UK Government Abandons Zonal Electricity Pricing Plan Amid Industry Backlash

The UK government has decided to abandon plans to introduce zonal pricing in the country's electricity market, following strong opposition from the energy sector and concerns over investment risks. Zonal pricing would have divided the UK into regional electricity markets with different prices based on local supply and demand, potentially lowering costs in renewable-rich areas like Scotland but raising bills in parts of southern England. While proponents such as Octopus Energy argued the scheme could save consumers billions and reduce the need for costly grid upgrades, major companies like SSE, Scottish Power, and RWE warned it would create a postcode lottery, increase bills for some households, and deter investment in renewable energy projects. Industry groups emphasized that uncertainty around zonal pricing was already hindering new wind and solar developments, and government sources highlighted risks to delivering clean power and renewables auctions on time. Research sponsored by energy developers indicated that zonal pricing could actually lead to higher consumer costs if investment was negatively impacted. The decision to maintain a national pricing approach is expected to boost investor confidence and support the UK's renewable energy pipeline.