Making the case for releasing Scotland from UK electricity bills

In the UK we have an electricity network that receives lots of cheap wind and solar renewable power, and then delivers it to consumers and businesses at the price set by gas, the most expensive electricity source. Poor and outdated government regulation is the cause. As a result UK electricity is amongst the most expensive in all of Europe.
In the absence of fundamental reform, detaching Scotland from UK electricity pricing could provide a solution we will explore here and help speed the UK transition away from burning fossil fuels. In doing so the Scotland could learn a lot from…Ethiopia.

UK electricity pricing

To understand how UK electricity pricing works let’s see what happens if you apply the UK electricity method to a Gin and Tonic in a pub.

Essentially the UK price is set by the most expensive single source. This is almost always electricity produced by gas power stations. Even if gas, like gin in a G&T, is only 10% of electricity in a half hour period, 100% of the electricity is charged to customers at the gas price. Pricing like this is known as “marginal pricing”

Luckily this isn’t the case in pubs. In one of my locals £6 (gin)+£3(tonic) equals £9 for a 225ml G&T.

What if you apply marginal pricing like electricity to the G&T”? The gin is the same £6 as in the pub. And the tonic on its own costs the same £3 as in the pub. But if you have both at the same time the whole drink costs £6 per 25ml… so your “mixed” 225ml gin and tonic would set you back £54.

In a further twist even when there is enough renewable electricity to cover all demand in the UK, we still usually use some gas because there isn’t enough grid capacity to carry power from where it is generated to where it is used. So gas is burnt in south Wales while in Scotland wind farms are paid to stop their turbines. This same electricity is then replaced with gas at a combined cost of around £1 billion a year. If Scotland made more rapid progress using electricity to replace fossil fuels then this would allow wind energy to be used even before grid connections are adequately upgraded to the south.

Using renewable power in Scotland and Ethiopia

Both Scotland and Ethiopia have more than enough renewable electricity for their needs but while one country is using cheap renewable energy to save money and cut the amount the country spends on expensive imported fossil fuels, the other literally pays windfarms to throw cheap renewable energy away (officially called curtailment) while at the same time burning expensive oil and gas for heating and transport.

It’s like having pure fresh water from a tap but instead paying for expensive bottled water transported from 100’s or even 1,000’s of miles away instead. Who would do that? Ok so illogical stuff does happen!

Despite being about 4,000 miles or 6,500 km apart both Scotland and Ethiopia have enough home grown (or in the Scottish case “home blown”) renewable energy to power most or all of their energy needs. While Ethiopia generates much of it’s renewable energy from Hydroelectric dams, Scotland’s renewable generation is largely from onshore and offshore wind. This power is used not just in Scotland but also exported to rest of the UK grid.

Both produce enough cheap renewable energy to progress from being petrostates, dependent on burning expensive oil and gas, to being electrostates.

I would define an electrostate as being able to generate enough low cost renewable electricity to run all its existing electric grids as well as heating buildings and road and rail transport as well.

US’s Petrostate versus China’s Electrostate – Climate and Capital Media

How does Ethiopia encourage use of its cheap electricity

• The domestic Electricity price in Scotland is around 26p per kWh. Prices for business users are harder to come by but may be closer to 45p per kWh. By contrast the electricity price in Ethiopia is 1.5-3p per kWh
• DC charging cost 15p per kWh in Ethiopia. In Scotland most DC chargers are just 50kW and cost 70p per kWh. Others are faster but can cost up to 85p.
• Fastest chargers in Ethiopia are at the new Ethio branded hub in Addis Ababa which comprising 8x600kW, 12x 500kW and 12 slower chargers.
  The Fastest chargers in Scotland are in Dundee 22x360kW and Inverness 6x360kW in Inverness. Edinburgh, Ayr, Glasgow and Aberdeen have some 350kW units.

So Ethiopia delivers electricity at 1/10th of the cost at home and a 5th of the cost at public chargers in Scotland. In the UK parity with the cost of an equivalent petrol car is 60p per kWh so UK DC public chargers overwhelmingly cost more than petrol and even many slow AC chargers offer no saving either.

• By contrast Ethiopia looked at the amount it spends importing oil, over US$5 billion a year, taking a huge chunk of the country’s scarce foreign currency resources and decided to act to cut this unnecessary bill.
• Energy security and self-sufficiency was another major driver.
• They had just commissioned the first units Grand Ethiopian Renaissance Dam (GERD) which will around 15,500 GWh of clean electricity to the country’s energy mix.
• So in 2024 Ethiopia banned the import of all combustion engine vehicles along with a plan to convert the vehicle fleet to electric. The original plan was for there to be roughly 200,00 electric cars and buses (out of 1.2m) within 10 years. After 2 years they are so ahead of target that it has been revised to 500,000

Poor Government regulation squanders the benefits for the UK

While the UK transition away from coal or gas has made good progress in cutting carbon emissions it hasn’t helped reduce prices for UK electricity users. Both the last Conservative government and the new Labour one have been too lazy to focus on reforming how prices are set and too afraid of vested interests in the power sector who make excess profits by providing UK consumers with some of the most expensive electricity in Europe. Other countries like the US, Norway, Australia, New Zealand and Sweden have reformed their electricity markets..

It appears the UK Government would prefer to wait for the renewable rollout grow to the point where every region in the UK can operate without gas most of the time. This requires enough power and for grid upgrades to allow that renewable energy to supply the areas of greatest demand further south.

The effect is:

• much slower transition from petrostate to electrostate (benefiting oil and gas companies)
• higher UK inflation and living costs for businesses and households
• windfall profits for wind and solar farms for no reason at all (encouraging some investment but discouraging complete replacement of gas generation which would kill these excess profits)
• A less competitive UK economy that is less able attract energy intensive industries and where consumers and businesses face artificially inflated living costs.
• more resistance to electrification technology like electric vehicles and heat pumps because cost benefits are diluted or entirely lost.

Zonal pricing – How Scottish electricity could be priced separately from the rest of the UK

Remember our very expensive gin and tonic that is all priced like the gin? Well a drinker could order a tonic water in Dundee which should cost £3, but if someone in Cardiff or Oxford or Penzance has gin at the same time the price of that Scottish 225ml tonic goes up to £54. The problem is that while Scotland has enough renewable energy to provide all its electricity most of the time, England and Wales nearly always need enough gas to keep UK prices high.

If Scotland was separated from UK pricing Scottish electricity prices could fall dramatically while prices in England and Wales should remain unchanged. If North and South Scotland were separately priced the savings would be even better. This is known as zonal pricing.

The screenshot above is from the NESO app and shows carbon intensity from very low to high. Carbon intensity varies all the time, but frequently displays 3 main features

• Scotland and the NE of England have the lowest fossil fuel in generation
• The Rest of England and North Wales varies between high and medium carbon intensity
• In any conditions South Wales generally has the dirtiest supply in the UK

While many, including Greg Jackson, CEO of Octopus energy have been campaigning for zonal or regional pricing across all of the UK. The aim of zonal pricing is to allow more regions to get power at tonic cost rather than gin cost. In the absence of backing from Government so far for full zonal pricing across the UK, letting Scotland be a separate pricing region could be an ideal test bed.

I’m not qualified to set up this change but would imagine power used in Scotland would be priced in at a Scottish price. Any excess power not used in Scotland would be sent south and be charged at the UK price until zonal pricing (or an alternative) is rolled out across the UK.

Greg can speak for himself on zonal pricing and in this mid April 2025 video outlines perspective in a lot more detail here.

Greg has also written in the Times here on Sunday 20th April 2025.

The major benefits if Scottish electricity is set separately from the rest of the UK and prices fall

1. Cut the cost of living via lower energy bills

Where Scotland is

The hapless current UK Labour chancellor is really struggling with her aim of encouraging more growth. Her policies to date have consisted of raising taxes on jobs via National Insurance increases, cutting pensioners winter heating allowances and backing anything demanded by fossil fuel lobbyists from airport expansion to weakening EV mandates and increasing taxes on EV’s. At the same time while “money is incredibly tight” she froze fuel duty for fuel burning vehicles and then splashed out £22 billion a UK oil and gas industry carbon capture and storage (CCS) building spree. CCS has never worked anywhere and makes no sense from a carbon emissions or economic or engineering point of view. CO2 emissions might even be lowered by simply burning the £22 billion.

None of this has made anyone outside of the oil and gas industry happy about the UK’s future economic direction and certainly hasn’t helped growth or consumer confidence.

Where Scotland could be

If Scotland became the first part of the UK to have a major fall in electricity costs off the back of cheap renewable energy it would

• Reduce the living costs of millions of people in Scotland
• Help offset increases in taxation on businesses and consumers.
• FOMO or fear of missing out could encourage other regions of the UK to want these benefits too and more quickly

2. Reduce heating costs

Where Scotland is

At the moment the price of electricity in Scotland is very high compared to the price of gas. This is known as the spark gap and is worse in the UK than in the rest of Europe.

• In the Spark Gap graphic below buying 1 kWh as electricity costs just 1.2 times more than 1 kWh of gas in Sweden or Norway.
• An electric air or ground source heat pump produces about 4 times more heat from a kWh than a gas boiler so not surprisingly Scandinavians’ have switched to heat pumps en mass.
• By comparison UK electricity including in Scotland costs around 4x as much as gas largely wiping out the efficiency savings of a heat pump.

To say there is room for improvement is an understatement. According to chat GPT in 2022 just 32,000 or 1.3% of Scottish homes were heated by heat pumps. In 2023 around 6,000 were installed but with 2.54 million households it would take over 400 years to finish the job.

By contrast across the North Sea in Norway, where the electricity price per kWh is about the same as gas, 40-60% of households are heated by heat pumps and they save consumers a lot of money.

The current UK domestic electricity price is around 26p/kWh which has improved slightly since the graphic but at 3.7x is still one of the worst in Europe.

Where Scotland could be

• If Scotland was able to deliver electricity for homes and businesses at a spark gap of nearer 2x the price of gas per kWh then we could see heat pump adoption soar to Scandinavian levels.
• Electricity prices are… along with first time installation cost, the biggest barriers to heat pump roll out at scale.
• As at April 2025 with a gas price around 7p per kWh we need to target an electricity price around 14p

3. Reduce Electric Vehicle charging costs

Where Scotland is

• DC charging in Scotland costs 70-85p per kWh.
• On an equivalent size vehicle petrol and diesel are equivalent to around 60p. This is in line with UK pricing across most UK EV charging networks and actively discourages EV adoption in the UK.
• Again it is the price relative to petrol or diesel cars that matters rather than the absolute number.
• The public chargers generally cost 5-10x more than charging overnight at home if you have a driveway. We need to encourage more competition across the UK for both DC and AC public charging and reduce unnecessary costs to operators.

Where Scotland could be

• The price of UK EV charging doubled after the Russian invasion of Ukraine and never came back down.
• We believe 50p per kWh is the price which would encourage EV adoption.
• Even those who charge mostly at home don’t want to pay more than petrol when on a road trip. This would be easier to achieve once wholesale electricity prices come down.
• EV sales in Scotland were the lowest in the UK. By contrast over the water in Norway over 90% of new car sales are now fully electric. Pricing of EV charging could provide the boost Scotland needs.

China low cost electricity in Zhejiang which reportedly leads the world. A province in China’s east that’s a major global producer of solar panels and batteries, it has reached an electrification rate of 51%, per RMI’s research. The southern province of Guangdong ranks second, at 49%, while Norway, the world leader in the transition to electric vehicles, is close behind at 47%.
The real driver for electrification however, has been the province’s low electricity tariffs, according to RMI. “There are no high-electrification territories with high electricity prices.”

4. Improve the speed and quality of Scotland’s EV charging

Where Scotland is

• Scotland’s EV charging was rolled out quite a long time ago and is now showing its age
• Like Wales in April 2025 Scotland has just 2 chargers over 350kW or above. They are 360kW sites in Dundee and Inverness
• In the whole of the Scottish highlands in a line North and West of Fort William, Inverness and the Caledonian canal there are just 2 locations with 100kW chargers and one single 149kW unit. Then 3 75kW chargers at John O’Groats.
• The vast majority of chargers in Scotland are run by Chargeplace Scotland. Fortunately they are helpful on the phone but the chargers are old, not particularly reliable and almost all limited to just 50kW, often single units and even worse… rationed to just a 45 minute charge with a £1 per minute penalty after that. This means an EV with a 75kWh battery can at best get just a 50% charge very slowly.

Where Scotland could be

• If Scottish residents were encouraged to switch as well we would need to see hubs of at least 10 chargers each well spread over Scotland with speeds of 175-400kW.
• This would transform EV ownership in Scotland where especially outside of the big cities where many lack confidence in the current offering.

4. Cut fuel imports and increase energy security

Where Scotland is

There is a big caveat on the numbers below because I didn’t find directly relevant numbers and so had to extrapolate these numbers from other data. It appears that Scottish consumers spending on burning fossil fuel (retail cost including taxes) is around

• £2.8 billion on burning gas for heating homes
• £8.4 billion on burning petrol and diesel for transport.

Much of this £11.2 billion fuel burning bill soars regularly at times of geopolitical uncertainty and at the whims of autocratic regimes. Yes Scotland produces oil and gas too, but it is sold priced by international not local markets so where it is produced does nothing for fuel and gas prices in the UK or even in Scotland itself. Domestic energy from renewable sources removes this pricing uncertainty and provides greater security of supply.

Where Scotland could be

If Scotland joins other countries like China in cutting demand for fuel and gas products then it will help the world cut emissions and reduce fossil fuel demand.

It’s not just cost that is an issue. While undersea power cables will need protecting against the usual hostile actors and possibly new ones, getting security of supply for power produced in UK and in UK waters would be in the control of the UK.

5. Benefits to business and employment

Where Scotland is

• UK businesses are as much victims of high UK electricity prices as individual consumers. This includes everyone from heavy industry to local pubs, supermarkets and bakeries.
• This costs jobs and investment and is a barrier to growth across the UK and all to maintain windfall profits for shareholders in the power sector.
• These windfall profits in turn damage UK politics by encouraging industrial scale lobbying of UK political parties by those in the energy and oil and gas sector with the most to loose.

Where Scotland could be

• Pushing Scotland into the electrification fast lane will spur UK innovation in clean tech from battery storage, electricity demand management, charging and heating solutions including heat pumps. This should expand new economic sectors and grow the economy.
• Lowering energy costs and making them more stable allows businesses to plan, to expand and to lower their costs.
• This in turn creates jobs just as soaring bills for fossil fuel have cost jobs.

6 Tourism

Where Scotland is

• Scotland is a major tourist destination and touring routes like the North Coast 500 do attract drivers but the archaic, slow and expensive charging infrastructure provides a disappointing experience for all but the more intrepid visitors.

Where Scotland could be

• The steps above on EV charging costs and improving the speed and quality would greatly improve the experience for visitors and locals alike. A country with abundant renewable power should be easy to travel around in electric vehicles whether that is tourists, locals or business use.

7. Politics, Environment and Netzero in the rest of the UK

Lowering the cost of energy in Scotland first will affect the rest of the UK by showing those who are yet to be convinced that there are real benefits from netzero. It will:

• Provide extra momentum and pace to net zero policy across the UK and help turnaround the messaging about renewable energy and misinformation about it increasing bills.
• Cut air pollution and improve health outcomes in a part of the UK that is behind the rest of the UK on life expectancy
• provides a template for the rest of the UK to speed the transition from fossil fuel that is driven far more by carrot than stick and, if implemented effectively will not materially affect public revenue or spending
• The UK continues to heavily subsidise the fossil fuel industry directly and with tax breaks. Shifting the landscape in Scotland, the centre of UK oil and gas production, will fundamentally change the relationship of both devolved and central governments in the UK with the fossil fuel and supporting industries. If fossil fuel interests have less justification for regular meetings with ministers and officials there is a good prospect their influence should start to wane. Essentially they will be a declining export industry of less and less strategic importance to the UK.
• Scotland is currently in the slow lane of EV adoption in the UK. Its energy mix makes it the logical part of the UK to lead between now and 2030 and by doing so will pull the rest of the UK towards next zero more rapidly.

Scotland and Ethiopia compared

1. Ethiopia is 14 times bigger than Scotland with 1,100,000 square km land area versus 78,000 square km for Scotland
2. Ethiopia is both higher and lower than Scotland. It’s highest peak Ras Dashen is at 4,550m compared to Ben Nevis which sits at 1,345m. By contrast Ethiopia also has one of the lowest places on land, tghe Danakil Depression which sits 125m below sea level.
3. In case you think it’s getting one sided Scotland has over 30,000 lochs and 10,000km of coastline while Ethiopia is landlocked and fewer bodies of water
4. Ethiopia is also more densely populated with 120m people compared to 5.5m in Scotland
5. Like most of the world Scotland uses the Gregorian calendar. By contrast Ethiopia has it’s own unique calendar which runs about 7 or 8 years behind and has… 13 months in every year!
6. Climate – Comparing Addis Ababa with Edinburgh or Aberdeen the numbers are not as different as you might expect in these coastal Scottish cities. Average lows of 5-12C in Addis versus 1-11C in Scotland.
   Average highs are more different… 20-25C in Addis v 6-19C in a Scottish summer! When you look at the lowest recorded temperatures
   The Bale National Park in Ethiopia at 3,500-4,377m elevation has recorded -10C but in Scotland the record coldest temperature in the Highlands is -27.2C.