1. Introduction

Electricity regulation and industrial strategy are closely connected because reliable and affordable electricity is essential for industrial development. Factories, manufacturing units, technology companies, transport systems and data centres all depend on a stable electricity supply.

Industrial strategy refers to government policies designed to develop important industries, create employment, improve productivity, attract investment and strengthen national economic capacity. Electricity regulation can support these objectives through pricing, infrastructure development, renewable-energy policy, grid planning and market design.

2. Meaning of Industrial Strategy

Industrial strategy is a planned approach through which the government supports particular economic activities or creates conditions for industrial growth.

It may include:

infrastructure investment;

support for strategic industries;

electricity-price policies;

renewable-energy development;

tax and financial incentives;

technology development;

manufacturing policies; and

energy-security measures.

Electricity regulation becomes part of industrial strategy because electricity is a basic input for almost every modern industry.

3. Reliable Electricity and Industrial Growth

Industries require electricity that is reliable, affordable and predictable.

Frequent power cuts can cause:

production losses;

machinery damage;

increased operating costs;

supply-chain disruption; and

reduced investor confidence.

Therefore, electricity regulators must consider industrial demand when planning generation and transmission capacity.

A strong electricity network can also encourage companies to establish factories in regions where electricity supply is dependable.

4. Electricity Pricing and Industrial Competitiveness

Electricity prices can influence the competitiveness of domestic industries.

If industrial electricity prices are extremely high, local manufacturers may face higher production costs than foreign competitors.

Governments may therefore introduce special tariff structures or support mechanisms for certain industries.

However, such measures must be carefully designed. Excessive subsidies can create unfair competition, financial losses for utilities and inefficient allocation of electricity.

5. Electricity Infrastructure as Industrial Policy

Transmission and distribution infrastructure can be used to support industrial development.

Governments may prioritise electricity infrastructure for:

industrial corridors;

manufacturing zones;

ports;

technology parks;

mining areas; and

renewable-energy manufacturing centres.

This creates a connection between grid planning and economic planning.

However, infrastructure decisions should be based on transparent criteria rather than political favouritism.

6. Renewable Energy and Industrial Strategy

The transition to renewable electricity has created new industrial opportunities.

Governments may encourage domestic production of:

solar panels;

wind turbines;

batteries;

electric vehicles;

hydrogen equipment; and

smart-grid technologies.

Electricity regulation can support these industries through renewable-energy auctions, grid-access rules, contracts for difference and long-term procurement mechanisms.

This can create jobs while also supporting decarbonisation.

7. Competition and Industrial Strategy

Industrial strategy should not automatically mean protecting existing companies from competition.

Electricity markets must remain open to efficient new entrants where possible. Competition can encourage lower prices, innovation and better services.

Regulators therefore need to balance industrial-policy objectives with competition law.

For example, preferential electricity arrangements for one company may need to be examined carefully if they distort competition.

8. Relevant Case Laws

Energy Watchdog v CERC (2017) 14 SCC 80: The Supreme Court of India considered contractual and regulatory issues in electricity generation. The case is relevant because predictable electricity regulation is important for investment and industrial planning.

Power Grid Corporation of India Ltd v Century Textiles and Industries Ltd (2017) 5 SCC 143: The Court considered electricity transmission infrastructure and statutory powers affecting private property. It demonstrates the importance of transmission development for wider economic and industrial objectives.

PreussenElektra AG v Schleswag AG, Case C-379/98: The Court of Justice of the European Union examined renewable electricity support and its relationship with EU market rules. The case shows how government energy policies can pursue wider economic and environmental objectives while interacting with competition principles.

Canada – Renewable Energy / Feed-in Tariff Programme, WTO DS412 and DS426: The WTO disputes examined Ontario's renewable-energy programme and local-content requirements. The cases are important because industrial policy connected to electricity can raise questions concerning trade rules and discrimination.

ATCO Gas and Pipelines Ltd v Alberta (Energy and Utilities Board), [2006] 1 SCR 140: The Canadian Supreme Court considered the public-interest role of utility regulation. The case demonstrates that regulators must balance the financial interests of utilities with broader economic and consumer interests.

9. Strategic Industries and Energy Security

Some industries are important for national security and economic resilience. These may include semiconductor manufacturing, defence production, telecommunications, pharmaceuticals and critical infrastructure.

Such industries may require highly reliable electricity supplies.

Electricity regulation can therefore support national resilience through adequate generation reserves, diverse energy sources, strong transmission networks and emergency planning.

10. Industrial Strategy and State Aid

Government support for electricity-intensive industries can take the form of subsidies, tax benefits or preferential electricity arrangements.

Such policies can raise legal questions concerning state aid and competition.

A legitimate industrial strategy should therefore be:

transparent;

legally authorised;

proportionate;

economically justified; and

consistent with competition and trade obligations.

11. Energy Transition and Future Industry

The energy transition is changing the relationship between electricity and industry.

Cheap renewable electricity can support green hydrogen, electric vehicles, battery manufacturing and low-carbon industries.

However, these industries can also create substantial additional electricity demand. Regulators must therefore plan generation, storage and transmission capacity before demand becomes a serious constraint.

12. Conclusion

Electricity regulation can be an important instrument of industrial strategy. Reliable networks, reasonable electricity prices, renewable-energy support and long-term infrastructure planning can encourage manufacturing, investment, innovation and employment.

However, industrial policy should not become uncontrolled protectionism. Electricity regulation must continue to respect competition, transparency, consumer interests, environmental obligations and legal limits.

A balanced approach allows electricity regulation to support national industrial development while maintaining a reliable, competitive and financially sustainable electricity system.