UK datacentre operators are advocating for zonal electricity pricing to support the growth of artificial intelligence infrastructure in remote areas, such as Scotland.
Tech Firms Push for Zonal Electricity Pricing in UK to Fuel AI Datacentres
Datacentres are the critical infrastructure that underpins the digital economy, according to Sam Robinson of the Social Market Foundation thinktank.
A datacentre is a specialized facility designed to house and manage large amounts of computer equipment, such as 'servers,' storage systems, and networking hardware.
These facilities provide a secure, climate-controlled environment for the operation of IT equipment, ensuring high availability and performance.
They are used by organizations to store, process, and distribute vast amounts of data, supporting applications and services like cloud computing, big data analytics, and online transactions.
Energy industry leaders are calling on the UK government to overhaul the country’s electricity market by introducing zonal pricing. This would involve splitting the market into different zones, where prices become more expensive in areas with high demand and cheaper in areas with low demand.
Zonal pricing is a pricing strategy where different regions or zones are charged varying prices for the same product or service.
This approach takes into account regional differences in demand, competition, and cost of living.
Companies use zonal pricing to maximize revenue by setting higher prices in areas with high demand and lower prices in areas with low demand.
For instance, a company may charge more for its products in urban areas than in rural areas due to the higher disposable income of consumers.
The move is aimed at encouraging the growth of AI datacentres in remote areas of Great Britain, such as Scotland, which have an abundance of windfarms and low population density. The report by the Social Market Foundation (SMF) thinktank highlights that zonal pricing would make areas such as Scotland a hotspot for AI datacentres.
Keir Starmer has announced plans to ‘mainline artificial intelligence into the veins of the nation,’ with a sweeping action plan to make the UK a world leader in the technology. However, the plans have attracted some scepticism due to the high industrial electricity prices in the UK and the pressing targets to virtually eliminate fossil fuels from the power system by the end of the decade.
Artificial intelligence (AI) has been a subject of interest for decades, with its roots dating back to the Dartmouth Summer Research Project in 1956.
Initially focused on simulating human thought processes, AI has since expanded to include machine learning, natural language processing, and computer vision.
Today, AI is integrated into various industries, including healthcare, finance, and transportation.
According to a report by Gartner, the global 'AI market' is expected to reach $190 billion by 2025.
The SMF report points out that research by Octopus Energy shows that zonal pricing would mean a datacentre in Aberdeen would have electricity costs 65% lower than one in Slough, and make Scotland‘s electricity prices the lowest in Europe.
Benefits of Zonal Pricing
Proponents of zonal pricing believe it will encourage high energy users such as datacentres and factories into areas with low energy prices. This would create new job opportunities beyond south-east England and ensure that windfarms in remote areas do not need to be turned off due to low demand.
Concerns Over Zonal Pricing
However, clean energy companies have expressed concerns that the changes could make projects planned for remote areas of the country less profitable and put investments in clean energy at risk. The government is expected to make a decision on how to proceed with zonal pricing in the coming months.
The report has also backed the government’s plan to allow small modular reactors (SMRs) to be built outside the UK’s legacy nuclear power zones, which would help power the rollout of datacentre hubs across England and Wales.
- theguardian.com | Tech firms call for zonal electricity pricing in UK to fuel AI datacentres
- uk.finance.yahoo.com | Autonomous Last Mile Delivery Market Report 2025: Revenues ...
