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New Energy World
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Time for a change to the wholesale pricing model?
1/2/2023
6 min read
From Cornwall to Thurso, UK household consumers pay the same unit price for their electricity, despite the cost of getting it there. Yet this may have to change as more locally-based renewable generation is connected to the power grid. Nick Cottam reports.
Providing remote, sparsely populated parts of Britain with an electricity supply can be an expensive business. The cost of getting power to and from the north of Scotland, for example, is a world away from profitable distribution made by generators to customers in the south-east, yet household tariffs for each region are just about the same.
To offset this imbalance in supply costs, the UK’s transmission system, namely the National Grid, intervenes financially to ensure energy is made safely and gets to those who need it, wherever they live.
However, the current arrangements may need to change, admits the government, if Britain is to transition to cleaner, more cost effective, more responsive and, ideally, more localised electricity supplies. If those living in the Highlands of Scotland end up paying more for their electricity because supply is limited, generators may well be incentivised to increase supplies to the region. The alternative for consumers is to reduce demand or become more self-sufficient, for example via onsite renewable energy such as solar.