The boss of one of Scotland’s biggest energy companies will urge ministers not to “snatch defeat from the jaws of victory” by introducing zonal energy pricing and deterring billions of pounds of infrastructure investment.
It was reported last month that Ed Miliband, the UK energy secretary, was considering plans to introduce regional pricing for power that could lower bills in some parts of the country which produce more energy.
Keith Anderson, the chief executive of ScottishPower, will tell delegates at the All-Energy trade show in Glasgow his company alone has plans to spend £30 billion by the end of the decade.
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Michael Shanks, a UK energy minister, and Kate Forbes, the Scottish deputy first minister, are among the politicians expected to attend the event.
Anderson will point to the economic opportunities around the overhaul of the electricity transmission network as well as the pipeline of renewables projects with many domestic supply chain companies having already been selected for work.
But he has concerns about what will happen if Westminster decides it wants to pursue zonal pricing, which would potentially see different wholesale charges for electricity around the UK leading to lower bills in some places.
The UK government has stated it does not want to introduce a postcode lottery on energy pricing although it is considering options as part of its Review of Electricity Market Arrangements.
Government officials reportedly advised Miliband to back plans for a form of regional pricing used in some other parts of the world including Australia, Italy and Sweden, according to The Telegraph.
A decision on the issue is expected to be made in the coming weeks with Greg Jackson, the chief executive of Octopus Energy, among those lobbying heavily for zonal pricing while many utilities and renewable developers are against it.
While Anderson is not wholly against the introduction he will urge caution about making a fundamental change to the UK’s electricity system at a time when investors want clarity to back huge projects in areas such as grid upgrades, cabling and renewables.
Anderson will say: “Don’t tamper with a system that works. Policy uncertainty on big market reforms such as zonal pricing does not help in this regard.
“All it does is cast a shadow of higher costs. We want to get prices down but need to be careful reforms don’t unintentionally drive them up.”
The creation of a more modern electricity network is projected to eventually reduce costs in areas including cutting payments for wind farms to stop generation.
With improved connectivity and battery infrastructure there is expected to be less need for wind assets to be effectively switched off at times where there is nowhere for the electricity being produced to go to.
Anderson will say: “Energy infrastructure is built to last for decades. It’s hard to invest today if you don’t know what the market is going to be like tomorrow.
“You don’t grow by not building energy infrastructure. You don’t grow by putting off network build out. You don’t grow by putting off investors or harming an industry that is a British — and a big Scottish — success story.
“Even down at a regional level, in the Highlands alone renewables could account for more than £100bn of investment according to Highlands and Islands Enterprise, if we don’t derail the stable policy framework that attracts that capital.
“No matter your politics, electricity demand will double. Britain needs the right infrastructure to support this, or we get left behind.
“As we go forward, when deciding how investment faces off against policy changes, it is important the government is careful not to snatch defeat from the jaws of victory.”
