UK rejects zonal energy pricing

The British government is not moving to a zoned system of wholesale energy prices, but will instead try to gain greater control over the planning process in order to determine where to build clean energy infrastructure.

The UK, with some of the world's highest electricity prices, struggles to find a way to build wind and solar farms, as well as transport them to the various parts of the country.

The government had looked at dividing the country into zones with a pricing system based on demand and supply, hoping to encourage businesses to move closer to renewable sources of energy, and potentially reduce the cost for transmission.

It announced on Thursday reforms that would spread out the construction of new energy projects across the country, increase investor confidence in where and when to build, and accelerate the time required to connect to the grid.

Ed Miliband, energy minister, said that the reforms would protect consumers and ensure investment in our drive to achieve clean power.

As part of the planned changes, the government will take more responsibility in planning the system.

In an effort to "rewire Britain" and upgrade the outdated infrastructure of the country, it also seeks to reduce the amount that it must pay in constraint payment - compensation given to electricity generators who are forced to reduce their output due to grid restrictions.

According to a statement, the National Energy System Operator estimates that up 4 billion pounds ($5.4billion) in constraint payment could be avoided if upgrades were completed by 2030.

(source: Reuters)