Whitehall’s Review of Electricity Market Arrangements (REMA) is considering how to reform the market to ensure we meet the Prime Minister’s Mission for clean power by 2030.
Enhanced national pricing – a series of simple, practical measures to ensure the system works best – is the fairest, cheapest and fastest route. By contrast, zonal pricing would mean higher bills¹, especially for the poorest in society, and slow our transition to clean power²³.
Fairer Energy Future is a coalition of organisations who have come together to urge the government not to create unnecessary delays or drive up the cost of clean power by messing with the optimal plan.
The fairer, cheaper, faster route to clean power by 2030
New consumer survey results
Fairer
Enhanced national pricing is fairer. A more expensive and less green alternative like zonal market pricing will impact those on the lowest incomes the most.
Zonal pricing means electricity will cost more, especially where it is needed the most¹. Those on low incomes will have to choose between moving away from their jobs, communities and support networks or paying more to power their homes. Zonal pricing isn’t fair.
Cheaper
Enhanced national pricing is cheaper for consumers, for businesses and for builders of renewable energy than zonal pricing.
Zonal pricing creates uncertainty and risk, needlessly inflating the cost of capital, so driving up the cost of building clean energy infrastructure²³. It inflates bills the most in areas where wind farms cannot easily be built, pushing up costs for residents and businesses alike. And it creates havoc for heavy industries that can’t just move to areas where energy will be less expensive. Zonal pricing isn’t cheap.
Greener
Enhanced national pricing is the best route to clean power by 2030. There are no simple solutions – but a plan for targeted simple, practical fixes will ensure the system works best.
Zonal market pricing will delay renewable energy infrastructure, risking the clean power mission¹⁴. Creating uncertainty in the market will mean fewer new and upgraded wind farms and delay vital grid upgrades which make the electricity system more efficient. Most importantly, it won’t fix our energy system, but instead attempts to appease our broken electricity grid. Zonal pricing isn’t green.
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1: Aurora Energy Research (AER) (2023) – Locational Marginal Pricing in GB
2: LCP and Grant Thornton (2024) - System Benefits from Efficient Locational Signals - A study on moving the electricity market to a locational pricing model for the Department of Energy Security and Net Zero
3: Frontier Economics (2022) Locational Marginal Pricing Implications for Cost of Capital
4: Pollit (2023) - Comments on the FTI Report on Assessment of locational wholesale electricity market design options in GB August 2023