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POWER: UK Zonal Pricing Could be Implemented in 2-3 Years: Octopus Energy

POWER
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Octopus Energy claims that UK zonal pricing could be implemented within two to three years, faster than the government’s projected timeline, by using a legislative route instead of industry code modifications, it said, cited by Utility Week.

  • The legislative route would allow for a smoother and faster implementation process, without going through the lengthy and uncertain iterative consultations involved in code modifications, Octopus Energy’s Rachel Fletcher said.
  • This compares to the DESNZ, which initially stated that zonal pricing would take at least five years from the decision, potentially as late as 2032 based on other countries’ experiences.
  • Fletcher emphasised that zonal pricing in two to three years would cut network costs, reduce transmission infrastructure needs, and boost efficiency for renewables.
  • Zonal pricing is also supported by the Uks Ofgem, the National Electricity System Operator, which has argued that the plan would lower overall costs by improving efficiency and reducing payments to shut down wind farms when the grid is overloaded.
  • However, under a proposed zonal electricity pricing system, households in London and the southeast could face higher energy bills while consumers in Scotland benefit from lower prices, RWE said on 17 March.
  • Critics of the zonal pricing also include SSE, Scottish Power and Orsted, which warn that the mechanism could increase investment costs and slow the UK’s push for clean energy by 2030.
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Octopus Energy claims that UK zonal pricing could be implemented within two to three years, faster than the government’s projected timeline, by using a legislative route instead of industry code modifications, it said, cited by Utility Week.

  • The legislative route would allow for a smoother and faster implementation process, without going through the lengthy and uncertain iterative consultations involved in code modifications, Octopus Energy’s Rachel Fletcher said.
  • This compares to the DESNZ, which initially stated that zonal pricing would take at least five years from the decision, potentially as late as 2032 based on other countries’ experiences.
  • Fletcher emphasised that zonal pricing in two to three years would cut network costs, reduce transmission infrastructure needs, and boost efficiency for renewables.
  • Zonal pricing is also supported by the Uks Ofgem, the National Electricity System Operator, which has argued that the plan would lower overall costs by improving efficiency and reducing payments to shut down wind farms when the grid is overloaded.
  • However, under a proposed zonal electricity pricing system, households in London and the southeast could face higher energy bills while consumers in Scotland benefit from lower prices, RWE said on 17 March.
  • Critics of the zonal pricing also include SSE, Scottish Power and Orsted, which warn that the mechanism could increase investment costs and slow the UK’s push for clean energy by 2030.