Electricity needs to be cheap, clean, abundant and resilient. Here's my 8-point plan to turn the current Power Price Doom Loop into an Electrification Virtuous Circle.
However, I disagree with one item: peak loads no longer drive grid investment. Utilities are installing storage to manage renewables, and have the option to install some of this storage near the customers, where it can deliver at peak hours without a need for grid investment.
The power sector is gradually becoming more like other industries. I'll use breakfast cereal as an example. We harvest all the corn (maize) in the autumn, but we eat Corn Flakes all year long (and concentrated in the morning hours as well). How do we do that? Storage is the answer. Vast silos of grain, huge warehouses near the breakfast cereal factories with rail carloads of Corn Flakes, regional warehouses with pallets of Corn Flakes, local supermarkets with cases of Corn Flakes, and my own pantry with several boxes (always bought on sale and with coupons). Of course I live in a big American home, with the space to do this; not everyone has quite the flexibility that I have.
Electricity will become similar if we are smart. Some storage will be built at the wind and solar farms, to smooth the flow onto the transmission system. Some will be built at transmission hubs, allowing for dynamic line ratings to dramatically increase allowed transmission loading, knowing that storage can pick up the load if a line or terminal equipment fails. But much should be built along the distribution system, to allow peak loads to be met without huge distribution capacity costs.
Batteries are now cheaper than distribution capacity. And those localized batteries can take power when it is cheap, and deliver it to customers when it is dear, earning their way to providing a cleaner power system.
Seattle City Light, the municipal utility serving Seattle, did a great piece of work on this in conjunction with EPRI. Their electrification study showed that to enable full electrification of heating, water heat, and transport, about one-third of their distribution circuits could handle the DAILY kilowatt-hour flow of electrification, but not the peak HOURLY load. For those circuits, Seattle determined that local storage and local demand response were alternatives to circuit capacity upgrades. One third of their circuits have plenty of capacity and do not need upgrades, and only one-third will need upgrades to meet the daily kilowatt-hour flow. https://www.epri.com/research/products/000000003002024906
Jim Lazar, Olympia, Washington (but written from Budapest)
Yes, there will be distribution capacity upgrades needed.
On locational pricing, in Norway there was direct political fall-out in 2025 from locational pricing (just at the point the U.K. government was making its recent round of deliberations on the topic).
On the surface, Norway seems to have a lot of similar characteristics to GB: North-South supply-demand flows, non-EU member, continental inter-connectors playing an important role...
Are there any good pieces about how the UK could ameliorate the risks of something similar happening here, if LMP was to go ahead?
This is very good indeed. Changing the focus from carbon targets to making customers' lives better will, ironically, make it easier to hit those carbon targets as well.
Feels like an 'institute' or some supporting vehicle for best practice in each of these would help. Maybe a EurElectric supported? Educating the Government energy depts' of the planet on best in class cases and a playbook to push back against the naysayers (especially for 3, locational pricing). Maybe getting Octopus Energy to help communications around how to get residential consumers to change behaviour to suit the grid- we will have a lot of pensioners with plenty of time and willingess to change if it saves them money. I know its unsexy but Energy efficiency as a 9th item would have a lot of impact (yes its inherent if you do a good market design but as Steve Banbury (below) puts it, make it cheap and Jevons paradox kicks in).
Maybe I don't know enough about energy investment and markets specifically, but I don't really understand the economics of the High Price Doom Loop. How do high prices make it harder for new investments to pan out? It seems like it would be the opposite - high prices would make new investments even more profitable. And if volume is too low for them to sell all of their new electricity, wouldn't that drive prices down?
Michael, a well argued case for cheap and abundant electricity. My fear is that once it becomes cheap and abundant we humans will just waste more and more of it.
Even now, electricity is already too cheap. We throw a switch and spray electrons all over the place. Massive office blocks lit up at 3am in the morning yet totally empty is a good marker for 'too cheap'.
A very nice piece.
However, I disagree with one item: peak loads no longer drive grid investment. Utilities are installing storage to manage renewables, and have the option to install some of this storage near the customers, where it can deliver at peak hours without a need for grid investment.
The power sector is gradually becoming more like other industries. I'll use breakfast cereal as an example. We harvest all the corn (maize) in the autumn, but we eat Corn Flakes all year long (and concentrated in the morning hours as well). How do we do that? Storage is the answer. Vast silos of grain, huge warehouses near the breakfast cereal factories with rail carloads of Corn Flakes, regional warehouses with pallets of Corn Flakes, local supermarkets with cases of Corn Flakes, and my own pantry with several boxes (always bought on sale and with coupons). Of course I live in a big American home, with the space to do this; not everyone has quite the flexibility that I have.
Electricity will become similar if we are smart. Some storage will be built at the wind and solar farms, to smooth the flow onto the transmission system. Some will be built at transmission hubs, allowing for dynamic line ratings to dramatically increase allowed transmission loading, knowing that storage can pick up the load if a line or terminal equipment fails. But much should be built along the distribution system, to allow peak loads to be met without huge distribution capacity costs.
Batteries are now cheaper than distribution capacity. And those localized batteries can take power when it is cheap, and deliver it to customers when it is dear, earning their way to providing a cleaner power system.
Seattle City Light, the municipal utility serving Seattle, did a great piece of work on this in conjunction with EPRI. Their electrification study showed that to enable full electrification of heating, water heat, and transport, about one-third of their distribution circuits could handle the DAILY kilowatt-hour flow of electrification, but not the peak HOURLY load. For those circuits, Seattle determined that local storage and local demand response were alternatives to circuit capacity upgrades. One third of their circuits have plenty of capacity and do not need upgrades, and only one-third will need upgrades to meet the daily kilowatt-hour flow. https://www.epri.com/research/products/000000003002024906
Jim Lazar, Olympia, Washington (but written from Budapest)
Yes, there will be distribution capacity upgrades needed.
Super summary — thank you.
On locational pricing, in Norway there was direct political fall-out in 2025 from locational pricing (just at the point the U.K. government was making its recent round of deliberations on the topic).
On the surface, Norway seems to have a lot of similar characteristics to GB: North-South supply-demand flows, non-EU member, continental inter-connectors playing an important role...
Are there any good pieces about how the UK could ameliorate the risks of something similar happening here, if LMP was to go ahead?
Britain should send Michael to become Commissioner for Energy in the next European Commission. …wait
This is very good indeed. Changing the focus from carbon targets to making customers' lives better will, ironically, make it easier to hit those carbon targets as well.
Feels like an 'institute' or some supporting vehicle for best practice in each of these would help. Maybe a EurElectric supported? Educating the Government energy depts' of the planet on best in class cases and a playbook to push back against the naysayers (especially for 3, locational pricing). Maybe getting Octopus Energy to help communications around how to get residential consumers to change behaviour to suit the grid- we will have a lot of pensioners with plenty of time and willingess to change if it saves them money. I know its unsexy but Energy efficiency as a 9th item would have a lot of impact (yes its inherent if you do a good market design but as Steve Banbury (below) puts it, make it cheap and Jevons paradox kicks in).
https://electrifybritain.org/
no.2 is just a fairy tale
the only way to cut curtailment is to build storage, and by storage I mean the only good one - large scale pumped hydro
everything else is just talk and pork barreling
Maybe I don't know enough about energy investment and markets specifically, but I don't really understand the economics of the High Price Doom Loop. How do high prices make it harder for new investments to pan out? It seems like it would be the opposite - high prices would make new investments even more profitable. And if volume is too low for them to sell all of their new electricity, wouldn't that drive prices down?
Michael, a well argued case for cheap and abundant electricity. My fear is that once it becomes cheap and abundant we humans will just waste more and more of it.
Even now, electricity is already too cheap. We throw a switch and spray electrons all over the place. Massive office blocks lit up at 3am in the morning yet totally empty is a good marker for 'too cheap'.