Latest news with #zonalpricing
Times
13-07-2025
- Business
- Times
Swinney has blown our chances of a payoff for all those turbines
Lesley Riddoch is fed up. Granted, this is not an unusual condition for the independence-supporting columnist and promoter of all things Nordic. But it is not hard to understand why she's upset that there was scarcely a murmur of discontent from the Scottish government last week after Ed Miliband scrapped zonal energy pricing. 'Where's the outcry from the SNP or Greens?' she asked, plaintively. What was so wrong about Scots getting cheaper bills? How could John Swinney have missed this opportunity to demand that Scots get direct benefit from Scotland's wind? Surely this was a slam dunk for a nationalist party which always claims that Scots were robbed of the last energy bonanza in the North Sea. Zonal pricing is the idea, promoted by Greg Jackson of Octopus Energy and backed by Jonathan Brearley of the regulator Ofgem, that electricity prices in Scotland should reflect its contribution to addressing climate change. All those wind farms in the North Sea and the towering turbines now gracing Scotland's hills are supposed to deliver cheap-as-chips energy. But Scottish bills have continued to rise, plunging around a million Scots into fuel poverty. • Rejection of postcode electricity pricing pleases energy bosses Yet Scotland could enjoy 'the cheapest energy costs in Europe', according to Jackson, if the UK government introduced zonal pricing. The cost of electricity, he says, should reflect the cost of producing and transporting it. In the past, location didn't matter much because power for the electricity grid was generated by coal, gas and nuclear plants which were dispersed across the country. But with renewable energy generated in the North Sea, location very much does matter. It is expensive to transport the electricity produced by Scottish wind farms to the south of England, where most of it is used. Huge infrastructure projects are necessary to drag the reluctant electrons five hundred miles through cables and interconnections. A lot of energy is lost on the way through heat and leakage. Allowing energy costs to fall in areas where it is generated should be more energy-efficient. More importantly, it might encourage energy-intensive industries to come to Scotland. Those footloose data centres and artificial intelligence companies, with their insatiable demand for energy, could locate in Scotland to take advantage of lower energy costs. Given the chronic overconcentration of economic activity in the south of England, this is not such a daft idea. At any rate, you'd think that this is something that would appeal to Swinney, the first minister, who keeps saying he wants economic growth brought back to Scotland. Scotland was one of the centres of the Industrial Revolution largely because of an abundance of coal and other raw materials. That's why the Clyde could build a fifth of world shipping before the First World War and mills such as Ravenscraig could later turn out miles of sheet metal for the motor industry. The days of coal are over, of course, and Westminster has passed a death sentence on the Scottish oil and gas industry. So surely Scotland would have a case for demanding that the new industries of the digital age should be located where energy is abundant. Of course, zonal pricing might have had awkward trade-offs. If Scots paid less for their energy, English consumers would presumably have to pay more. Yet it would not be a massive imposition for the 65 million consumers who don't live in Scotland to finance a couple of hundred quid off the bills of the five million who do. The main reason Swinney has been reluctant to campaign for zonal pricing is that the big energy companies, most notably SSE and Scottish Power, are firmly against it. These largely foreign-owned behemoths have a material interest in the status quo. They are compensated generously by a panoply of schemes such as contracts for difference, which effectively guarantee that the profits from renewable energy are never less than the profits they make from gas. At least a quarter of domestic energy bills go toward subsidies for renewables. They claim that they would not be able to finance new wind farms if differential pricing undermined profitability. However, the energy companies also benefit directly from the mismatch between where energy is generated and where it is used. Last year they earned nearly £2.7 billion in constraint payments, largely for turning their windmills off when they generated too much energy for the grid to accommodate. A quarter of Scotland's potential was switched off last year. Well, there seems an obvious solution to that. Even more obvious is surely the propaganda benefit to a nationalist government of a situation where Scottish wind energy was actually being wasted. Moreover, communities are already being compensated for proximity to wind farms, albeit in a very limited way. RES, a renewables development company, has been setting up local energy discount schemes (LEDs) across the country since 2012. Properties near Glenchamber Wind Farm in Dumfries and Galloway can apply for a £200 discount on electricity bills. So zonal pricing is actually happening — just not at scale. And even as Miliband killed the idea of zonal pricing, he promised zonal compensation for communities facing wind farm development. There will have to be, he said, 'direct community benefits'. Perhaps it is not feasible to disaggregate the National Grid to create zonal pricing. There is a democratic argument that energy costs should be the same across the UK. But given that so much of the cost of renewables is covered by subsidies, surely this could be re-engineered to allow Scottish homes and businesses to benefit from all that wind. UK energy policy is anyway riddled with anomalies, waste and unfairness. Miliband is using punitive taxation to accelerate the collapse of Scotland's oil and gas industry. The promise of a bonanza of green jobs has been as false as Labour's promise to cut energy bills by £300. If zonal pricing isn't feasible, then what would be a sensible way of compensating Scots for the disruption to their environment and their selfless contribution to saving the planet? And why isn't the Scottish government arguing for it? For once, there is good reason here to play the Scottish card. Instead of meekly acquiescing in the diktat of the renewable energy cartel, the Scottish government should be holding Miliband's feet to the fire and making sure the dash for renewables doesn't leave Scotland on the sidelines. As Riddoch says: 'Why the heck not?'
The Sun
10-07-2025
- Business
- The Sun
Regional electricity pricing plan is scrapped with Ed Miliband backing single national rate
PLANS to charge regions different electricity rates based on supply and demand have been axed. Energy Secretary Ed Miliband ruled out zonal pricing yesterday, meaning the UK will retain one national wholesale price. Mr Miliband said the move was fairer, more affordable and would protect investment in clean energy. He said: 'Building clean power at pace is the only way to shield families and businesses from volatile fossil fuel markets.' Zonal pricing could have lowered costs in areas such as Scotland, where power generation is high, but raised prices in regions such as the South East. Critics feared it would create a postcode lottery, while supporters argued it could save billions by improving grid efficiency. Energy firms welcomed the decision to axe the plan. Centrica boss Chris O'Shea said it was 'common sense', while SSE said it provided 'much-needed clarity' for investors. Meanwhile, the Government said it would take more control over energy system planning, map out new projects up to 2050 and review the charges generators pay to access the transmission network. However, it was warned that the changes could drive firms overseas. Claire Coutinho, Shadow Secretary for Energy Security and Net Zero, said the plans would see Britain 'lose businesses to more polluting countries with cheaper energy'. 1 FTSE'S RECORD THE FTSE 100 yesterday hit a record closing high of 8,975.66 — up 108.6 or 1.23 per cent. It earlier reached a new intraday record of 8,979 points compared with 8,908.82 set in March. Mining and commodity stocks led the rally, with Anglo American, Glencore and Rio Tinto among the top performers. Investors shrugged off concerns over US tariff threats and global recession fears. WATER PAYOUT OF £24M Free data roaming abroad and HUGE council tax bill reductions SOUTH WEST WATER will pay £24million after regulator Ofwat found it failed to manage wastewater properly — leading to environmental spills. To avoid a £19million fine for legal breaches, the firm proposed a shareholder-funded investment package with £20million to improve storm overflows. But campaigners were angry that Ofwat had let South West avoid a flat-out fine. Meanwhile, Thames Water rejected a rescue bid from former Lib Dem energy spokesman Rupert Redesdale and investment firm Muinin Holdings.
Yahoo
10-07-2025
- Business
- Yahoo
UK Government must explain how it aims to cut energy bills, says minister
The UK Government must set out how it is going to bring down energy bills after proposals to bring in zonal pricing were rejected, Scotland's Energy Secretary has said. Energy Secretary Ed Miliband announced on Thursday that the Government would not segment the UK into zones where bills would depend on local supply and demand. Such an initiative was expected to benefit Scots due to the high level of power generation in the country. Instead, Mr Miliband promised a 'reformed system of national pricing', which he said was 'the best way to deliver an electricity system that is fairer, more affordable, and more secure, at less risk to vital investment in clean energy than other alternatives'. Responding to the announcement, Scotland's Energy Secretary, Gillian Martin, urged the UK Government to urgently lay out plans to cut bills, citing a Labour manifesto pledge from last year's general election. 'The UK Government promised to cut bills – instead, they have increased,' she said. 'They need to set out immediately how they will sort out the high energy bills faced by the people of Scotland – in an energy-rich country like Scotland, people should not be struggling to pay their bills. 'They promised that bills would fall by £300, but bills are higher than they were this time last year. 'The UK Government have set out what they will not do; they now need to set out what they will do to bring bills down. 'Given the significance of Scotland's renewables sector, the Scottish Government must be fully involved in decisions on reforming the national energy market in a way that brings down bills and delivers a level playing field for renewables in Scotland.'
The Independent
10-07-2025
- Business
- The Independent
UK Government must explain how it aims to cut energy bills, says minister
The UK Government must set out how it is going to bring down energy bills after proposals to bring in zonal pricing were rejected, Scotland's Energy Secretary has said. Energy Secretary Ed Miliband announced on Thursday that the Government would not segment the UK into zones where bills would depend on local supply and demand. Such an initiative was expected to benefit Scots due to the high level of power generation in the country. Instead, Mr Miliband promised a 'reformed system of national pricing', which he said was 'the best way to deliver an electricity system that is fairer, more affordable, and more secure, at less risk to vital investment in clean energy than other alternatives'. Responding to the announcement, Scotland's Energy Secretary, Gillian Martin, urged the UK Government to urgently lay out plans to cut bills, citing a Labour manifesto pledge from last year's general election. 'The UK Government promised to cut bills – instead, they have increased,' she said. 'They need to set out immediately how they will sort out the high energy bills faced by the people of Scotland – in an energy-rich country like Scotland, people should not be struggling to pay their bills. 'They promised that bills would fall by £300, but bills are higher than they were this time last year. 'The UK Government have set out what they will not do; they now need to set out what they will do to bring bills down. 'Given the significance of Scotland's renewables sector, the Scottish Government must be fully involved in decisions on reforming the national energy market in a way that brings down bills and delivers a level playing field for renewables in Scotland.'
The Guardian
10-07-2025
- Business
- The Guardian
UK government abandons energy ‘zonal pricing' plan
The government has abandoned plans for 'zonal pricing' that would have charged southern electricity users more than those in Scotland, saying that a single national price would help ensure the system was 'fair, affordable, secure and efficient'. The energy secretary, Ed Miliband, had been considering proposals for zonal pricing that would meandifferent areas of the country paying different rates for their electricity, based on local supply and demand. It was intended to encouraging heavy electricity users to relocate to areas that have more generation such as Scotland, where windfarms sometimes have to switch off because of a lack of demand. But senior officials said earlier this week that the scheme could put off investors and make it more difficult to build renewables. The energy department confirmed on Thursday it was abandoning the proposal after a lengthy consultation that had been running since 2022. Miliband said: 'Building clean power at pace and scale is the only way to get Britain off the rollercoaster of fossil fuel markets and protect families and businesses for good. 'As we embark on this new era of clean electricity, a reformed system of national pricing is the best way to deliver an electricity system that is fairer, more affordable, and more secure, at less risk to vital investment in clean energy than other alternatives', Miliband said. 'Our package of reforms will protect consumers and secure investment as we drive to deliver our clean power mission through our Plan for Change.' Instead, ministers said new proposals would let the government take more responsibility for planning the system and determining where clean energy infrastructure is located, based on what is needed for the long term. The long-awaited decisionends the bitter feud within the industry between those who believe that zonal energy pricing could make the market more efficient and those who argue the disruption would raise costs and jeopardise the UK-plan to create a virtually carbon-free power sector by the end of the decade. Those who backed a move to zonal pricing included Greg Jackson, the founder and boss of Octopus Energy, while some of Britain's biggest renewable energy companies including SSE, Scottish Power and RWE opposed the idea. SSE said on Thursday the move provided 'much-needed policy clarity' for investors and consumers. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Chris O'Shea, chief executive of British Gas owner Centrica, said it was a 'commonsense decision' and that the 'theoretical benefits never stacked up against the real-world risks' in potential zonal pricing. Under the dropped proposals, zones with an abundance of electricity generation relative to local demand – such as Scotland – would have had lower market prices. But densely populated areas in the south-east of England would have run the risk of higher energy bills due to higher market costs. Both sides of the debate paid consultants to produce detailed analysis to serve as evidence, and engaged in rigorous lobbying to put forward their point of view.
