‘Wind investments at risk amid electricity market changes’

Proposals for locational marginal pricing, a key reform suggested by the government, could lead to a prolonged hiatus in new renewable electricity generation, according to a report

The achievement of the UK’s net zero targets may face delays if radical changes to electricity market structures are implemented.

That’s according to a report commissioned by the Scottish Futures Trust (SFT), which calls for an evolution rather than a revolution in market arrangements to meet net zero goals effectively.

Analysts suggest proposals for locational marginal pricing, a key reform option suggested by the UK Government and favoured by some electricity stakeholders, could lead to a prolonged hiatus in new renewable electricity generation.

The report emphasises the need for investor confidence to be retained to prevent exposure to volatile gas prices and to promote job creation in sectors like hydrogen.

Key proposals from the report include a shared vision and plan for Britain’s electricity system, accelerated investment in network infrastructure, clearer communication of consumer benefits from the renewable transition and the retention of a Great Britain-wide wholesale market with a single national price.

The aim is to boost investor confidence, drive capital spending in wind investment and accelerate the move to UK net zero targets.

Andrew Bruce, Senior Associate Director at the SFT, said: “Scotland has a key role to play in delivering the UK’s 2035 target of a fully decarbonised power sector.

“We have a current renewable energy capacity of 15GW which needs to increase more than three-fold to at least 50GW within the next 12 years if the UK Government is to meet its net zero commitments.

“We need to attract investors in renewables, batteries and the green hydrogen sector. If we can achieve that, Scotland could potentially generate green electricity to cover the electricity demand of everything north of Nottingham by 2035.”

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