Monday 7 October 2024

Zonal Pricing To Come to UK Electricity?

Zonal pricing is a proposed change to the UK energy market. It would result in energy consumers paying less for electricity, if they are based close to the generators, like wind or solar farms. Energy producers would also earn less for their electricity, if they are based far from homes and businesses. There seems a natural logic to zonal pricing. It's likely to make people more accepting of electricity production being sited near their homes/businesses. It's also more expensive to transmit electricity, when the distance between producer and user is great. Much of the UK's renewable electricity generation is currently distant from users. Scottish windfarms, have to transmit electricity to Southern England (https://www.theguardian.com/business/2024/oct/07/zonal-energy-pricing-plan-uk-industry-trade-groups-ed-miliband). Advocates of zonal pricing, claim it has cost savings. These will be sufficient to enable folk living near generation sites to have falling bills, whilst more distantly-sited consumers have only a small increase. Opponents of zonal pricing, conversely suggest its extra uncertainties for electricity generators, will prevent some much-needed developments taking place. It will be interesting to see how this 'pans out'.

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