Tata Steel has warned that its £1.25 billion electric arc furnace at Port Talbot could be delayed by up to eight months, after National Grid formally flagged hold-ups in connecting the plant to the high-voltage power it needs to run.
The new furnace, the centrepiece of Britain’s pivot to lower-carbon “green steel”, had been due to fire up by the end of 2027, replacing the traditional blast furnaces that closed two years ago with the loss of around 2,000 jobs. That timetable is now under pressure, with the company conceding that “timelines continue to evolve” as construction and infrastructure work progresses.
The warning surfaced when Koushik Chatterjee, Tata Steel’s executive director and chief financial officer, briefed investors on a conference call last month. He said the project itself was advancing well, with major demolition complete, but that “securing access to high power electricity is critical for our planned transition”.
“While we are working with the electricity system operator and the National Grid for new electrical infrastructure, National Grid has formally alerted us that their connectivity project is delayed,” Chatterjee told analysts. “This is critical for Tata Steel UK for the project commissioning. We are in conversation with National Grid and the UK government on resolution of the issues.”
Pressed on the likely scale of the slippage, he was blunt: “Somewhat between, say, six months to eight months will certainly be there, maybe higher, after we have built the plant.” The company, he added, was working with the UK government, National Grid and its electricity supplier to “see if we can mitigate”.
The irony will not be lost on anyone who has followed the Port Talbot saga. The engineering on Tata’s side appears to be on track. Construction of the electric arc furnace at the Port Talbot site began in July last year, underpinned by a £500 million government grant, and the company carried out a controlled demolition of an empty gas holder on the site earlier this month. The bottleneck lies in getting enough power to the plant.
National Grid said its share of the work involves building two new substations, installing transformers and laying two kilometres of underground cables. Problems with ground conditions, alongside environmental and planning considerations, had contributed to the delays, though it insisted “good progress is being made”.
In its own statement, Tata struck a similar note, saying that, as with many major projects, timelines shift as detailed engineering, construction and infrastructure work advances. It said it was “discussing potential adjustments to the commissioning timetable” with its partners “to deliver the project safely and as quickly as possible”.
Electric arc furnaces melt scrap steel rather than smelting virgin iron ore, slashing carbon emissions by an estimated 90 per cent and aligning Port Talbot with the UK’s net zero ambitions. But they are voracious consumers of electricity, which is precisely where Britain’s steelmakers are most exposed.
UK producers already pay some of the highest industrial power prices in the developed world. Trade body UK Steel has warned that British steelmakers now pay up to 77 per cent more for electricity than rivals in France and Germany, a gap that has widened sharply in recent months. The numbers are set out in stark terms in UK Steel’s own analysis of industrial electricity prices. For a plant whose entire business case rests on cheap, reliable power, a delayed grid connection is more than an inconvenience; it goes to the heart of the economics.
The stakes are national as well as commercial. Ministers have made Port Talbot a flagship of their industrial strategy, with the government confirming in July that the £500 million grant had secured 5,000 jobs as construction began on the green steel project. The site sits at the centre of a wider push that includes a target to produce up to 50 per cent of the steel Britain uses at home. Any slippage at Port Talbot complicates that narrative.
For now, all eyes are on the three-way conversation between Tata, National Grid and Whitehall. Tata says it is hunting for ways to claw back time; National Grid says progress is being made. Neither has put a firm new date on commissioning, and Chatterjee’s caveat that the delay could run “maybe higher” than eight months will give little comfort to a workforce and a community that have already absorbed two difficult years.
The episode is a pointed reminder that Britain’s industrial decarbonisation is only as fast as the infrastructure underpinning it. The furnaces may be ready; the question is whether the grid will be.
