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Comment by throwawayben | Hacker News Reader

it is insane to me that they rejected moving to zonal pricing. zonal pricing would give incentive to move power demand closer to production, create costs to nimby-ism, and give the benefits of lower costs to those who live closer. but it might make energy cost more down here in the south east and (in particular) London while benefiting the North and Scotland so we can't have that

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This is covered in the article. The uncertainties brought about by zonal pricing are not really worth it, given that the main obstacle is the need for network reinforcement. The UK is just not that big! Introducing a complicated market reform which will be obsoleted within a few decades doesn't make sense.

Sweden used to have a single zone even though most generation is in the sparsely populated north and most consumption is in the slightly more populated south. Then they had to move to a zonal model because of pressure from Denmark who complained of the unfair competition for industry wanting to be in nearby Sweden and there was a move to a (IIRC it was actually UK-inspired) "nord pool" 'fake auction' energy market. It sucks for consumers :(

His conclusion point 8 covers this.

Basically it shifts risk to developers and we want developers to install lots of green energy over the next decade.

(I just noticed the recommended related article is research on exactly this topic)

There's other machanisms to incentivize demand closer to production, though whether they are being used optimally is debatable.

They abandoned it because it does not solve anything and it is political suicide. Most people would have ended being forced to pay more than they already pay without alternative, so would not have helped solve grid constraints, either.

Could you explain more? It appears economically self evident to me that it would improve the situation but I'm not in the industry and there's probably much I don't understand.

I would say that improving transmission seems like a much better solution but again I think zonal pricing can help there as it could then be more easily sold to the public as being able to import the cheaper (say) Scottish energy to your local zone, whereas at the moment there's no apparent direct cost associated with blocking pylon projects forever.

The majority of the population live in regions that would become more expensive. Additionally the majority of Scottish constituencies vote for their nationalist party, so the major national parties don't have any chance of getting seats from Scotland, where energy prices may fall slightly under such a scheme.

> The majority of the population live in regions that would become more expensive.

Yes, and if you are an individual, family, or even the vast majority of businesses you aren't going to move to Scotland over this, you are going to pay, no choice. So effectively this would have increased bills for most people, so bad politically, with only a marginal change to demand.

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