Decoupling gas and electricity to lower prices

Another significant piece of the puzzle is decoupling gas and electricity prices.

At present, the UK’S energy system enables the wholesale cost of gas to determine the price of electricity. But the UK Government is considering reforming the market to “unlock the full potential of our abundant, cheap renewable resources – particularly wind and solar”.

The Review of the Electricity Market Arrangements will look at the entire future structure of the market – how it is traded and paid for. And, while Scottishpower’s Keith Anderson welcomes the move to a decarbonised, costeffective and secure electricity system, he is concerned the review may take two years to complete.

“In the short-term, we can look at making sure all the existing renewables power we generate in this country doesn’t get inflated in price because of gas,” he says.

Currently, power generated from renewable sources and sold by Scottishpower through the Contracts for Difference scheme, the government’s main mechanism for supporting lowcarbon electricity generation, is protected from the gas price. Keith says: “It is going to customers at its true cost, much more cheaply than any other form of generation.”

But the huge bank of renewable energy that isn’t sold through the scheme goes straight into the mainstream

“We can make sure all the existing renewables power doesn’t get inflated in price because of gas” power market, meaning that by the time it reaches your home or business the cost has been inflated by the price of gas.

Disaggregating the two markets would give Scottishpower the opportunity to sell all its renewable power through the same system and pass the savings directly on to the customer.

Keith urges: “We can directly get that power to businesses and to consumers at its true cost, at a much, much lower cost than gas. We can do that quite quickly, we can probably start doing that next year.”