Zonal pricing to slash more than £55bn off energy bills, major new report finds

• FTI and Octopus find zonal pricing could save British consumers at least £55 billion
• Market reform would protect bill payers from the cost of infrastructure delays and reduce need for extra pylons, bringing savings up to £74 billion
• FTI and Octopus call on the Government to bring in zonal pricing to ease bills, decrease number of planned pylons and protect consumers from shock costs

Tuesday 25th February 2025 - British customers could save between £55-74 billion by 2050 on electricity bills if the Government adopts zonal pricing, according to a new report by FTI Consulting commissioned by Octopus Energy*.

The UK currently operates under a single, nationwide electricity pricing system - a legacy of the fossil fuel era that is no longer fit for purpose, resulting in some of the highest power prices in the world.

Countries like Norway, Sweden, New Zealand, Japan, and much of the US have already adopted locational pricing, which adjusts electricity prices regionally based on local supply and demand. This allows for more efficient use of the grid, reducing unnecessary costs and inefficiencies.

The findings show zonal pricing could save consumers an average of £3.7 billion a year, rising to as much as £5bn annually if there are delays to planned infrastructure**.

This is a significant increase in the bill savings estimated by Ofgem and FTI in 2023, with potential for further benefits in protecting customers from delays to new infrastructure.

Zonal pricing could mean fewer pylons cluttering up the countryside and creates economic growth potential in places like Scotland where new energy-intensive industries – such as data centres – could locate and benefit from some of Europe’s cheapest electricity.

Greg Jackson, Founder of Octopus Energy Group, said: “Either Britain sticks with an outdated pricing system that leaves consumers exposed to skyrocketing bills, or adopts zonal pricing and saves over £4 billion a year.

“Zonal unlocks massive savings by encouraging energy to be used nearer to where it’s produced, and at those times it is plentiful, rather than wasted. With the potential to ease any burdens in infrastructure delays, the government can embrace a modern system that delivers cheaper, fairer energy while also protecting us from shocks further down the line. The evidence is overwhelming - zonal pricing is the way forward, and we need action now.”

With consumers facing rising energy costs, the UK government has a major opportunity to explore zonal pricing as a way to deliver a cheaper, more resilient, and lower-carbon electricity system.

-ENDS-

*Impact of a Potential Zonal Market Design in Great Britain - FTI Consulting and Octopus Energy, February 2025

**Zonal pricing acts as a safety net to de-risk Britain’s ambitious infrastructure plans, catalysing up to 37% in additional savings if certain conditions are met.

Britain needs to build more than double the amount of power lines in the next five years than was built in the last decade. If just three out of eighty critical power lines aren’t built by 2030, the cost of wasted wind energy under the current energy system would rise to £7.8 billion per year - six times today’s level (Clean Power 2030, National Energy System Operator).

Under a zonal system, the grid intuitively adjusts and turns these excess costs into benefits. FTI’s report found if a small number of higher-risk power lines are delayed, total savings would rise from £55 billion to £64 billion.

Additionally, if just a small proportion of new wind farms were accelerated in Scotland, coupled with further delays to nuclear power plants, the cumulative benefits could rise to as much as £74 billion.

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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 9 million households globally. Its operations span 27 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 54 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. For more information, check out our website.