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UK industry braced for bleak winter as soaring energy costs threaten closures

October will be the crunch point as fixed pricing deals end, businesses warn

Businesses across the UK are braced for an unprecedented energy costs hit this winter. Many deals are due to be renegotiated next month, ahead of a crunch point in October when thousands of companies — large and small — have to switch to new contracts.

“There’s a huge cost shock coming to business — especially those that are rolling off fixed price contracts,” said Robert Buckley, head of relationship development at Cornwall Insight, an energy consultancy. “It’s frightening.”

Some fear the UK could be hit harder, with its response to the energy crisis stalled by paralysis in decision making until a new prime minister takes power next month.

Nishma Patel, policy director at the Chemicals Industry Association, a trade body, said the EU had released a framework to deal with severe gas shortages over winter that included allowing government intervention for spiralling prices. No such plan exists in the UK.

“In the EU, we’ve started to see their plans on the worst-case scenario. We don’t have that clarity yet,” she said. “The big concern is ‘will we have these things ready by winter?’”

For more than half a century the furnaces at Steve Keeton’s factory in Wigan have been used to melt and draw glass fibre used in wind turbines, electric car parts and construction. Now the prospect of surging power prices and supply disruptions may force it to shut permanently.

The threat of closure at Electric Glass Fibre UK is real despite strong demand for its products. The cost of keeping its furnaces running is set to rise by an unaffordable 300 per cent next April, as a result of soaring energy bills. There is also a risk that power will be rationed this winter if the stand-off with Russia deepens gas supply shortages across Europe.

Disconnection — even for just a few hours — would cause lasting damage and “cost tens of millions of pounds to repair”, said Keeton, managing director at the 57-year-old factory in north-west England which has been owned by Japan’s Nippon Electric Glass since 2016.

https://www.ft.com/content/0df8bde0-...2-2b4c25650cd3