Last week Climate Change Committee advisors tells us ​​​​​​​to make electricity cheaper for consumers, so who has the best solution for this? Well we have two titans of the energy sector in the UK fighting over this one. In one corner, we have Greg Jackson, CEO of Octopus arguing for zoning pricing. In the other corner, we have another British green energy industrialist, Dale Vince who is the owner of the electricity company Ecotricity advocating breaking the link between gas prices and renewable energy. 

Dale Vince, argues that high UK energy prices are due to the current market mechanism that links the price of all electricity, including that from renewables, to the global price of fossil gas. He advocates for “breaking the link” between gas prices and renewable energy, believing it would lower energy bills. Vince argues that the current UK electricity market mechanism sets the price of all electricity based on the most expensive source, which is often imported fossil gas. This means even when wind and solar are abundant and cheap, the price is still tied to gas, leading to higher bills. Vince proposes “breaking the link” by ensuring that renewable energy sources, like wind and solar, are priced separately from gas, allowing their cheaper prices to be reflected in consumer bills. By separating the pricing, Vince believes it would lower energy bills for consumers, make green energy more competitive, and help the UK achieve its net-zero targets.

Interestingly the House of Lords backs “zoning pricing” in a power market shake up whilst the CBI urges government to tackle energy costs as firms face £24 billion in extra costs and in particular the removal of policy costs (such as those related to net zero initiatives) from electricity bills, suggesting that these costs be funded through alternative mechanisms, such as general taxation.  So watch this critical battle, being played out over the summer.