Zonal Pricing in Britain: A Big Problem for NI Renewables?

Although Northern Ireland is part of the UK, its energy market is aligned with the Republic of Ireland in a cross-border initiative called the Single Electricity Market (SEM). This means it is not one of the regions that would see electricity prices adjusted directly under the highly-debated proposal to introduce zonal energy pricing in Great Britain, but far from the proposal being irrelevant to Northern Ireland, both consumers and producers of electricity in NI are likely to suffer greatly if the plan goes ahead. 

This is because lower prices in Scotland would lead to even more energy flowing from Scotland to Northern Ireland, where the combination of existing high energy import levels and poor grid infrastructure has led to record-breaking levels of constraint for Northern Irish renewable generators. 

In 2024 approximately 26.3% of available renewable energy in Northern Ireland was lost due to system constraint. While some amount of constraint is inevitable in the current electricity system  (due to required grid outages for repairs and maintenance, and the necessity for the grid operator to keep fossil fuel plants running for system security reasons) the unprecedented losses in Northern Ireland last year were exacerbated greatly by poor network infrastructure and huge amounts of energy being imported from Scotland along the Moyle HVDC interconnector. 

Interconnector flows are determined by market pricing – areas with higher energy costs will buy energy from areas with lower costs – and Great Britain has experienced consistently lower energy costs than the All-Ireland SEM pricing since 2023. This is due to a surplus of renewable energy in Scotland driving GB prices down, interconnection from GB to mainland Europe allowing GB to benefit from cheap solar energy in countries such as Spain and the Netherlands, and the Irish market design meaning the high costs of fossil fuels have been driving Irish energy prices up despite the availability of much cheaper renewable energy.  

This price difference has led to unprecedented levels of import into NI from Scotland, where imported energy has displaced NI renewables on the grid due to the inability of the transmission infrastructure to handle all the generation available in the region. Imports from Moyle take precedence, but lack of demand in NI leads to this imported power trying to flow south to Dublin and congesting the grid, resulting in NI renewable generators being greatly limited or even turned off, with nowhere for their energy to go. 

New transmission lines are needed to prevent these losses, but planned works have faced major obstacles, objections, and delays – such as delivery of the second North-South interconnector recently being pushed out an additional five years to 2031. Large-scale energy storage such as batteries could also help to mitigate the losses, but these technologies are in their infancy in Ireland, with a long road of planning, investment, development, and even policy hurdles to be overcome before they reach large-scale deployment.  

In the meantime, anything that makes Scottish energy prices lower than SEM prices will only serve to increase imports on Moyle and increase constraint losses for Northern Irish renewables. This puts NI renewables at risk of becoming financially unviable and may deter future investment in the region. It also increases energy costs for Irish consumers on both sides of the border, as analysis has shown SEM energy costs are lower when there is more renewable energy on the system.  In addition, EU-wide legislation under the Clean Energy Package is increasing curtailment and constraint compensation payable to renewable generators, which may lead to Irish customers effectively paying for their energy twice – once for the energy imported from overseas, and again via compensation payments to the renewable generators turned off to make room for it. 

Regional pricing in GB also poses a further risk to Ireland as a whole. If the price difference between Scotland and the south of England gets large enough that Irish SEM prices fall somewhere in the middle, current market interconnector policy could lead to power flowing into NI via the Moyle interconnector, down through already-overloaded transmission infrastructure to Dublin and Wexford, and back to GB – effectively resulting in GB using Ireland as an alternative path from Scotland to London for GB renewables, while greatly increasing constraints on the Irish network at no benefit to Irish consumer, and displacing Irish renewables which may have to be made up for by fossil fuels to meet the demand that renewable energy can’t reach.

GB Pricing Zonal Map

The UK’s Department of Energy Security and Net Zero are due to make a decision on zonal pricing later this month, and the outcome is far from decided, but it appears clear that the potential ramifications go far beyond the zones outlined in the proposal. Though some believe the proposal would be good for both consumers and renewable generators by reducing constraints from Scotland to England, evidence to date suggests this policy would only serve to move more constraints into Northern Ireland, where wind and solar generators are already facing significant financial challenges due to unsustainable constraint losses. 

The solution to high constraints is to build more grid infrastructure – not to build windfarms in the centre of London or data centres in the Scottish highlands, and certainly not to divert power through a neighbouring country. Grid infrastructure is desperately needed in GB and on both sides of the Irish border, and this is what the governments of each region should be focusing on.  

Renewable UK have spoken out against the proposed changes, particularly for the risk that it would jeopardise investment in clean energy and prevent the UK from meeting 2030 renewable energy targets. EnergyPro supports Renewable UK’s stance on this and encourages everyone who will be impacted to speak out against the proposal. 

UK citizens who wish to weigh in on the decision regarding zonal pricing should contact their government representatives, particularly the Review of Electricity Market Arrangements (REMA) team at the Department of Energy Security and Net Zero. This is especially important for citizens of Northern Ireland, to ensure they are not left out of the conversation when so much is at stake. 

If you wish to learn more about curtailment and constraint, you can arrange a meeting with our expert team.  https://www.energypro.ie/contact

About the Author

Kyro Keown Renewable Energy Engineer

Kyro is a mechanical engineer with a background in process development, mechanical design, and simulation.  Read more about Kyro here.