Why Britain needs zonal energy pricing

In the last 15 years, we've gone from an energy system that's 40% coal-powered to switching off coal for good. Renewable generation has gone from 5% of the nation’s power to over 40%.

Renewables are one of the cheapest ways to produce energy (cheaper than coal and even gas). British wind and solar farms should be able to take advantage of our abundant natural resources to deliver lower bills for everyone. And yet...

The UK has some of the highest energy prices in the world

British households and businesses are being hammered by soaring energy costs.

Household energy bills are up 45% from three years ago, while small businesses have been hit by a 70% rise since 2022.

This has a huge impact on people. Customers are struggling with the cost of living. 9 out of 10 small businesses say high energy costs hurt them. Two thirds of businesses say they've chosen not to hire because of high energy costs. (Based on a survey of Scottish businesses conducted by Stratcom UK and Diffley Partnership February 2025.)

Something’s got to give. So what's the problem, and how do we fix it?

The UK’s energy system is so broken we waste billions paying wind farms to turn off—instead of bringing down bills.

A key driver of the UK’s high electricity prices is our wasteful system that pays energy companies billions to switch off their wind farms when the wind is blowing, and turn on expensive polluting gas plants instead.

Bill payers have forked out over £300 million to turn off wind and turn on gas already this year, a 60% increase from 2024.

It cost £53,044,773 just last week (Sunday 2nd to Saturday 8th March). That’s around £180,000 per hour going into the pockets of generators to simply turn off their turbines. According to publicly available data from wastedwind.energy.

The Seagreen offshore wind farm was turned off 71% of the time last year, and earned £40 million for it. All the wind wasted in 2024 could have powered every household in Scotland for more than a year.

It’s projected the cost of wasted wind will rise to at least £3.6 billion a year by 2030 all funded by your energy bills.

The problem isn't the energy. The problem is our outdated system, designed hundreds of years ago to switch a couple of giant fossil-powered stations on and off. If the system's not fit for purpose any more, we've got to fix it.

The country has made huge strides towards a sustainable energy future: electric and decentralised, with hundreds of smaller clean energy producers and smart, shiftable demand (EVs, heat pumps & batteries). Such a system needs a dynamic grid, with dynamic pricing.

Read the leading independent analysis on zonal (locational) pricing below.

The FTI found that zonal pricing would...

• Save customers at least £55bn by 2050 (£3.7bn per year!)
• Lead to market reform and protect customers from the costs involved in infrastructure delays and other network costs, bringing savings up to £74bn.
• Make bills cheaper (or no worse off) in every area of the country
• Give areas with plenty of renewable generation, like Scotland, some of the cheapest electricity in Europe

Independent experts agree - zonal energy pricing is the way to go

Our energy system operator and regulator both think the change to locational pricing is needed.

Key figures in the energy sector agree that the status quo has to change. Jonathan Brearley, CEO of Ofgem has said it’s not economically credible for British consumers to leave the current system as it is. And the Ofgem board backs locational pricing.

The National Energy System Operator, NESO, also backs locational pricing, saying it would significantly reduce the prevalence of gas setting wholesale prices.

It’s supported by a wide range of organisations championing consumers and infrastructure investment including the Social Market Foundation, Ovo, the Energy Systems Catapult, Britain Remade and Tech UK

Learn more about zonal pricing and how it works on our blog: zonal pricing explained.

Or, learn how it works through the medium of fishmongers…