Scottish Futures Trust have published a piece of work I carried out earlier in the year developing a vision laying out how to reform of our electricity market and the way we develop our electricity system.
https://shorturl.at/btEHW
The vision is predicated on the idea that delivering significant renewable generation capacity is important for net zero, reducing prices, giving consumers long term confidence over energy costs, and decarbonising the whole energy system (not just electricity).
It captures the critical point that Scotland can’t succeed in its energy ambitions without the right decisions from UK Government on electricity market reform but also that the UK won’t hit its targets without Scotland succeeding.
It is based around three principles: 🔹Coordinating🔹 between and within Scotland and UK government and institutions. 🔹Commitment🔹 to deliver for people, businesses and society across Scotland, and 🔹Confidence🔹for renewable and flexibility investors and consumers in Scotland.
And the six points that should be taken forward in order to delivery:
🔸 A shared vision and plan for the GB electricity system and Scotland’s role within it.
🔸 An increasingly strong focus on transmission network investment.
🔸 A clear articulation of consumer values and outcomes and a set of consumer focused principles for decision making.
🔸 Retain a GB-wide wholesale market and a pricing mechanism, such as an evolution of CfDs, linking long term costs to prices.
🔸 Targeted, forecastable, stable, locational investment signals for generation, demand and flexibility, e.g. through reform of TNUoS.
🔸 Operational locational price signals to reward flexibility for reducing network constraints e.g. a regional constraint management market.
The vision acknowledges the importance of locational signals in general, and the potential value to electricity consumers, citizens, flexibility and the wider Scottish economy of getting locational signals right.
But importantly, it argues that locational wholesale pricing (known as LMP), either in zonal or nodal form, will do significant damage in terms of slowing investment, and creating significant and hard-to-manage risks for generators, flexibility providers and electricity consumers. Rather, locational signals should be developed alongside a national bilateral wholesale market.
The report was largely written in the first half of the year and I’m pleased to have seen positive moves in relation to several of the outcomes: the focus on strategic planning from the UK Networks Commissioner, commitments from UK government for a spatial energy system plan, and the Scottish Government’s Onshore Wind sector deal which includes a commitment for Scottish Government to engage with UK government and others on this issue.
Thanks to Andrew Bruce and Jonathan Murray for their work preparing the report for publication and to Johnny Gowdy and Eleanor Brundrett from Regen for invaluable input and review.