Wouldn’t it be great if when you live in a part of the country where there are loads of renewables the electricity was cheaper? Or would it? Is this just a chimera?
At the moment in the UK we live with a situation where piles of renewables have gone onto the grid, are going onto the grid and will continue to go into the grid and are far cheaper then any alternatives – but the cost of power is high. Why? The cost is set by the cost of the gas which does some base load and fills in at night, or when the wind is low. The gas price (as we have seen since the war in Ukraine started) is set on international markets. Even producing more here wouldn’t necessarily lower the price.
However a battle royal is currently waging on whether the electricity price should be set locally depending on regional demand and supply. On the local side is the energy supplier Octopus, the Office of Gas and Electricity Markets (OFGEM) and about half the Department for Energy Security and Net Zero. On the other opposing zonal pricing – everyone else.
The proponents of zonal pricing say it will encourage both investment in renewables and investment into areas of low electricity price of energy intensive industries (such as data centres). They say it will also lower the power price for everyone by stopping the ludicrous situation where wind farms are ordered to switch off because of grid constraints. It will also mean less pylons are needed.
Their opponents say the uncertainty caused by the switch will mean the price of the investment will go up wiping out any of the above savings and all the above is in any case untrue.
It’s certainly true that this would mean a postcode lottery on power prices. This might actually encourage investment where possible. London is the example that the anti’s mention. I’ve just been there and there’s hardly any roofs with PV’s on them. I can see the argument that raising power prices would make PV’s even more cost effective and encourage their uptake – although I expect the reasons for low number of PV roof is more to do with high mortgages or high % of renters than disinterest.
The main problem with the whole issue is the postcode lottery aspect. People would feel its unfair that through no fault of their own they have to pay more than people who may just live a few miles away. There’s also something that seems fair about sharing the costs around evenly. Annoying though it is to have windfarms switch off and gas stations fill in when there’s plenty of wind – the cash savings on our bills from the quoted total would be small.
However all being said we need to see bills come down and the benefits of renewables made clear and if it would avoid some infrastructure costs it could be worth it,
The arguments to me seem finely balanced and I’m glad I’m not Ed Milliband whose taking the decision.
Neil