Tuesday 12 March 2024

UK unveils landmark electricity market reform

UK unveils landmark electricity market reform

Energy Secretary Claire Coutinho is set to reveal plans to revamp electricity markets, potentially saving households up to £45 annually and unlocking £35 billion in savings over 20 years.

Under the proposed changes, locational pricing will be introduced to ensure a fairer distribution of renewable energy resources, reducing inefficiencies and lowering costs for consumers.

By incentivising investment in renewables closer to areas of high demand, the reforms aim to maximise the utilization of clean energy sources.

Addressing current disparities in renewable energy distribution, where a quarter of the UK's renewable energy is generated in distant locations such as Scotland, the reforms seek to optimise energy production by strategically locating renewable infrastructure closer to demand centres.

While hyper-local pricing has been ruled out due to its complexity, zonal pricing remains under consideration, drawing on successful models adopted by other countries such as Italy, Denmark and Sweden.

A government source said: "The Chancellor has already put an extra £900 in the average worker’s pocket every year - and the Energy Secretary’s proposals could save them an extra £45.

"The government’s plan is working - inflation is falling, debt is set to fall, and bills are set to reduce.

"These proposed changes will pass on the benefits of cheaper power to people across the UK and help reduce bills."

On Tuesday 12th March, the second consultation under the Review of Electricity Markets Arrangements (REMA) will be released.

Written by

Sumit Bose

Trending Articles