Steel production is one of the most energy-intensive manufacturing activities in the UK. Producing steel requires large amounts of heat and electricity for processes including melting, iron reduction, casting, reheating and rolling.
However, there is no single figure for how much energy a steel plant uses. Energy consumption depends heavily on the steelmaking process, production volume, equipment efficiency, operating hours and whether steel is produced from iron ore or recycled scrap.
The production route makes a particularly significant difference. Traditional blast furnace steelmaking relies heavily on coal and coke, while an Electric Arc Furnace (EAF) uses electricity to melt scrap steel. As the UK steel industry moves towards greater electrification, electricity procurement is likely to become increasingly important.
In this guide, Business Utility Hub explains energy consumption in steel production, where that energy is used and what manufacturers can do to manage both consumption and energy costs.
How much energy does steel production use?
UK steelmaking has become more energy efficient over the longer term. Evidence submitted to the House of Commons indicates that the energy used to produce each tonne of steel in the UK fell by approximately 40% between 1972 and 2001.
However, energy intensity - the amount of energy required to produce each tonne of steel - can vary between plants. Production methods, equipment, plant design and output can all affect the amount of energy a facility uses.
For example, Tata Steel reported energy intensity of 24.2 GJ per tonne of crude steel at its Port Talbot primary-steelmaking operation in 2018. This was a site-specific figure, rather than an average for every UK steel producer, so energy intensity may differ at other UK plants.
UK electricity consumption for iron and steel production also fell from approximately 6.35 TWh in 2000 to 2.16 TWh in 2023. However, these figures show total electricity consumption, not electricity used per tonne of steel. The reduction may therefore reflect a combination of improved efficiency, lower production volumes and changes in the size and structure of the UK steel industry.
Energy consumption should therefore be considered alongside:
- Tonnes of steel produced.
- Production method.
- Electricity consumption.
- Natural gas and other fuel use.
- Raw material requirements.
- Equipment efficiency.
- Operating patterns.
For manufacturers, measuring energy use per tonne of steel can provide a more useful performance benchmark than comparing total consumption between differently sized steel plants.
Why does steel production require so much energy?
Producing steel involves transforming raw materials at extremely high temperatures.
In traditional ore-based steel production, iron ore must first be reduced to remove oxygen and produce iron. Coal is processed into coke, which is then used within the blast furnace as both an energy source and reducing agent.
Additional energy is then needed across the steelmaking process for:
- Coke ovens.
- Blast furnaces.
- Basic oxygen furnaces.
- Reheating furnaces.
- Casting.
- Rolling.
- Pumps and motors.
- Compressed air.
- Extraction and ventilation.
- Material transportation and handling.
More than 70% of the energy consumed by blast furnace routes is thermal energy. This explains why coal, coke and natural gas remain important energy resources for conventional steel production.
How does the production method affect energy consumption?
The route used to produce steel has a major influence on both the type and amount of energy required.
Blast furnace steel production
The blast furnace route starts with iron ore rather than primarily recycled steel.
Iron ore, coke and other raw materials enter the blast furnace, where intense heat and chemical reactions produce pig iron. Coke provides heat while also acting as a reducing agent to remove oxygen from the iron ore.
The iron is then processed into crude steel through the basic oxygen furnace.
This process relies heavily on:
- Coal.
- Coke.
- Natural gas.
- Process heat.
- Electricity for supporting equipment.
Because of its reliance on carbon-intensive fuels, the BF-BOF route is also responsible for significant emissions. It can generate around 2.3 tonnes of CO2 for each tonne of steel produced.
Electric Arc Furnace steel production
An Electric Arc Furnace operates differently and produces significantly less carbon than traditional blast furnaces.
Instead of reducing iron ore inside a blast furnace, EAF production typically melts scrap steel using high-powered electrical arcs. Electric Arc Furnaces may use around 0.5 MWh of electricity per tonne of steel.
Scrap-based steel production is therefore much more dependent on electricity but considerably less reliant on coal and coke.
This matters for the UK steel industry. Greater use of Electric Arc Furnace technology could substantially increase the sector's total electricity consumption even as overall carbon emissions fall.
For steel manufacturers making this transition, electricity prices, network costs and procurement strategy will become increasingly important operating considerations.
Grinding and milling
Cement grinding is one of the biggest electricity consumers in cement plants. Mills are used to grind clinker and other materials into the final cement product.
Motors, fans and conveyors
Fans, motors and conveyors support movement, ventilation and process control throughout the plant. Poor maintenance, inefficient motors or unsuitable controls can increase consumption.
Compressed air and plant services
Compressed air systems can create hidden waste. Leaks, excessive pressure and inefficient controls can increase electrical demand without improving production.
What uses the most energy in a steel plant?
Energy consumption is spread across several parts of steel production.
Furnaces and high-temperature processes
Furnaces are among the largest energy consumers. Blast furnaces require substantial quantities of thermal energy to reduce iron ore. Reheating furnaces bring steel back up to temperature before rolling and shaping. Electric Arc Furnaces shift more of this demand towards electricity.
Rolling and finishing
Once crude steel has been produced, further energy is required to turn it into usable steel products.
Rolling mills use large electric motors to shape steel, while reheating, cutting and finishing processes can add further electricity and natural gas demand.
Motors, pumps and compressed air
Not all energy is consumed directly by the steelmaking process.
Large steel plants also operate motors, pumps, conveyors, compressed air systems, extraction equipment and cooling systems. Across a large site, these supporting systems can represent a significant portion of total energy consumption.
What affects energy consumption in steel production?
Two steel plants producing similar quantities of steel can still have different energy profiles.
Factors include:
- Steelmaking route.
- Production volume.
- Type of steel products.
- Plant age.
- Equipment efficiency.
- Operating hours.
- Percentage of scrap used.
- Furnace performance.
- Production interruptions.
- Maintenance standards.
- Waste heat recovery.
- Automation and production planning.
Material efficiency also matters. Reducing unnecessary raw material loss and improving manufacturing processes can lower the energy required per tonne of finished steel.
How can steel manufacturers reduce energy consumption?
Modern steelmaking has already become considerably more efficient, but further improvements can reduce energy consumption and operating costs.
Manufacturers can consider:
- Carrying out regular energy audits.
- Monitoring energy use per tonne of steel.
- Maintaining furnaces and production equipment.
- Improving motor efficiency.
- Reviewing compressed air systems.
- Reducing avoidable heat loss.
- Improving production scheduling.
- Monitoring baseload demand.
- Using half-hourly electricity data.
- Improving material efficiency.
- Recovering waste heat.
It is important to measure energy performance against output. Lower total consumption is not necessarily an efficiency improvement if it simply reflects lower steel production.
Waste heat recovery in steel production
Steelmaking produces substantial quantities of excess heat.
Waste heat can come from furnaces, hot steel products, cooling processes and exhaust gases. Where technically feasible, some of this heat can be recovered and reused.
Potential applications include:
- Pre-heating combustion air.
- Pre-heating raw materials.
- Generating steam.
- Supporting site heating.
- Power generation.
Waste heat recovery can improve energy efficiency by reducing the amount of additional fuel or electricity required elsewhere in the production process.
How could electrification change UK steel energy consumption?
The latest UK Steel Strategy emphasises the transition towards Electric Arc Furnace technology as the future of UK steel production .
Traditional blast furnace steelmaking depends heavily on coal and coke. EAF production replaces much of this with direct electrification.
This can reduce direct carbon emissions, particularly where renewable electricity forms a greater share of the energy supply. However, it also increases the importance of reliable and competitively priced electricity.
Future steel production may also include technologies such as hydrogen-based Direct Reduced Iron (DRI), where green hydrogen acts as a reducing agent instead of coke. These processes could support lower-carbon primary steel production, but they would create different electricity, hydrogen and infrastructure requirements.
Energy procurement will therefore become increasingly important as the steel industry's energy sources change.
Why energy costs and energy consumption are different
Reducing energy consumption does not automatically mean a steel manufacturer is paying the lowest possible energy costs.
The final bill is also influenced by:
- Electricity unit rates.
- Natural gas unit rates.
- Standing charges.
- Network costs.
- Pass-through charges.
- Peak electricity demand.
- Meter arrangements.
- Contract length.
- Contract renewal timing.
This distinction is particularly important in an energy-intensive industry. Small changes in the rate paid per unit of electricity or natural gas can become significant when consumption is high.
When should steel manufacturers compare energy suppliers?
Steel manufacturers should review their energy position before their current contracts expire wherever possible.
It is also worth comparing suppliers after:
- Significant production increases or reductions.
- Installing an Electric Arc Furnace.
- Introducing major efficiency improvements.
- Changing operating hours.
- Acquiring another manufacturing site.
- Changing electricity or natural gas demand.
- Moving onto deemed or out-of-contract rates.
Manufacturers should compare the full contract rather than concentrating solely on the headline unit rate. Ideally, gas and electricity contracts should be reviewed with an energy specialist such as Business Utility Hub well before renewal. This gives you more time to compare suppliers, assess contract terms and find an option that reflects your site’s energy usage and production requirements.
If your gas or electricity contract has already ended and you’re paying deemed or out-of-contract rates, it’s important to act straight away. Business Utility Hub can review your current position, compare available supplier options and help you arrange a suitable new contract to avoid remaining on potentially expensive rates for longer than necessary.
Compare business energy contracts now and get a quote in minutes.
How Business Utility Hub supports steel manufacturers
Business Utility Hub helps businesses across the iron and steel industry manage energy procurement in a market where high energy consumption can have a direct effect on production costs and competitiveness.
We work with manufacturers of different sizes, from smaller metal processing operations to larger energy-intensive sites. We review your energy usage, current contract position and the demands of your steel production processes before comparing suitable electricity and gas options.
Our support includes:
- Daily monitoring of business electricity and gas prices.
- Reviewing current energy consumption before comparing quotes.
- Comparing trusted UK business energy suppliers.
- Reviewing unit rates and standing charges.
- Comparing fixed and flexible contract options.
- Supporting contract renewals.
- Helping businesses after contract expiry.
- Support for deemed and out-of-contract rates.
- Dedicated account management.
- Multi-site energy comparison.
- Full switching management.
- No obligation to switch.
- Transparent commission disclosure on request.
As steel production becomes increasingly electrified and the industry considers greater use of renewable energy, understanding both consumption and contract strategy will become even more important. Changes to production methods, equipment or energy sources can alter a site's demand profile, making it important to review whether an existing contract still reflects how the business operates.
Review your factory energy contract before you sign elsewhere
Whether your energy contract is approaching renewal, has already ended or your business is paying deemed or out-of-contract rates, we'll review your position, explain the available options clearly and help you find a contract suited to your requirements.
