Why is a nation rich in clean energy still paying fossil fuel prices?

In Scotland, wind and hydro schemes now generate around 113% of the nation’s annual electricity demand, a statistic that should signal success in the shift away from fossil fuels. 

Yet energy prices remain among the highest in Europe. The Government has overtly applauded the potential benefits of AI and there is an opportunity to align key policies of growth with net zero ambitions, but not while Scottish data centres pay up to four times more for electricity than their Nordic competitors.

This contradiction exposes a deeper problem in how the UK manages its energy transition.

Britain’s electricity system was designed for a fossil-fuel era, not one dominated by renewables: coal and gas, not wind and sun. The physical grid and the associated electricity markets and codes lags behind the rise in renewables, which could deliver abundance. Instead, the result is that clean power is being wasted, while the energy sector - and consumers - continue to pay fossil-fuel prices.

The result is that clean power is being wasted, while the energy sector – and consumers – continue to pay fossil-fuel prices.

Energy is no longer the challenge; management is. The country has built a world-class renewable base but is still paying as though it relies on fossil fuels.

Unless markets and infrastructure catch up with reality, Britain risks falling behind in the race for digital and industrial competitiveness.

Wasting energy in the race to net zero

Every year, huge volumes of renewable generation is  simply switched off. Known as curtailment, this process is used to prevent the grid from being overloaded when wind farms generate more electricity than the network can handle, or when demand is too low.

In 2024/25 alone, the UK curtailed over 9000 Gwh of wind, spending hundreds of millions of pounds compensating renewable generators for energy that was never used.

The irony is astounding – and one that can oxygenate the fire of net zero debate: while households face high bills, and businesses worry about competitiveness, vast number of clean electricity projects are being paid not to generate

Much of the problem stems from geography. The windiest parts of Britain, particularly  northern Scotland, is far from epicentres of energy demand. Transmission bottlenecks mean that even when renewable output is high, the power often can’t travel to where its most needed in the South.

Without more flexible storage, better grid connections and network build out, or local uses for that surplus energy, the waste continues.

One solution , often presented with a seemingly obvious logic, is that Britain should ‘simply’ decouple renewables from gas, and stop allowing expensive gas-fired generation to set the price of all electricity. However, naturally there’s a reason such a  solution has not yet been realised; it’s an idea that masks the complexity of the energy pricing system.

If renewables were priced separately, consumers might see cheaper rates when the wind is blowing, but the system is still required to pay for the gas plants that step in when it isn’t.

Unless the government shoulders that cost through taxation or new subsidies, the expense doesn’t disappear, it just gets blown around like the wind.

Without tackling the underlying inefficiencies in how energy is priced, stored and distributed, price decoupling risks becoming another short-term fix that fails to make energy genuinely cheaper.

Putting wasted energy to work

A more constructive approach would be to put wasted energy to work locally. Instead of curtailing renewables when the grid can’t absorb any more, regions with surplus power could use it to drive economic activity, for example powering data centres

This idea, has already gained traction in parts of Europe. It means placing energy-hungry facilities near renewable generation, allowing them to benefit from cheap local power while easing pressure on the grid.

In practice, it could turn areas currently penalised by transmission constraints into magnets for digital investment.

If energy can’t easily get to where demand is, then demand should move closer to where the energy is generated.

For Scotland, with its abundant wind and growing digital sector, the opportunity is clear.

Gas’s role in renewables

This pragmatic model recognises that gas will still play a limited role in covering times of low renewables, but that 95% of the time, cheaper green power could be driving productivity and innovation instead of being switched off.

Abandoning gas overnight isn’t an option, both in terms of infrastructure, and in terms of costs. Britain will still need flexible gas generation during calm, dark periods when renewables fall short.Gas still plays a vital role, but it’s crucial we employ smarter systems to ensure that gas is only relied on to nurture renewable energy’s flow within the grid.

From power to prosperity

It would be reasonable that assume that when energy is abundant, it would be affordable. Yet current market structures do not comply.

Fixing that imbalance won’t just reduce bills it could help anchor new industries, support rural economies, and make the UK more attractive for energy-intensive sectors like AI and advanced manufacturing.

Scotland, in particular, is well placed to lead this shift.

By turning wasted renewable power into productive use, it could demonstrate that abundance and affordability are not opposites but allies and that a smarter energy system can deliver both cleaner and cheaper electricity.

Ed Miliband recently unveiled plans to put the UK ‘back on track to reach its net zero commitments’, with the Labour government insisting that pushing for renewable energy and lower carbon emissions will reduce household bills and boost the economy.

But Britain has the renewable resources to power a new industrial age. What it lacks is the will to redesign a system still tethered to its fossil-fuel past.

Until that changes, the paradox will remain: a nation rich in clean energy, but poor in how it’s used.

David Wildash is the Chief Strategy Officer at Apatura

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