A coalition of trade associations and unions has issued a stark warning to the UK Government over proposed plans to introduce zonal electricity pricing, arguing that the scheme would jeopardise investment and drive up energy bills for households and businesses across England and Wales. 1t5r5r

The letter, addressed to Energy Secretary Ed Miliband and Business and Trade Secretary Jonathan Reynolds, has been signed by a wide range of industry bodies, including Renewable UK, Scottish Renewables, Solar Energy UK and the Independent Renewable Energy Generators Group (IREGG). The signatories express deep concerns about the potential impact of dividing the UK into regional price zones, describing the proposal as a ‘postcode lottery’ for consumers.

In their letter, the industry groups reaffirm their for the UK Government’s Clean Power Mission but stress that the introduction of zonal pricing would introduce unnecessary complexity and financial risk into the market. Despite nearly three years of discussion, they argue, there remains a lack of clarity on how the system would function, what protections would be in place for energy-intensive industries, and how it would affect investment strategies.

Jane Cooper, Deputy CEO of RenewableUK, warned that zonal pricing could result in higher energy bills for businesses and households, particularly in parts of England and Wales. "The uncertainty and risks created by zonal pricing would be priced in by developers bidding into clean energy auctions and would drive up the cost of building vital new projects," she said. "It’s hard to see how the Government could achieve its clean power goals by 2030 while simultaneously introducing such a complex and controversial scheme."

Scottish Renewables, another key signatory, has voiced similar concerns, emphasising that the proposal could actively deter investment in crucial wind farms and renewable projects. Claire Mack, Chief Executive of Scottish Renewables, stated: "Zonal pricing is a dangerous proposal that would derail Scotland’s progress towards clean power. The potential benefits have not been convincingly demonstrated, and the risks threaten the private investment necessary to maintain vital Scottish projects."

The coalition is calling for a commitment to a Reformed National Market programme, which would involve reforms to transmission network charges and system balancing, as well as strategic investment in energy networks. They argue that this approach would better serve the UK’s industrial regions and ensure a secure, competitive, and low-carbon energy supply.

According to Pacific Green, zonal pricing could exacerbate the volatility of wholesale electricity tariffs, making it riskier to finance renewable energy projects and raising the cost of capital. In addition, vulnerable consumers in areas with high electricity prices would be even more likely to fall into energy poverty. 

If implemented, the coalition warns, zonal pricing could undermine the UK’s National Infrastructure Strategy and Industrial Strategy, creating further economic uncertainty at a critical time. They are urging the Government to provide clarity on the future of the electricity market as soon as possible.

The signatories, including representatives from sectors such as glass, ceramics, food and drink, offshore energy, and renewable energy, stress that they remain committed to ing the UK’s clean growth ambitions. However, they insist that any policy decisions must be backed by a comprehensive impact assessment to avoid unintended consequences for industry and consumers alike.

As the Government deliberates on its next steps, industry leaders remain steadfast in their opposition to zonal pricing, warning that its introduction would be a costly and disruptive shift that could hinder progress towards a cleaner, more sustainable energy future.