Zonal pricing move ‘could avoid £27bn grid upgrades’

New analysis shows that the introduction of zonal pricing could avoid the construction of nearly 3,000km of pylons and deliver up to £27 billion in savings for consumers.

The research by FTI Consulting compared the impact of national and zonal pricing systems on five major intra-GB transmission lines. Under national pricing, all five lines were worth the investment.

However, applying zonal pricing significantly decreased the payback on these power lines by between 22% and 95%, with two power lines becoming uneconomical, making them unnecessary.

The report argues that zonal pricing optimises the use of existing grid infrastructure, reducing the need for new power lines and associated costs.

The report, commissioned by Octopus Energy, recommends reassessing post-2030 grid plans totalling £58 billion to avoid unnecessary upgrades.

The debate over zonal pricing continues to be the subject of significant 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.