Zonal pricing will damage investment and increase energy bills, industry tells UK Government

In a letter to the UK Government, a coalition of trade associations and trade unions, including Scottish Renewables, has urged the UK Government to immediately rule out zonal pricing and adopt a reformed national market to protect energy bills and encourage investment in the UK’s pipeline of renewable energy projects. 

The trade groups have highlighted to Ed Miliband MP, Secretary of State for Energy Security and Net Zero, and Jonathan Reynolds MP, Secretary of State for Business and Trade, that zonal pricing would increase the cost of investing in renewable energy projects and have a negative long-term impact on energy bills.

The UK Government is currently considering a proposal known as zonal pricing, which would divide the UK into different pricing zones and see consumers face varying electricity costs, essentially creating a "postcode lottery" for energy bills.

Zonal pricing would actively disincentivise the development of vital wind farms and other renewable energy projects in Scotland which are needed to achieve the UK Government’s ambition of clean power by 2030.

 Analysis has found that even small increases to the cost of building renewable energy projects would wipe out any savings from zonal pricing and as a result of the uncertainty associated with zonal pricing, industry has warned this will lead to higher bills for households and businesses.

Claire Mack, Chief Executive of Scottish Renewables, said:

“Zonal pricing is a dangerous proposal to radically rip up the way the UK electricity market operates which would derail the strong progress Scotland has made towards our clean power ambitions.

“Any potential benefits of zonal pricing have not been convincingly demonstrated and the significant risks involved threaten the private investment needed to keep vital Scottish projects viable. Zonal pricing would also take at least seven years to implement, thereby undermining efforts to benefit consumers in the short term.

“Scotland’s renewable energy industry stands ready to support the positive reforms at our disposal, alongside wider efforts to enable deployment, which will protect the scale of investment that must be secured in the years ahead.

“We urge the UK Government to urgently rule out zonal pricing to ensure investment comes to Scotland and our industry can continue delivering the good jobs, economic growth and affordable clean energy that are crucial for our future prosperity.”

Ends

Notes

Read the letter to the UK Government here.