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Waste is bad in any industry. Even more so if dealing with it costs billions of pounds a year. No surprises then that UK ministers are exploring whether changes to electricity pricing could reduce costly payments to switch off wind farms. The bigger question is why they wasted so much time.
In just the first two months of 2025, the cost to consumers of dealing with Britain’s inefficient electricity system topped £250mn, estimates the website Wasted Wind, up 60 per cent year-over-year.
One part of this takes the form of “constraint payments”. Wind farms are largely located in Scotland, or remote areas of England, where local electricity demand is limited. On especially blustery days, there is insufficient grid capacity to transmit their output to areas of high demand — largely in the south of England. The wind farm owners are thus paid to shut down temporarily. The other part is gas-fired power stations are often simultaneously paid to switch on to meet that demand in the south.
No system would ever be deliberately designed in this nonsensical way. These kinks exist because wind and solar farms have been added to the electricity system faster than new transmission lines. The latter cost multiple billions to build and are often hampered by planning disputes.
The problem of green electricity wastage is not uniquely British. But the UK’s Labour government has promised a clean electricity system by 2030. At worst that could mean more wind-generated power, with nowhere to go.
One possible solution is “zonal pricing”, where different regions set prices based on local supply and demand. In theory, energy-intensive businesses would move to where the cheap power is. That should lessen the need for so many costly new transmission lines — and reduce unpopular payments to wind farm owners. Low electricity bills might even reduce opposition from communities to new energy infrastructure.
This all assumes that businesses would actually relocate. Variations on a zonal system already exist elsewhere in the world, though — in certain US states, such as Texas, for instance. A bigger issue is probably timing. Britain is embarking on a major upgrade of the electricity grid. Companies including National Grid, SSE and ScottishPower are working on new north-south transmission lines. It will be difficult to predict now where the grid bottlenecks will be in a few years’ time.
Even if companies do move, what about people? Cheaper power prices for Scottish households would not be popular in southern English constituencies. One way around that would be to have a blended national price for households. But such political questions are the real danger: ministers have dithered for years on electricity reform. Trying to please everyone will only fritter away even more precious time.
nathalie.thomas@ft.com
