Clean energy dividend: Ditching gas and switching to clean energy could save UK manufacturers £2.1 billion by 2035

Clean energy dividend

UK manufacturers could unlock £2.1 billion in energy savings by replacing gas with clean energy technologies, according to new modelling from E.ON. The company argues that greater adoption of electrification, energy efficiency and low-carbon technologies could turn energy from a cost burden into a source of competitive advantage.

UK manufacturing currently employs over 2.1 million people and contributes around £197 billion to the economy. However, the sector is highly exposed to energy costs, consuming 82 TWh of electricity and 193 TWh of gas each year. For context, the UK's total electricity consumption was 280 TWh in 2024[i]. With output forecast to grow by 2035, E.ON says action on energy efficiency will be increasingly important to protect margins and support investment.

Under E.ON’s highest adoption scenario, UK manufacturers could cut annual gas consumption by 15.2 TWh (terawatt-hours) and electricity use by 8.8 TWh by 2035, equivalent to the gas use of more than 1.2 million UK homes, and the electricity needs of 3.3 million homes. The analysis also sees annual gas cost savings of £406 million by 2035 and cumulative gas cost savings of £2.1 billion between 2027 and 2035.

Energy costs an ‘anchor’ on UK productivity and competitiveness

Industry in the UK is presently burdened with some of the highest energy costs in Europe. A joint report from the CBI and Energy UK released last month called on the UK government to cut business energy costs, arguing that doing so would deliver a £130 billion boost to the economy by 2050.

According to the report, persistently high energy costs are no longer just an energy market problem for the UK, rather they are an anchor weighing down productivity and competitiveness across the whole economy. The research notes that while UK gas prices sit close to the G7 median, electricity prices are around 45% higher, putting UK firms at a competitive disadvantage. The report argues that this makes UK electricity disproportionately expensive, discouraging investment and undermining the competitiveness of energy-intensive industries.

Louise Hellem, Chief Economist at the CBI, said: “If we want to tackle the cost of living and invest in public services, we need stronger economic growth – and that can’t happen while firms are navigating sky-high energy bills.”[ii]

CBI and Energy UK reference a PwC investor survey conducted in March 2026 which found that roughly half of respondents see the cost of electricity as a key area for improvement in the UK. Further, CBI economic surveys from April found that over four in ten companies said that they are cutting investment due to high energy costs.

Hellem adds: “Years of loading policy costs onto electricity bills have left UK businesses facing some of the highest electricity costs among the world’s biggest economies. At a time when we really need firms to invest, electrify and compete on the world stage, these costs make all three goals more difficult, representing a massive drag on economic growth.”[iii]

Barriers weighing on business

While lower energy costs could improve competitiveness, many businesses say significant barriers remain to investing in clean energy technologies.

E.ON’s polling of more than 500 UK business leaders finds four in five (89%) expect to invest in energy efficiency or low-carbon technologies within two years. However, almost half (48%) cite upfront costs as the biggest barrier, and more than a third (37%) say uncertainty over returns on investment is holding them back. E.ON claims that this shows businesses are ready to invest but need clearer policy support to unlock investment. To address this, they suggest the following:

Make electricity more competitive for business: Shift policy costs such as the Renewable Obligation and Feed-in Tariffs from electricity bills into general taxation, or a dedicated Energy Transition Fund, helping firms electrify without undermining competitiveness.
Provide long-term policy certainty: Create a clear pathway to close the gap between electricity and gas prices to support industrial electrification, strengthen commercial energy efficiency standards and scale up proven low-carbon technologies.
Back investment in proven energy upgrades: Establish a Business Energy Upgrade Scheme that offers advice, grants, low-cost finance and tax incentives for technologies such as heat pumps, solar, batteries, smart controls and waste heat recovery.
Reward flexibility: Reform balancing and network charging so businesses can reduce system costs by shifting demand, using storage and participating in flex markets.
Speed up grid access and local infrastructure: Accelerate grid connections, reinforce local networks and provide clearer local energy plans so businesses can invest with confidence.

Chris Norbury, Chief Executive of E.ON UK, comments: “Businesses don’t need to wait for tomorrow’s technology to start seeing the benefits of cleaner, smarter energy. We have the solutions and we have them now.”[iv]

“Energy can be a source of resilience, competitiveness and growth. Removing barriers to investment means more businesses can cut costs, reduce carbon and help build the resilient energy system Britain needs.”[v]

The findings suggest that with additional policy support, tackling industrial energy costs and decarbonisation offers businesses the opportunity to boost competitiveness while reducing emissions.