Make UK is calling for a targeted electricity discount for manufacturers switching industrial heat from gas or oil, arguing that the operating-cost gap between the fuels is blocking electrification even where the underlying technology is commercially available.
The proposal comes from Electrify Industry, part of Make UK, and centres on a Targeted Electrification Discount for companies installing electric boilers, heat pumps, and other electric heat technologies. The organisation wants the mechanism to last for at least ten years, accompanied by reform of electricity pricing and a longer-term industrial electrification strategy.
Its modelling shows substantial differences between current and discounted operating costs. At an energy-intensive paper site, the monthly cost of an electric boiler falls from £690,000 to £300,000, while the modelled heat-pump cost falls from £580,000 to £325,000.
A large chemicals site produces larger percentage reductions, with an electric boiler falling from £1 million to £256,000 a month and a heat pump from £715,000 to £287,000. For a modelled medium-sized brewery, an electric boiler falls from £766,000 to £153,000, an 80% reduction, while the heat-pump case falls from £612,000 to £153,000.
The figures are modelled scenarios rather than reported bills from named factories, but they define the scale of the operating-cost barrier the proposal is designed to address. Electrify Industry estimates that 80% of UK manufacturers, around 104,000 businesses, could electrify at least part of their operations.
The problem is concentrated in process heat. Manufacturers use gas and oil for boilers, ovens, drying, heating, and other thermal duties that can increasingly be performed by electric equipment, but an efficient electrical process can still cost more to operate if the electricity supplying it carries a sufficiently large price premium over gas.
Electrify Industry describes that differential as the spark gap. Its report argues that the UK gap against competing fuels remains large enough to undermine investment decisions, particularly when manufacturers are also being asked to fund connection upgrades and new production equipment.
Capital expenditure is only one part of the calculation. A manufacturer replacing a gas boiler with an electric system must consider equipment cost, installation, production downtime, grid capacity, connection charges, and the energy bill over the life of the asset. A project with an attractive technical efficiency can therefore fail its investment case because the annual operating cost remains too high.
The proposed discount attempts to intervene directly at that point. Instead of reducing electricity bills irrespective of how power is used, the mechanism would lower the relative cost for manufacturers actively switching heat production from natural gas or oil to electricity.
Make UK’s proposal is paired with broader electricity-market reform because a temporary discount would not resolve the underlying price structure. Electrify Industry wants policy and network costs reconsidered, greater certainty over long-term electricity pricing, and an industrial strategy capable of supporting investments with payback periods measured over many years.
Grid infrastructure is the other obvious constraint. Industrial electrification can add several megawatts of demand to a site that was designed around gas-fired heat, requiring new substations, switchgear, cabling, protection equipment, or upstream network reinforcement before the replacement process equipment can operate.
The report consequently calls for faster connections and greater transparency around upgrade costs. A discount on each megawatt-hour does little for a manufacturer that cannot obtain the electrical capacity required to run the new plant or faces a connection programme longer than the equipment investment cycle.
Skills and equipment supply also sit inside the proposal. Electrification projects require power-system engineering, process integration, thermal design, controls, and commissioning, while a large-scale move towards electric heat would increase demand for equipment such as industrial heat pumps, boilers, transformers, and associated electrical infrastructure.
Those requirements mean policy designed around energy price alone would leave several industrial bottlenecks untouched. A factory can justify a new electric process financially and still struggle to secure the network capacity, engineering resources, or installation window required to put it into production.
Electrify Industry is therefore asking government to treat fuel switching as a specific industrial investment problem. Its recommended package combines the ten-year discount with electricity-pricing reform, a long-term electrification strategy, faster grid connections, coordinated supply chain policy, and skills development.
The proposed scheme has not been adopted, and the modelling does not establish that every factory would achieve the upper-end savings cited in the report. Site load, process temperature, equipment choice, electricity tariff, operating hours, and existing infrastructure will alter the economics considerably.
What the calculations do show is how strongly the electricity-to-gas differential can dominate a project that is technically capable of being electrified. Until that gap narrows, the industrial transition will continue to depend as much on the cost of running the equipment as on whether engineers can build it.
