[plantain]

The UK has insane prices because of their refusal to do regional pricing to accommodate grid constraints. They'd rather pay wind farms to park their turbines, than to segment their grid pricing (i.e. make energy prices cheaper where there is a surplus of wind generation).

The UK's prices are a political choice due to the mapping of voters over the energy generation distribution.

[mnw21cam]

We also have this rather unusual energy market where the price for energy is set by the supplier with the highest price necessary to meet demand at any particular time, and all the suppliers get paid that price. Most countries use a system where the suppliers get paid how much it costs for them to generate individually, and the users pay an average of that all.

[Moldoteck]

No, most countries use the same merit order mechanism like UK. The difference is that in those countries gas peakers are competing with cheaper hydro (nordics), coal(Germany) or nuclear (france). UK nuclear is pretty small, so gas competes only with itself for setting the price.

[plantain]

If you sit down and think hard about it, I'm not sure you'll figure out a better system. It does make sense.

[ZeroGravitas]

Curtailing renewbles due to grid constraints is usually a perfectly rational decision. New generation, new storage, new demand and new grid connections don't always happen on the same schedule.

Now, banning onshore wind in England for a decade when it was the cheapest source of energy available. That's just plain stupid (or a corrupt gift to your mates in gas companies).

[Moldoteck]

Isn't regional pricing dangerous for industry if it's concentrated in wrong areas and moving it isn't easy?

[AndrewDucker]

It means that the industry has to actually follow economics, and build supply where the demand is.

[Moldoteck]

But it followed economics. What you are saying is that now you want to screw it, because moving industry/trained labor to other areas isn't a plug and play option- it's a huge investment which could lead to closures

[AndrewDucker]

The government, by saying that there was a single zone, despite the electricity not actually working that way (because interconnectors don't have infinite capacity), were defying economics.

By breaking the country in to zones, where the electricity that's bought can actually reach the users they then apply the actual economics of the system properly, and encourage suppliers to build where the demand can be satisfied by them.

[Moldoteck]

But in the past it made sense to have a single zone- prices were similar. So industry developed where possible. Now what you ask is that due to the ren generation, the pricing should change, so that industry that was formed long before current ren push needs to restructure/move to more advantageous locations because otherwise it'll use competitiveness. If you are fine with such development and it's consequences, you could ask for such reforms.

Situation is very similar in Germany - most industry is concentrated in the south while most productive wind in the north. In the past it didn't matter since prices were similar with coal. But now, since you can't magically create wind in low wind/unproductive areas, the options are either split zones and kill part of industry, which Germany doesn't want, or to keep a single zone and build expensive transmission like sudlink.

[teamonkey]

Or rather, build demand (move industry) where the supply is (Scotland)