The power to cost more in the South according to the local rate plan Business

Households are to pay higher electricity prices in London compared to Scotland at certain times of the day as part of sweeping reforms to make the UK’s energy market greener.

National Grid wants to reorganize the market so that the wholesale price of electricity varies according to the distance travelled.

The aim is to make better use of the wind turbines which proliferate around the UK coast as well as solar panels and batteries, rather than having to pay for renewable energy to switch off when it generates more than the grid does. can handle, as sometimes happens now.

The National Grid’s Electricity System Operator (ESO) says an all-encompassing national wholesale price is “no longer appropriate for
objective” and the costs of running the system will be “excessive” unless changes are made. He recommends dividing the network into different “nodes” which would have different wholesale electricity prices fluctuating during the day, reflecting the cost of supplying that location.

If fluctuating wholesale prices are passed on to consumers in real time, it could mean that on a windy day in Scotland, which has many wind turbines, homes would pay lower electricity rates than those further south and further afield. sources of production. .

National Grid ESO said nodal pricing “could create opportunities for harnessing low-cost, low-carbon electricity when and where it is plentiful, helping to drive down electricity prices for households. and reduce network operating costs, while helping to decarbonize the system.”

Cian McLeavey-Reville, Senior Director of Market Development at ESO, added: “We need to transform our markets, not only to encourage renewable energy in our energy system, but also to ensure that clean energy can be delivered when and where it is needed for maximum consumer benefit.

Under the current system, National Grid steps in to alleviate mismatches between supply and demand if, for example, there is too much wind power produced in an area and demand is low. Under the nodal system, it is hoped that the market will operate more efficiently. For example, if there were high wind speeds in Scotland, prices would drop locally, encouraging industry and households to absorb the supply.

“Our modeling suggests consumers around the world are benefiting,” said George Day, head of markets at Energy Systems Catapult. “But consumers would tend to see probably greater benefits in Scotland and the north, as these are the areas where it is relatively easier to generate clean electricity.

“But it’s not certain. We could see innovation and new technologies coming in and taking hold in the Thames Estuary, for example, which could make electricity cheap in London.

The government must now decide whether to adopt the reforms.

Nodal pricing is well established in other markets such as Ontario.