The Fairer Energy Future campaign has fired a salvo at the Treasury, urging Chancellor Rachel Reeves to scrap plans for zonal energy pricing in the British electricity market. The coalition, a motley crew of renewable energy investors, trade associations, trade unions, and other stakeholders, argues that the policy could derail clean power investment and send electricity bills soaring.
In a letter to Reeves, the campaign warned that zonal pricing could “delay delivery of the government’s energy goals and undermine economic growth.” The group cited analysis by Biggar Economics, which suggests that £30bn of planned Scottish renewable investment could be jeopardised under the proposals. This is a significant chunk of change that could otherwise drive the UK’s green transition.
The campaign also pointed to modelling from the UK Energy Research Centre (UKERC), which indicates that strike prices in future Contract for Difference auctions could surge by up to £20/MWh due to increased investor risk. This, in turn, could add a staggering £3bn a year to household electricity bills. “This is a recipe for higher bills and slower progress on our net-zero goals,” said a spokesperson for the campaign.
Instead, the group is pushing for an Enhanced National Pricing model. This approach, they argue, would cut strike prices, accelerate investment, and create a fairer system for all consumers. Recent polling seems to back this up, with 85% of consumers expressing disbelief that zonal pricing is fair, and 70% supporting national pricing.
Trade unions, including GMB, Unite, Prospect, and Community, have already weighed in, urging the government to rule out zonal pricing. The Fairer Energy Future campaign’s preferred approach focuses on delivering planned grid upgrades and boosting the National Energy System Operator’s balancing tools. This, they say, would reduce current constraints, improve energy security, and lower costs across the UK.
The campaign boasts an impressive roster of supporters, including well-known developers like BayWa r.e., Boralex, ERG, CWP Energy, Fred Olsen Renewables, Nadara, OnPath Energy, and Voltalia. These industry heavyweights are not just watching from the sidelines; they’re actively shaping the debate.
So, what does this mean for the energy sector? Well, it’s clear that the fight over zonal pricing is heating up. The Fairer Energy Future campaign has thrown down the gauntlet, challenging the government to reconsider its plans. If the campaign gains traction, it could force a significant shift in policy, with major implications for investors, consumers, and the UK’s net-zero goals. The energy sector is in for a bumpy ride, and it’s anyone’s guess how this will play out. But one thing is certain: the debate is far from over.
