We need a Welsh electricity zone
Jonathan Edwards
The UK Government’s Review into Electricity Market Arrangements is in danger of being a potentially cataclysmic missed opportunity for Wales.
The previous UK Government launched a consultation into how to reform the UK’s outdated electricity market based on introducing zonal/locational electricity pricing.
The work has been continued by the new UK Government and is due to report soon. Ed Miliband, the Secretary of State for Energy Security and Net Zero, is under considerable pressure from some industry insiders to keep things as they are and not to adopt a zonal pricing system.
However, if the UK Government goes down the road of reform, it is set to recommend the creation of seven market zones for Great Britain (Northern Ireland is linked to the Republic). A radical nodal model based on 850 locations has been ruled out from what I read.
Lower costs
Under a zonal system, areas that produce vast amounts of electricity yet have low demand should enjoy lower costs, enabling them to tackle crushing social justice issues such as fuel poverty, and critically to entice industries and other high energy users such as datacentres to locate in those zones bringing direct economic value. Proponents argue a zonal system is vital if net zero targets are to be met.
Some years ago I wrote an article that Wales was an electricity exporting superpower, based on figures showing that at the time no other country in Europe exported a higher proportion of the electricity generated than Wales at 50%.
To put it in context, nearly every other country in Europe runs an electricity deficit. Despite our strength in electricity generation, over a third of Welsh households are fuel poor.
The problem Wales faces is that there is no dividend for us as a country under the current system; the wealth is syphoned out of Wales. It is extractive in nature.
As a designated zone with significant generating assets yet low demand, Wales would have low-cost electricity. It offers more economic opportunity for Wales than anything published in the big growth speech last week by the Chancellor.
Implemented correctly it has the potential to be a game changer for the Welsh economy and for tackling one of the biggest social scourges of our time – cold homes.
GB6
Regrettably however it appears that the UK Government preference is for seven zones which would see the south of our country included in an area stretching to East Anglia, including London, in so-called GB 6. Meanwhile the north will be included in GB 4 which would stretch across Liverpool and Manchester to the Humber.
The zones, from what I understand, have been chosen based on existing transmission boundaries.
Ironically due to the high demand natures of the two zones Wales would be split into, electricity prices under locational pricing methodology would be far higher than a Wales-only zone. There would be no dividend for Wales and our people – the zonal model under consideration will continue to be extractive.
Scotland meanwhile will have its territorial integrity protected in two distinct Scottish zones.
Much energy in Welsh political circles is consumed by the debate over control of Welsh Crown Estates territory. I initiated the campaign in Westminster and understand its significance. However, it is small fry compared to the potential missed opportunity for Wales if a zonal model is implemented for GB and the preferred seven areas are adopted by the UK Government.
Potential gains
A cursory look at the Senedd Record and Parliamentary Hansard in Westminster indicates that no Welsh politician is on the case. I readily admit to not being an expert, but you would expect someone in the Welsh political class to be challenging the powers that be considering the potential gains for Wales and our people.
We need a Welsh specific zone, and we need it now, while understanding that may require significant investment in developing transmission infrastructure within Wales. As far as I can see, there is no rational reason why there can’t be a Welsh specific zone.
Wales must play to its strengths. Our status as an electricity generating superpower is an obvious one. A Welsh specific zone would be transformative, the leg up our country desperately needs.
I hope Welsh Ministers are on the phone to Mr Miliband.
Jonathan Edwards was the MP for Carmarthen East and Dinefwr 2010-2024
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The logic to have Wales in two zones is due to there being no connection in the electricity grid between north and south, but it these were linked then the transmission boundaries would alter
I agree entirely that Wales needs to be identifiable in the zones, but there may still have to be two
A lot of nervousness has arisen around zonal pricing as the logical conclusion is that bills in and around London would increase. Lumping south Wales with London in one zone evens things out
The boundaries are being set based on technical considerations, not political ones. As Jonathan Dean points out, electrical infrastructure joining North and South Wales is just as lacking as north-south road infrastructure or north-south rail infrastructure. The only way to make a single Welsh electrical zone would be to build a couple of high-voltage lines (100 foot pylons) right through the Cambrian mountains. This would be expensive, environmentally damaging and unsightly, but it would help people who want to politicise electricity.
This map of the National Grid shows how it makes sense for North Wales to be included in GB4 and South Wales in GB6, and how little sense a single Welsh zone would make. It also shows that Scotland’s situation is very different to Wales’.
https://www.nationalgrid.com/electricity-transmission/network-and-infrastructure/network-route-maps
The National Grid dates from 1926, when it was created. Regional Electricity Boards were set up MANWEB that covered the north and SWEB the south of Wales. The south connected to and supplied the south of England and the north to north west England. After a hundred years it is time this structure was up dated to reflect todays political realities. There should be one national generation and distribution system in Wales under the control of Welsh Government. It should serve the needs of Wales not England and not be subject to being ripped off by foreign entities,