Plans for an overhaul of the electricity market are set to be revealed by Energy Secretary Claire Coutinho on Tuesday 12th of March. These new plans could save households £45 a year and billions of savings over a period of 20 years.
What is the Electricity Market Reform in the UK?
The reform of the electricity market was implemented in March 2023 and amended both the 2019 electricity regulations and the 2018-2019 electricity directives. It also included a regulation that protects against any manipulation of the wholesale energy market.’
What is Location-Based Pricing?
A locational-based pricing system has wholesale power prices, with higher areas of demand expected to have higher prices.
It is set to be introduced as part of the plan, allowing for a fairer dispersal of renewable energy whilst minimising any inefficiencies and cutting down the costs for energy consumers.
Areas of high demand will see incentivising investment of renewable energy sources, to fully utilise greener energy.
Renewable Energy Distribution
To tackle recent imbalances in the distribution of renewable energy, these new reforms aim to change energy with a tactical approach to locating renewable infrastructures built closer to areas of high demand.
Zonal pricing, which sees all energy consumers within a defined zone or region of the country charged the same energy prices. This remains under consideration for the reforms and takes inspiration from successful models being used by our European neighbours; Denmark, Sweden, and Italy.
How Will the Electricity Market Reform Help You Save Money?
A government source has stated that an extra £900 is in the everyday worker’s pocket annually – with the Energy Secretary’s proposals saving them a further £45.
The government’s plan is proving to work, with inflation decreasing, debt predicted to fall, and, hopefully, bills will be reduced.
Thanks to these changes, the benefits of greener, cheaper power, will be passed to people all across the UK, helping to cut down energy bills.
Summary
This newly planned reform is set to shake up the spread of renewable energy across the country, placing renewable infrastructures nearer to high-demand locations.
This strategy is set to create further savings of £45 on top of £900 savings that are already being seen by consumers.
It is hopeful that these changes, set to be announced on Tuesday 12th March, will create cleaner and cheaper power that will help consumers all over the country who are feeling the struggles of high energy bills.
Sources:
Energy Live News: UK unveils landmark electricity market reform – Energy Live News
