Leading companies and groups in the renewables industry have backed the UK government’s plan to ditch zonal pricing in favour of a reformed national pricing system.
SSE, Vattenfall, Scottish Renewables and RenewableUK were among the organisations to issue supportive statements on Thursday morning after London confirmed its decision.
Vattenfall’s UK country manager Claus Wattendrup (pictured), said: “This is the right decision from the U.K. Government.
“Reforming the transmission charging system, while expanding the grid and ensuring energy infrastructure is built where it is needed, is the best way to help stabilise prices for bill payers.”
SSE said it welcomed the decision.
“This brings long-awaited clarity to energy suppliers and investors, protects consumers from higher bills, and reinforces the UK’s global leadership in renewables.
“This decision reaffirms the UK as a world-leading renewables market, enabling the efficient delivery of the homegrown energy the country needs.”
RenewableUK said the government’s decision means consumers will pay less for electricity
Executive Director of Policy Ana Musat said it will also give confidence to private investors that the UK is one of the best markets in the world to build new renewable energy projects.
“It also means that we can deliver more jobs, grow our supply chains in the UK faster and build more clean energy projects and key infrastructure at a lower cost,” she said.
“This will enable us to strengthen our energy security by reducing Britain’s exposure to volatile international gas markets and moving us closer to the Government’s target of clean power by 2030.
“We’re pleased to see Ministers are going to continue to work with us to reform our electricity market by enabling more grid capacity and energy storage to be built to reduce constraints and add greater flexibility to the system, which will benefit consumers by making the most of the volumes of clean power we’re generating.
“Confirming the details of reforms in the way that generators are charged for access to the grid will also enable companies to develop projects with a greater level of certainty in the years ahead”.
Scottish Renewables meanwhile said it commends London for the move.
“After three years of heavy consideration, industry must now come together to transform our energy system which will protect us from future price volatility and secure the economic benefits of clean energy deployment across the UK,” said chief executive Claire Mack.
“A reformed national market must grasp the nettle of transmission charging to finally deliver a fairer system for Scotland and it is encouraging that the UK Government will be working with Ofgem to review the current charging regime. This reform must complement the introduction of strategic planning and the rapid deployment of new transmission infrastructure.
“The design of an energy system that can cope with strategic reform whilst continuing to attract investment and navigate delivery challenges will need carefully managed. Scottish Renewables will continue to work closely with the government and all stakeholders to achieve the right outcomes for the country as we build a fairer and more secure clean energy system.”
The decision on zonal pricing meanwhile does not resolve fundamental challenges facing the energy market, according to Cornwall Insight principal consultant Kate Mulvany.
“The electricity system remains under immense strain, with outdated structures, rising constraint costs, grid bottlenecks, and very high prices for customers. While our modelling of zonal pricing highlighted valid concerns around investor confidence, cost of capital, and risks to existing projects, stepping back from zonal pricing does not, in itself, constitute a strategy,” she said.
“Many of the same challenges identified when the Review of Electricity Market Arrangements (REMA) programme began three years ago persist to this day, only now we have less time to resolve them.
“If the government is to pursue a reformed national pricing model, it must be careful not to just tinker around the edges. It must be bold and comprehensive, designed to swiftly deliver efficient price signals and support investment in low-carbon technologies. No easy task when you consider reformed national pricing has yet to face the level of scrutiny or modelling applied to zonal pricing.
“Most importantly, reform must keep consumers at the heart of all decisions. Presently, consumers face the worst of both worlds: paying wholesale prices that are still driven by volatile gas markets, and premium costs to replace gas in the power.”system with renewables. We cannot assume they will be willing to pay like this forever. Households and businesses care about affordable, reliable energy above all else. If reform fails to deliver that, the legitimacy of the entire system will be called into question.
“The government has made its choice on zonal pricing. Now, it must lead with purpose and pursue comprehensive reform with the urgency and seriousness this critical moment demands.”