Octopus responds to Government's decision to scrap Zonal Pricing
- Modeling shows Zonal Pricing would unlock bill savings of £3.7bn to £5bn a year
- The system could be implemented in 18 months and is already used by the majority of the OECD
- The mooted alternative ‘Reformed National Pricing’ does not exist
- Octopus urges the government to ensure any alternative solution can slash energy bills and be implemented by 2028, which is what zonal pricing would have delivered
London, 10th July 2025 – Today, the UK government has announced it will abandon plans to introduce Zonal Pricing for electricity, opting instead for the undefined ‘Reformed National Pricing’.
This year alone, the UK has spent almost £700 million to turn off wind farms when the wind blows and fire up costly gas power plants instead* – a 40% rise on last year and set to reach £8 billion by 2030, according to the system operator.
Britain needs to reverse these spiralling costs.
Zonal pricing could cut bills by at least £3.7 billion to £5 billion a year while unlocking investment and driving a more efficient system, according to detailed modeling by FTI** and also save bill payers up to £27 billion more by preventing the construction of nearly 3,000km of unnecessary, costly grid infrastructure***.
Locational pricing is well understood – it is the norm in the OECD and could have been implemented by 2028 (in Sweden, it was introduced in just 15 months).
The alternative to Zonal Pricing – so-called ‘Reformed National Pricing’ – is non-existent. There are no published models, no cost-benefit analysis and therefore little hope it’ll tackle the rising costs of the system.
Octopus Energy today urges the government to ensure any alternative to Zonal Pricing passes these tests:
1) Can it cut electricity costs by at least £100-£150 per year?
2) Can it be implemented by 2028?
3) Can it significantly reduce the need for new pylons?
Greg Jackson, founder and CEO of Octopus Energy, said: “Electricity bills are spiralling and zonal pricing would have reversed that.
“The government and generators need to come up with an alternative which will prevent the now seemingly inevitable price rises that will hit over the next few years.”
-ENDS-
Notes to editors:
**Impact of a Potential Zonal Market Design in Great Britain - FTI Consulting, February 2025
***Helping Hercules: How to Make Transmission Build-Out to Achieve Net Zero Easier - FTI Consulting, April 2025
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About Octopus Energy Group
Octopus Energy is a global clean energy tech business, driving the affordable, green energy system of the future. Under its own retail brand, Octopus delivers world-class customer service and cutting edge energy products to over 9 million households globally. Its operations span 32 countries and the entire energy value chain. The group invests in, builds and flexibly manages renewable energy, operating a £7 billion portfolio of projects.
Octopus has licensed its advanced data and machine learning platform, Kraken, to support over 60 million customer accounts worldwide through licensing deals with companies such as EDF, E.ON and Origin Energy. Kraken enables Octopus to drive the electrification of heat and transport through smart tariffs and innovative cleantech. Backed by pension funds, investors and energy giants, Octopus Energy Group businesses deliver cheaper, greener energy and cutting-edge tech to countries and customers worldwide.
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