Zonal electricity pricing may not be possible until mid-2030s, says research

Independent

12-05-2025

Zonal electricity pricing would be unlikely to happen until after 2030, according to research, even if the Government decided to adopt the policy in the coming weeks.
Energy consultancy Cornwall Insight said the measure, which would divide Great Britain into different energy price zones, could even take until the mid-2030s to be implemented.
Ministers are expected to make a decision on zonal pricing this summer after lobbying efforts for and against it have ramped up since Labour entered Government.
The new research said zonal pricing would take at least five or six years to bring into effect.
That includes the time it would take for consultations, legislating the policy in Parliament and transitional arrangements to avoid disruption for existing energy producers.
Legislating the policy into law may not even happen before the next general election, the report said.
Kate Mulvany, principal consultant at Cornwall Insight, said: 'Zonal pricing would represent the most fundamental redesign of the GB electricity market in decades.
'It is an incredibly divisive topic in the industry, and regardless of the purported benefits, its implementation is going to take significant time and resource.
'Political backing and industry support may help, but a go-live before 2030 remains incredibly unlikely.
'The Government's commitment to a decision by mid-2025 is welcome. But we must be realistic: this is the start of a long road, not the finish line.
'Zonal pricing may still form part of the long-term vision for electricity market reform. But for now, its delivery sits firmly in the next decade.'
Zonal pricing would replace the current single price for electricity with different prices for each region, excluding Northern Ireland.
The prices would be based on how much electricity is available, meaning areas like Scotland, which generate large amounts of power, would have lower market prices.
But it also means market prices in other parts of the country, such as the South East, would be higher.
Proponents of zonal pricing say it would save billions of pounds each year by making the electricity grid more efficient.
Critics say it would create a postcode lottery where people would face an unfair disparity in bills.
It comes at a time when the Labour Government is pushing to decarbonise the grid by 2030, in a policy which will require tens of billions of pounds of private sector investment.
Cornwall Insight's report also said the policy could create uncertainty for companies looking to invest in the UK power sector, potentially threatening the 2030 clean power target.