How to maintain investor confidence through electricity market reform

This report explains zonal pricing and why it is needed.

System costs are rising too quickly, impacting households and businesses, harming growth, endangering investment, and making net zero harder and more expensive. Moving to zonal pricing will save around £70bn in system costs between 2030 and 2050.

International evidence shows that zonally priced markets are at least as successful as nationally priced ones in deploying renewables—if anything, they’re better. In 2020, 43% of all generation capacity was in markets with some form of regional pricing, up from 23% in 2000.

The report outlines how the government and companies can mitigate any risk from zonal pricing, which shifts the cost and risk of poorly sited power plants from billpayers to big generators. It also explains why alternatives to zonal pricing will not work. Clean power 2030 is at risk because the government will not address interconnectors flowing the wrong way nearly a third of the time, requiring more gas to be burned than is compatible with clean power 2030.

Read the full report below.