Controversial plan risks driving up electricity bills in south of England

3 March 2025 - RenewableUK press release

RenewableUK is warning the Government against introducing a new scheme called zonal electricity pricing, because of the risk that it would jeopardise investment in clean energy and push electricity prices up in parts of the England and Wales - with analysts suggesting the highest increases would be in the south of England.

Under the scheme, which is currently being considered by Ministers, the UK would be divided up into different zones, and consumers would pay different rates for the same amount of electricity, creating a postcode lottery for billpayers, as this map by analysts LCP Delta shows:

We strongly believe that a cost-benefit analysis should be undertaken on the implications for billpayers and businesses across the country before any decision on zonal is undertaken.

Modelling suggests that households and businesses in England and Wales would be hit the hardest under the proposals – especially those on the south coast, where wholesale prices would be highest, as this graph by LCP Delta shows:

Wholesale prices account for 40-50% of electricity bills, so changes to them are very significant. However, household bills also include other costs such as paying for network maintenance and upgrades, and the overall impact when these other costs are included is unknown at this stage.

RenewableUK has sent a letter on the issue to the Energy Secretary Ed Miliband and the Business and Trade Secretary Jonathan Reynolds, which has been signed by a range of trade associations, including energy intensive users, and trade unions. The letter is available here.

Jane Cooper, Deputy CEO of RenewableUK, said:

“The reality is that introducing regional or zonal electricity pricing is likely to lead to higher energy bills for households and businesses in parts of England and Wales – especially in the south of England - as well as disrupting new investment in clean energy. It would create on a postcode lottery on bills, which understandably worries communities and businesses which might see higher charges.

“It's hard to see how the Government could succeed in delivering clean power by 2030 whilst also introducing this complex and controversial scheme. If Ministers choose to move to zonal pricing, they would essentially be asking companies to build wind and solar farms with no idea of what their future market might look like. The uncertainty and risks created would be priced in by developers bidding into clean energy auctions and would drive up the cost of building vital new projects, potentially stalling development. This would be particularly acute over the next few years, at the very time when we need to secure billions of pounds of investment and maximise the amount of new clean energy capacity we commission to strengthen the UK’s energy security".

As well as pushing up household bills, sectors including aerospace, automotive, data centres and pharmaceuticals would be disproportionately impacted, undermining companies based in the south of England. Make UK – the trade association for manufacturing - has publicly stated that higher electricity costs could push companies to relocate out of the UK altogether, weakening Britain’s economic growth.

Similar regional pricing in Norway led to backlash, forcing the Government to suspend it by reinstating national pricing measures due to concerns over its lack of fairness.

More details on the impact of zonal pricing by LCP Delta are available here.

(ends)

Notes

For further information, contact

Robert Norris, Head of Communications
07969 229 913 | Robert.Norris@RenewableUK.com

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