supply for natural graphite and dysprosium, over 90% for manganese, 70% for cobalt, almost 60% for lithium and around 40% for copper.
UK Governments have had a hokey-cokey approach to relations with China. One minute they are all in, the next minute they are out. Then they are in again… A few years ago Chinese companies were banned from 5G telecom infrastructure, but Chinese firms still own stakes in other UK infrastructure, although in most cases these are minority stakes meaning they do not have control. However, these stakes provide them with access and potentially valuable information about how key assets are being operated.
Some have criticised the EU’s approach to “golden shares” where governments held a small stake, sometimes as low as a single share, which gave them extraordinary powers to prevent certain changes in control. In 2002 the European Court of Justice struck down golden share regimes in Portugal (Energias de Portugal) and France (Elf Aquitaine), while upholding a more tailored regime in Belgium. Golden share arrangements in the UK (British Airports Authority), Italy (ENEL) and Spain (Repsol, Endesa, Relefonica and others) were also struck down. The Court held that all state measures that prevent or deter cross-border investment within the EU may breach fundamental EC Treaty provisions on the free movement of capital and the freedom of establishment, with the only exceptions relating to protecting a legitimate public interest as long as they do not discriminate against investors from other EU member states.
Since Brexit, the UK has more flexibility over golden shares, and could have introduced one in relation to British Steel. However, selling what was at the time (2020) one of only two producers of virgin steel in the UK to a Chinese business was always a risky proposition.
Would UK steel making be competitive using EAFs?
A key driver of uncompetitiveness is the high industrial electricity price paid by UK steel makers. Despite exemptions from subsidy and capacity market costs under the Supercharger regime, carbon taxes still apply and amount to £200-300 million per year (it’s hard to estimate based on publicly available information). A move to electric arc furnaces would remove much of the requirement to pay carbon taxes since coal would no longer be consumed on site. Unfortunately the reduction would still leave the effective electricity price higher than in other countries, significantly so in some cases such as the US.
The real challenge for competitiveness is not so much electricity prices, but the use of subsidies in other countries. Steel makers elsewhere in Europe benefit from various subsidies but still struggle to be profitable – Germany announced plans to increase its subsidies late last year to address this lack of profitability. The real competitors for UK steel makers are in the US and Asia. The US benefits from much cheaper energy following the shale revolution which makes oil and gas in the US very cheap. Despite this, the US subsidises its steel industry. Other major competitors are in Japan, South Korea and China, all of whom also subsidise their steel industries, particularly in relation to low carbon steel.
So despite a move to greener production methods (and the fact that the import-related emissions would be excluded from any charging mechanism, at least for as long as no carbon border adjustment mechanism is in place), UK steel would still be uncompetitive, and British Steel would likely still be loss-making unless the government were to offer subsidies matching those available in other countries.
So what does all of this mean?
The UK steel industry has been unprofitable for years, primarily as a result of high energy costs and carbon taxes, and its overseas competitors receiving generous subsidies. Pressures to “green” steel-making are further undermining their business cases. The Scunthorpe plant contains the UK’s last blast furnaces. They are old and need replacing, but despite the technical and operational challenges with retrofitting electric arc furnaces, and the long lead time for a grid connection to power them, the Government appears to prefer the EAF option to new blast furnaces. (ChatGPT tells me it would take 18-24 months longer to retrofit EAFs at Scunthorpe than to install new blast furnaces, excluding the delay for the grid connection).
Steel making accounts for just 2.4% of UK greenhouse gas emissions, and a significant proportion of the emissions reductions achieved through switching to EAF would be offset by the increased emissions from having to import some of the Scunthorpe product portfolio which cannot be produced in a typical EAF. It would make more sense to replace the aging blast furnaces at Scunthorpe with new blast furnaces. This would give resilience and maintain a useful source of virgin steel, even if it is not military grade, and would avoid a reliance on imports for the higher-grade products currently made there.
Of course, coking coal needs to be sourced, and this should come from the closest mines possible – shipping coal from Australia makes no sense. The UK has plenty of coal deposits including the Midlothian field in Scotland and the Aberpergwm Colliery in Wales both of which produce coals suitable for coking (Aberpergwm produces high-grade anthracite with low sulphur and ash content which is suitable for certain metallurgical processes).
But the key challenges are to deal with the UK’s high industrial electricity prices. Even with exemptions from subsidy and capacity market costs, UK steel making is uncompetitive. Use of EAF would remove the requirement to pay carbon taxes which would help but unfortunately the residual electricity price would still be uncompetitive and British Steel would still be unprofitable. It’s likely that the only way to truly make the business viable would be through subsidies. The Government needs to decide how important it is to retain steel making in the UK, whether it values a virgin steel production capacity and whether supporting a structurally uncompetitive business with taxpayer money is worthwhile.
Until these questions have an answer, claims that British Steel has been “saved” are very premature.
“ In any case, converting Scunthorpe to EAF makes little sense. It would be more cost-effective to close the site and build an entirely new plant elsewhere using EAF, in a location that has lower electricity grid constraints.”
While the steelworks at Scunthorpe are on the 132kV system I’m not sure how there are grid demand constraints in the region when there is Keadby with 1.6GW of generation is less than six miles away with the grid substation there having no less than ten 400kV feeders.
Then the other Humber region power stations such as Saltend 1.2GW, Brigg 250MW,, South Humber Bank 1.4GW, , Killingholme 0.9GW, Immingham 1.2GW.
Keadby has twin teed feeders to Drax & Thorpe Marsh, four feeders south to West Burton 1.3GW, and feeders to Creyke Beck where the Hornsea offshore wind connections are made.
Whatever the reason, NESO gave a connection date of 2032…
Thanks Kathryn, excellent article pulling together the different angles. One point regarding the coke for blast furnaces is the need for coke ovens for this supply. I believe the last one closed in South Wales last year and the one in Scunthorpe the previous year. If we did use UK coal it would need to be processed abroad or we would have to reopen or build new coke ovens.
The point I was trying to make is with two exceptions Saltend & Immingham which are co located alongside specific demand for power and process heat, the other gas & wind generation is mainly being exported over constrained feeders south in the Trent valley. Scunthorpe and indeed the entire Humber region is slap bang in an area ripe for increased high electricity demand. In fact I’d struggle to find a better place than Scunthorpe in the UK for a new arc furnace or a rolling mill.
Maybe that’s behind the thinking as to the preferred site for the fusion testbed is not far south at West Burton. Back in the early 80’s, such was the possibility of the impact on frequency control, all the English Grid control centres, both National and ‘Area’ (when grid control was regional) all got a specific flashing light on the desks as a several minute (maybe 3?) pre-warning of the JET fusion pulse at Culham, and then a continuous light at the pulse).
Seven years hence for a presumably 400kV connection when the 132kV route, a mere 25 spans in total is already there on an existing corridor shared with other overhead infrastructure might be the reality in this very broken distracted world, but it’s not even remotely credible compared to what is possible if push comes to shove. (witness the cable overheating issues in Auckland 1998 and how rapidly the initial fix was).
I think you make a good point. However, Scunthorpe power consumption is not enormous currently. I looked back and in 2019 it used about 170GWh or about 20MW on average mainly I guess for raw materials conveyors and rolling mills. Obviously EAFs consume a lot more. With West Burton and Cottam coal shut there is a needs for power to be fed towards London at least until East Anglia Green comes in. But part of the story may simply be part of the CCC mafia seeking to close major industrial sites.
Kathryn Porter for Energy Secretary!!!! Fantastic, forensic analysis again. I would pay to watch you explain this stuff to the cabinet and oh to see their reactions!
The constraints on the grid capacity are huge and everywhere. In the water sector im working on a project that has been quoted 2037 to increase only a small amount in comparison to the quants you are referring to.
My instinct is to always take Govt away from our lives so I’m not sure Govt subsidies are the answer. After all, Govt policy got us here and let’s face it, it’s a complete mess but let’s start by getting rid of all the Govt production taxes and constraints on the industry. Oh wait! That would further increase the country’s debt.
Keep banging the drum of ‘realism driven by physics not feelings’
Hi Donald,
Are you please available for a discussion regarding this post and this thread, and an ongoing collaboration of sorts.
What would be yoirbbest email or phone number ?
Sincere thanks in advance for your time
Hi, thanks for the kind offer, but my technical ability on this subject is currently not up to the level required to be able to contribute anything worthwhile.
This is probably under the old connection regime where it was first come first served the revised process would allow NESO to better than it by several years if they were directed to prioritise it over other connections umm how about a few windfarms OFTOs for starters!
Thank you for a very clear analysis.
I’m not sure the Government is aware of all the issues you have raised, so I hope that you get a chance to present them.
Thanks Donald. I do find it frustrating that there’s so much info that is publicly available yet so few people bother to look for it. Journalists and politicians could all find this stuff yet they keep saying and writing things that are not well informed.
One wonders if the Civil Servants in the relevant departments know this (all) but don’t or won’t write it all down in one place. It’s their role, surely? Of course an innumerate or purely political (NZ) driven poltician might still misunderstand or ignore it all. We didn’t ‘get to here’ 100% by accident.
Hi Donald,
Are you please available for a discussion regarding this post and this thread, and an ongoing collaboration of sorts.
What would be yoirbbest email or phone number ?
Sincere thanks in advance for your time
Dear Kathryn,
I suggest that the only reason Britain was successful in the past was because of well practiced fundamental engineering principles, economics and implementation strategies were the business of well-rounded and experienced engineers and politicians who were both numerate and forward thinking.
How on earth can we expect the same level of industrial expertise by politicians like Miliband who cannot even fathom that electricity is in fact a secondary product from a primary energy source???? As such ‘electricity’ will always be subject to the loss of generation and distribution and therefore always not only dependent on primary energy resources but always more expensive than the direct transformation of those primaries!!!!! We don’t need to argue at all about solar and wind being ‘primary’ because their energy density is simply too pitiful and intermittent to even look at an electric arc furnace!!!
Honestly, Kathryn, without you and hopefully many more like you who simply apply real intelligence to our rather woeful situation and cut through the absurd platitudes and, indeed, lies of our abjectly ignorant political class I would say that Britain is finished. It may be but please carry on anyway. You give me some hope!!!
Thanks Chris
It’s a huge shame that Westminster and Whitehall are dominated by people with degrees in everything except hard sciences. This makes them ill suited to determining policy in areas dominated by physical as well as economic principles that cannot be ignored or wished away.
They also seem weirdly unable to inform themselves using easily available public information. Anyone could have written this blog – the question is, why haven’t they?
What I find very annoying, that that there is a far cheaper solution to reducing the CO2 in this country which would cost much less to implement that putting in arc units.
To go back a short while in history, the UK got rid of single use, single function plastic bags. Plastic is not nice to the environment and single use for a single function, made it a prime target to be got rid of. The point of this will be seen later.
Now we have a grid that is powered in part by renewables which is not reliable when they produce power. Making the availability of electricity during the 4pm to 7pm time as the highest priority but the rest of the day time is also important, we need a way to store wind and solar power for when its needed.
Today the national grid are buying and installing massive battery system which are used many times but are a single function. Ie that is all they do, is work for the grid. Lithium is not a nice product. Open cast mining etc etc. This storage is presently 3.5Gwh.
Luckily the UK has 3.5Gwh of battery storage (lithium) that is already paid for and doing something else at this time. The UK though is in a catch 22 situation and so this capacity is not used.
My electric car sits on my drive most of the day. I charge it up overnight on cheap rate and then it sets there. However my car also has something else which most other don’t have. I have an onboard inverter built into the car so that it can produce 240V. My car is the ioniq 5. The Kia EV6 also has this function as well as other cars that have been upgraded recently by Hyundai and Kia. BYD card also come with 240V main inverters on them.
However lets ignore those other cars and keep to the Ioniq 5 and EV6. These have been produced for around 3 years and now total around 50,000 cars on UK roads. Each of them has a battery of 70kwh or more (newer models now have 84). The the battery power of those cars already on UK roads with a mains inverter on board is 3.5Gwh. The nice thing is that the batteries are being used multiple times for transport. If we could use the batteries multiple times for another function as well, then we are ‘really cooking’
Now the catch 22. Although the Ioniq 5 is being used in the Netherlands as part of a trial where the cars give back electricity to the local grid, they have not released that function elsewhere. The UK being one place. Its not enough to make 240V, it has to be ‘in sync’ in frequency and phase to be able to be connected to the grid. But there is no point in Hyundai or Kia releasing that function as there is no market for it.
The market that is needed is an extension of the tests that the grid has been doing with owners of house batteries. We get paid when the grid gets short to pump power into the grid for say an hour. However my home battery even though larger than a fair number of people is 19kwH, far smaller than the car sitting idle on the drive.
In fact on the home battery issue, the national grid is not really pushing a solution here but messing around for the past 2 years trying to get the volume up and yet to get the costs down. The BIG event you reported on, caused the national grid to pay £5 per kwh to some power stations. However we were offered 37p if my memory is correct. Many owners could not be bothered.
On the other hand for normal day to day usage (say 4pm to 7pm) the recent price of 13p has to be enough otherwise its not cost effective. But that is because the ‘events’ have been so rare. If they were every day and people had automated their batteries then it would not be difficult for the home owner to earn one or two pounds EVERYDAY. For many that would take a sizable chuck out of their monthly bills. If we could add cars which can generate 3.5kw per hour from their inverter then another pound or two appears.
Its easy to see from the stats that the grid is generally greenest at night when the usage is lowest. If we charged up the batteries as we do already overnight and then lets some of that out during the day, then a big reduction in CO2 would be seen for the UK
What is needed is for the UK Gov, to ‘encourage’ all vehicles to have an onboard mains inverter with the synchronisation function. A single 1% year one rising to 5% after 5 years for vehicles that dont have this function. They also need to increase road tax by say £50 per year which is separately itemised as ‘Non-grid support’ This would mean that all the owner of cars which have a converter, would be beating up their supplier. Obviously this tax applies to ALL vehicles, petrol/diesel/hybrid and electric.
There will be pushback from the ‘can’t do people’ and from ignorant people on wearing out a battery. I have written enough here to ask you to watch this. https://www.youtube.com/watch?app=desktop&v=w5gq7scB0hE It is given one one of the formost peope in the world on batteries.
I’m very dubious that demand response will be the solution, although NESO, Ofgem and DESNZ all think it will. There are many issues…not enough people have or want EVs, Li-ion is a poor technology for the application, fire risk, lack of grid connections, public choices over charging and so on.
We used to get 2 GW I&C DSR under the Triad system and now we get 200 MW under DSR. We have way more than 200 MW worth of EVs so why is there so little DSR already? The answer is that it’s not cost effective vs other grid solutions.
The real answer is to build more gas fired power stations as a bridge to new nuclear and stop wasting money on renewables and batteries. The intermittency and low energy density of renewables creates so many problems. It’s a very inefficient use of capital as well as natural resources. We’re desperately trying to fit square pegs into round holes when nuclear is the only real reliable solution to decarbonising the power sector.
There are lots of reasons why V2G is destined to remain a niche market. You mention payments of £5/kWh to power stations: yet demand side response, including V2G aggregation was also offered £5,000/MWh. The difference between what the grid paid and what you were paid is swallowed in costs and profit for the aggregators. At the level of a few sources the contributions from V2G are relatively insensitive to the quality of the inverter connected to the grid. However, when we move from a gnat peeing in the ocean to an elephant peeing in a pond there is a need for much higher quality of inverter that contains much more sophisticated and hence costly electronics to provide a closer approximation to sine wave output and to suppress harmonics. This is an added cost that is best diluted with the greater scale of a grid battery.
Grid batteries make money by “stacking” revenues – being able to offer grid frequency stabilisation at the same time as being able to charge up when power is cheap or discharge when it is costly, or having a reserve to support the grid temporarily when there is a major interconnector or generator trip for instance. These ancillary tasks require a very different level of communication and control at sub-second timings that would be hard and costly to emulate with a highly distributed resource. At the same time V2G is a potential competitor to grid batteries for the easier to deliver services, potentially eating into revenues. Already we have the battery industry complaining about the prospect of subsidies to be given to the planned pumped hydro projects along the Big Glen, as these will be able to compete in many of the same markets as batteries – yet they need the extra subsidy to justify longer durations. Battery economics depend on being able to turn over the storage capacity frequently: the best grid batteries manage of the order of twice a day, giving them frequent profit opportunities so they don’t need as high a round trip margin between the cost of charging and the income from discharging plus the payment for providing ancillary services. V2G will never be able to compete on that scale.
There is actually a limited demand for higher frequency battery cycling, and some of it is seasonal – particularly charging during solar peaks for use in the evening, limiting the opportunity to earn an income. The economics of providing longer term storage soon become very stretched. If you have to keep your storage full waiting for a lull in the wind you may go many days or even weeks before there is a chance to discharge. Moreover, the capacity will likely be discharged long before the lull is over, and you will be waiting a long time to fill it cheaply. Any realistic assessment of the volume of V2G storage potential is that it simply would be inadequate for making any dent in the need for longer term storage as an alternative to dispatchable capacity for filling in renewables shortages. If 5 million vehicles devoted 20kWh each, that’s just 100GWh, or about 10% of demand on a cool winter day.
Then there is the real thorny issue of finding out how much battery life gets lost to V2G cycling. Having a car as a battery container and knocking a few years off its life is a very expensive way of doing things compared with just having a purpose built battery container with all the electronics, air conditioning and other facilities that grid batteries have. It will remain a niche market.
Why would any one want a system that produces something when not neede and incapable of supplyong when it is
Wind and solar are iefficient and unreliableand and incapable of supplyong reliable dispatchable baseload power be cause it relys on the weather which is also unpredictable, and relys a on gas, nuclear etc to cover their iefficiencies.
If we want a true steele industry then coal or nuclear are the answer and people like Milliband need to go back to school to finish their education,
The idea of Co2 being bad for the planet is as without it the planet would not be green and and face mass famine
After 60 year of false climate doomsday predictions why should the Net zero catastrophys think this id any different.
It is a strategic industry and as the last blast furnaces should be retained until replaced by green hydrogen as Sweden is pioneering. Virgin steel produces something like 1.5 tons of CO2 for each ton of steel. We should also look to the future. Canada has an industry capturing CO2 from CO2 rich environments such as cement production and passing it through an electrolytic process to produce carbon nanotubes that can be formed into carbon fibre which is 3 times the strength of steel and can be used in lighter and thinner concrete as rebar and mesh. It can also be used in many steel uses as RSJs, strengthening concrete connections, especially in earthquake risk areas, car bodies and wind turbines. It is probably more expensive, but without the carbon tax and a carbon sequistration subsidy that steel has, could be competative.
Thank you for this article Kathryn. I appreciate the additional detail you provide on the issues and also the historical background. I will follow the UK steel industry with a great interest and a better understanding from this point forward. And I will look forward to your posts on this topic and well as the other subjects on which you write.
Thanks Kathryn, excellent article pulling together the different angles. One point regarding the coke for blast furnaces is the need for coke ovens for this supply. I believe the last one closed in South Wales last year and the one in Scunthorpe the previous year. If we did use UK coal it would need to be processed abroad or we would have to reopen or build new coke ovens.
For your information Scunthorpe BOS plant has 3 ladle arcs, 2 RH vacuum degassers.
Thank you for an engaging and enlightening article. It highlights, to me, the urgent need for a truly holistic UK industrial strategy — one that looks ahead to a century where coal, oil, and gas will inevitably decline. The scale and complexity of such a strategy will be well beyond most politicians unless the country adopts a ‘war footing’ mindset: establishing a central operational command that draws on the best of our scientists, engineers, and systems thinkers to develop an integrated, scalable cyber-physical (phygital) infrastructure .
It is interesting there is so much discussion about the costs of saving British Steele and whether we should subsidise critical industries which are vital for our national security and our economy, Yet when it comes to the cost of illegal migrants which are costing the country a fortune and DOESNOT benefit our economy one jot but there appears to be no discussion by comparison.
For too long governments have been concentrating on Net Zero to the detriment of our economy which is leading to deindustrialisation due to high energy prices making them uncompetative. Until the Net Zero policies are reviewed our economic future is under threat and is making everyone poorer., whilst making China Rich and powerfull.
Kathryn, thank you for this analysis. Firstly, it is indeed a sad reflection on our political and media classes that your arguments have not been made elsewhere. I found your discussion of Sheffield Forgemasters particularly useful.
Secondly, a little bit of context. This clip below from Spectator TV (from about 6m 30s) has Lord Hannan suggesting that no single country provides more that 15% of our steel imports (with the largest suppliers being EU countries) and with China well down the list. However, I do not think Hannan broke down the imports by grade of steel so there is still some further clarity needed in respect of the quantities of imports of the highest quality steels.
https://www.youtube.com/watch?v=nixlHGdS_Wc
Regards, John C.
Thank you for this excellent article. This is the first time I have seen a public commentator say the unthinkable, that in some instances, retention of blast furnace technology may be the best way forward. It is strange that at the COP conferences, steel production has always been accepted as a sector that is “hard to abate”, but our politicians have ignored this and decided to press ahead regardless of the drawbacks of some of their solutions. These may not be as magical as they seem to think.
At the moment there appears to be a herd instinct that “something” must be done and politicians with little understanding of science or engineering (let alone metallurgy) think they are awfully clever if they mention EAF s – with no knowledge of costs or quality issues. A few will mention the possibility of using green hydrogen but while this would reduce carbon emissions, there are several important factors pointing against a race to early adoption:
-It is not yet fully commercialized.
-Current estimates are that its steel is at least 30% more expensive than the existing blast furnace + BOF process.
-Given repeated reports about set backs in the hydrogen economy, are we sure there will be adequate supplies of green hydrogen, if every European steel plant aims for green steel by 2030?
So the possibility of renewing the blast furnaces at British Steel should not be dismissed out of hand, but considered with an open mind. Would the site not be a prime candidate for a trial of carbon capture and storage? I accept that many are dubious of CCS but what are the latest developments?
Thank you for this excellent article. This is the first time I have seen a public commentator say the unthinkable, that in some instances, retention of blast furnace technology may be the best way forward. It is strange that at the COP conferences, steel production has always been accepted as a sector that is “hard to abate”, but our politicians have ignored this and decided to press ahead regardless of the drawbacks of some of their solutions. These may not be as magical as they seem to think.
At the moment there appears to be a herd instinct that “something” must be done and politicians with little understanding of science or engineering (let alone metallurgy) think they are awfully clever if they mention EAF s – with no knowledge of costs or quality issues. A few will mention the possibility of using green hydrogen but while this would reduce carbon emissions, there are several important factors pointing against a race to early adoption:
-It is not yet fully commercialized.
-Current estimates are that its steel is at least 30% more expensive than the existing blast furnace + BOF process.
-Given repeated reports about setbacks in the hydrogen economy, are we sure there will be adequate supplies of green hydrogen, if every European steel plant aims for green steel by 2030?
The possibility of renewing the blast furnaces at British Steel should not be dismissed out of hand but considered with an open mind. Would the site not be a prime candidate for a trial of carbon capture and storage? I accept that many are dubious of CCS but what are the latest developments?
A comprehensive and wide-ranging commentary on the Scunthorpe blast furnaces.
As the need for the Scunthorpe products is likely to be subject to ‘Unknown unknowns’, it would appear sensible to maintain the facility (other G7 nations coming to the same conclusion).
But why did the UK allow itself to get into such a precarious position that needed a Saturday re-calling of Parliament to deal with it?
In my opinion, it’s one more instance of the UK Government being less than competent to deal with matters involving complex technology.
Kathryn very informative blog greatly improved my knowledge of this area. I also didn’t realise what the Act does and just goes to show again how useless the MSM is but problem is majority still read it and believe it and this is our biggest challenge.
FACT: SCUNTHORPE WAS NOT BUILT ON STEEL IT WAS BUILT ON IRON ORE.
If Iron ore had not been discovered around Scunthorpe the steel works would not exist where it is.
The cost of energy today is but one other problem for the steelworks, when energy was relatively cheap in the 1960’s, it still lost money, it’s gone from being built on its local Iron Ore to IMPORTING EVERYTHING.
Scunthorpe Steelworks (now (Chinese) Hebei Jingye – British Steel has been under the Sword of Damocles since the 1960’s, it only survives through government handouts, it’s not a viable business model, why because it’s geographically now in the wrong place. (Scunthorpe) The steel works is only there because of one thing, that’s where iron ore deposits were discovered and mined in 19th century. It evolved in 19th century as IRON ORE MINES, then they started smelting, then came blast furnaces, finally developing into a steel works which produced mined iron ore to finished steel products. By 1960’s the iron ore had been classed as low grade compared with what was cheaper and higher quality ore from abroad. In the 1960’s the last iron ore mine was closed. From then on the following started to be imported:
IRON ORE
IRON ORE IN THE FORM OF SINTER
METALLURGICAL COAL/COKE
IRON PYRITES
CRUSHED LIME (Maybe obtained locally)
Virtually all of the above are shipped in to Immingham docks some 25 miles away, then unloaded, then loaded onto freight railway and taken to Scunthorpe Steelworks where it’s unloaded again.
UK Government under its green energy policy want (Chinese) Hebei Jingye (British Steel) to pay for conversion of steel smelting from blast furnace process to using (new technology) electric arc furnaces and use of Blue/Green Hydrogen and maybe carbon capture and storage schemes.
As an Ex-Scunthorpe steelworker perhaps if they could go back to mining the inferior iron ore instead of importing higher quality, and the Greenies could turn a blind eye to use of British metallurgical coal/coke, they might just be profitable, if not it’s back to Government handouts, just saying. And of course the world’s awash with steel, a result of more Steel being produced globally than is required
Used to work for BSC Redcar 40 odd years ago
If you said then Scunthorpe would be last plant … you would gave been laffed out of the room at best.
How old are those blast furnaces they still use loading cars to put the stuff in the top of furnace I.e. no conveyor belt !!
They gonna need a refurbishment or build new!
A joy to read. But we expect competent governance from politicians who’ve been drip-fed by ideologues and focus groups. 🙂
I spent some time in Electricity Supply (Norweb) where I did risk modelling for PFI. That was another age, anyway I came here from https://www.youtube.com/watch?v=hHIuPPtsAUg&ab_channel=SouthbankInvestmentResearch