UK 'set to reject' zonal pricing plan loathed by renewables developers
Energy secretary Ed Miliband promised decision would come on controversial proposal ahead of pivotal renewable energy auction this summer
The UK government is reportedly set to reject a proposal to move to a zonal system for electricity prices that has faced deep opposition from wind and solar power developers.
The sources cautioned that the final decision has not yet been made and will require involvement from Prime Minister Keir Starmer.
DESNZ has been consulting on the proposal to radically reform Britain’s power system as part of its Review of Electricity Market Arrangements (REMA).
Miliband has come under pressure to make the decision soon from developers who desperately need certainty over the issue ahead of bidding wind and solar projects into the UK’s upcoming renewable energy auction, AR7.
Miliband told industry body RenewableUK’s Global Offshore Wind summit last week that he would decide ahead of the auction round this summer, amid speculation that he could defer it until after.
A zonal system, as used in many other countries, would see the UK government split the power market in Britain into different geographical zones, with each having different electricity prices based on their respective levels of supply, demand and available grid.
Areas that have high green power supply and low demand, like Scotland, would see generally lower prices, while areas such as the southeast of England would see their prices rise.
The idea is that this would incentivise developers to build green capacity where it is most needed to capitalise on those higher prices.
One high-profile backer of a switch to zonal pricing is British developer Octopus Energy, whose founder Greg Jackson has said that without such a switch power costs in the UK – some of the highest in Europe – will “continue to spiral, guaranteeing industrial decline.”
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