Locational pricing could save £30 billion by 2035, according to a new study from the Energy Systems Catapult (ESC), commissioned by Octopus Energy. The study found that by moving to a market with locational pricing for wholesale electricity, it would increase flexibility, reducing the need for balancing actions, and help decarbonise the electricity system. Such a system would be able to more accurately reflect challenges around balancing supply and demand, encouraging more efficient operation and the right balance of investment in generation, grid distribution and flexibility technologies such as storage. The report – titled Location, Location, Location – found that billpayers could see billions of pounds of savings by 2035 due to a number of key factors driven by the introduction of locational pricing. These include more efficient location and dispatch of generation and storage, more efficient use of grid infrastructure and more investment in storage technologies and in generation supported by carbon capture to complement renewables. According to the ESC, electricity users in all regions would see benefits from switching to locational pricing, although this will be proportionally greater in Scotland and the North of England. The estimated benefits are based on conservative assumptions and simplified reforms, with further benefits possible under a more refined market design.
Current 18th May 2022 read more »