Space, time and electricity (part 2)
DEEP DIVE: What exactly is nodal pricing and why does it mean a return to central dispatch?
“We think it is credible to implement nodal pricing and central dispatch within five years.” – National Grid ESO, May 2022
The UK electricity system was designed for simpler times. When the so-called New Electricity Trading Arrangements (NETA) were introduced in 2001, the weather did not drive power generation. Demand was inflexible and highly predictable. Renewables accounted for less than 1% of the mix and consumers were passive recipients of electrons produced largely by baseload coal and nuclear power stations. Fast-forward two decades and NETA is in clear need of an update — and the system operator is pushing for ‘nodal pricing’. But what is it, and what does it entail?