POWER: Octopus Energy Backs UK Zonal Pricing but SSE Warns of Risks

Octopus Energy believes adopting zonal pricing could save UK consumers between £55-74bn by 2050. However, SSE warns that the approach may lead to regional price disparities, potentially raising costs for consumers in certain areas, according to both Firms.

• Zonal pricing could save consumers an average of £3.7bn per year, rising to £5bn annually if infrastructure delays occur, Octopus Energy said.
• This could reduce the need for additional power lines and pylons could generate further savings, making energy distribution more efficient, Octopus added.
• Additionally, the company calls for government action to implement zonal pricing, emphasising the opportunity to provide cheaper, fairer energy.
• And that adopting zonal pricing would protect consumers from future price shocks.
• However, SSE highlights that the risk of higher costs would be exacerbated by the increased financial uncertainty surrounding energy investments.
• SSE also argues that zonal pricing could add significant risk premiums to energy infrastructure projects, making them more expensive.
• Modelling by SSE suggests that zonal pricing could lead to up to £4bn in additional costs for upcoming offshore wind auctions.
• The firm emphasises the need to evolve the current pricing system without introducing unnecessary complications or risks to consumers.