Wednesday, 17 April 2013

GB energy markets beyond the Thatcher era

Margaret Thatcher’s funeral was held today in London. Her legacy includes the present structure of Great Britain’s energy markets. She presided over the development of the Electricity Act 1989, and the breaking up of the Central Electricity Generating Board in 1990. As a result, we have an electricity market structure which allows consumers some freedom of choice in which company to buy their electricity from, or to sell their solar generation to.

As well as breaking up state monopolies into corporate oligarchies, Mrs T enthused about trading between little businesses. In that respect, GB energy markets aren’t really very Thatcheristic at all. Although little businesses (and even householders) are allowed to trade in electricity, they’re only allowed to trade with the corporate oligarchy. It’s as if we’re allowed to have a greengrocer’s shop on a corner in Grantham, but it has to buy its produce from Tesco or Asda.

Things don’t have to remain that way. The greengrocer can buy his sprouts from a local market garden: so why can’t the man at Number 1, Acacia Avenue buy electricity from the lady at Number 7? Recent work has demonstrated that the technical barriers to trading electricity between households and small businesses are not insuperable, and that the economic benefits may be significant. There’ll be a conference next month to discuss the possible future world of local electricity markets. Whether GB is ready for such market restructuring remains to be seen.

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