Zonal pricing ‘could cut industrial power costs’

The introduction of zonal pricing could reduce industrial energy costs without burdening consumers, a new report has argued.

Analysis by FTI Consulting estimated the system, where electricity is charged based on regional demand and supply, could save major energy users billions of pounds.

The report pointed out that the current energy subsidy scheme for manufacturers, the British Industry Supercharger, adds up to £410m onto consumer bills, and is expected to become 2.5 times more expensive by the 2030s.

The report, carried out for Octopus Energy, said zonal pricing - which is being considered as part of the wider Review of Electricity Market Arrangements (REMA) - would make the energy system more efficient, helping thousands of energy-intensive companies not covered by the supercharger.

The debate over zonal pricing continues to be the subject of much industry debate. A recent report by the UK Energy Research Centre warned it would drive up the cost of building new wind farms and could add significantly to household bills.