Record energy prices in the UK have forced two fertiliser plants in the north of England to shut down, in one of the first signs that the energy crunch could deal a blow to the UK’s economic recovery.
The US fertiliser maker CF Industries will halt production at its plants in Billingham in Teesside and Ince in Cheshire because of rocketing gas prices, which have reached successive record highs in the UK in recent weeks.
The closure of the plants comes after UK Steel, the industry’s trade body, said steelmakers were already forced to pause work during peak electricity demand hours due to market prices for power.
The UK faces a winter energy crunch owing to a global boom in gas demand and trouble importing gas from Norway and Russia. There are also rising fears over the country’s electricity supplies after a string of unplanned power plant outages.
The UK’s electricity woes were compounded this week by news that one of its biggest power cables responsible for importing electricity from France would be forced to shut until late March after a fire at a converter station in Kent.
The shutdown means the UK will rely more heavily on electricity generated domestically by gas-fired power plants, which could increase the pressure on gas supplies, and coal plants that have raked in record payments to help keep the lights on.
CF Industries said the company did not have an estimate for when production would resume at its UK facilities, and experts fear that other heavy energy users will also face shutdowns or rocketing business costs this winter.
Soaring energy prices are expected to drive an extra 500,000 homes into fuel poverty this winter as energy bills climb, and cause a string of small suppliers to go bust. But the impact on businesses and factories could have wider economic consequences.
UK Steel said at current electricity prices it was already impossible for steel producers to be profitable at certain times of day or night, and urged the government and the regulator to intervene.
“The government and Ofgem must be prepared to take action as this situation continues,” said Gareth Stace, the group’s director general. “Electricity prices increase in the winter months, therefore the situation gets more urgent each and every day.”