Swedish industry, which has one of the lowest electricity prices in the European Union, will face higher electricity prices due to the Union's electricity market liberalization. Rising electricity prices, together with a larger use of electricity than other European countries, pose a threat to industrial activity in Sweden. The Swedish foundry industry, with large proportions of energy costs in relation to the added value, is particularly sensitive to higher electricity costs. The aim of this paper is to study the effect of higher electricity prices on the Swedish iron-and-steel foundry industry, quantify an energy efficiency potential for a medium-sized Swedish iron foundry resulting from a thorough industrial energy audit, and investigate what impact they have on the energy cost. (c) 2004 Elsevier Ltd. All rights reserved.