Energy Transition Shorts: What's next for solar in the UK?
Learn moreInstitutional Investments
Energy Transition Shorts: Zonal pricing in the UK?
21/3/25
5 min
Renewable energy
Insight
Key takeaways from this episode:
The UK government are considering implementing zonal pricing in discussion with REMA. In this video Tom Williams and Coos Battjes explore why this is being considered and what the proposed reforms may look like.
One of the key challenges faced is the imbalance in generation in the UK: most generation is in the north, while most demand is in the south. Proposed reforms suggest 2–12 pricing zones with electricity prices varying by region. This means that high-demand areas like London could face higher prices, while regions in northern Scotland may see lower ones.
This creates a potential postcode lottery, raising concerns about fairness, industry impact, and inflation. While in the long-term, zonal pricing could encourage demand to move closer to generation sources, short-term problems may outweigh this benefit.
The pair also explore other alternatives, such as transmission tariffs, grid connection tariffs, and directing data centres and new industries to the north to balance demand and reduce curtailment costs. The agreed that zonal pricing is a politically sensitive topic that, although potentially bringing long-term gain, there will be short-term pain.
Energy and Infrastructure at Downing
Downing’s dedicated team of renewable energy and infrastructure specialists provide investors with access to renewable energy, grid infrastructure and energy storage opportunities across the UK and Northern Europe. From developing and constructing large-scale renewable energy projects to in-house asset management, we have integrated teams providing end-to-end capabilities.
Share
Contents
See full contents
Will zonal pricing be introduced to the UK? What does this look like in practice? Join Tom Williams, Partner and Head of Energy & Infrastructure, and Coos Battjes, Energy Markets Specialist, as they explore the topic of zonal pricing in the UK in episode one of our Energy Transition Shorts.
Key takeaways from this episode:
The UK government are considering implementing zonal pricing in discussion with REMA. In this video Tom Williams and Coos Battjes explore why this is being considered and what the proposed reforms may look like.
One of the key challenges faced is the imbalance in generation in the UK: most generation is in the north, while most demand is in the south. Proposed reforms suggest 2–12 pricing zones with electricity prices varying by region. This means that high-demand areas like London could face higher prices, while regions in northern Scotland may see lower ones.
This creates a potential postcode lottery, raising concerns about fairness, industry impact, and inflation. While in the long-term, zonal pricing could encourage demand to move closer to generation sources, short-term problems may outweigh this benefit.
The pair also explore other alternatives, such as transmission tariffs, grid connection tariffs, and directing data centres and new industries to the north to balance demand and reduce curtailment costs. The agreed that zonal pricing is a politically sensitive topic that, although potentially bringing long-term gain, there will be short-term pain.
Energy and Infrastructure at Downing
Downing’s dedicated team of renewable energy and infrastructure specialists provide investors with access to renewable energy, grid infrastructure and energy storage opportunities across the UK and Northern Europe. From developing and constructing large-scale renewable energy projects to in-house asset management, we have integrated teams providing end-to-end capabilities.
Share
Will zonal pricing be introduced to the UK? What does this look like in practice? Join Tom Williams, Partner and Head of Energy & Infrastructure, and Coos Battjes, Energy Markets Specialist, as they explore the topic of zonal pricing in the UK in episode one of our Energy Transition Shorts.
Key takeaways from this episode:
The UK government are considering implementing zonal pricing in discussion with REMA. In this video Tom Williams and Coos Battjes explore why this is being considered and what the proposed reforms may look like.
One of the key challenges faced is the imbalance in generation in the UK: most generation is in the north, while most demand is in the south. Proposed reforms suggest 2–12 pricing zones with electricity prices varying by region. This means that high-demand areas like London could face higher prices, while regions in northern Scotland may see lower ones.
This creates a potential postcode lottery, raising concerns about fairness, industry impact, and inflation. While in the long-term, zonal pricing could encourage demand to move closer to generation sources, short-term problems may outweigh this benefit.
The pair also explore other alternatives, such as transmission tariffs, grid connection tariffs, and directing data centres and new industries to the north to balance demand and reduce curtailment costs. The agreed that zonal pricing is a politically sensitive topic that, although potentially bringing long-term gain, there will be short-term pain.
Energy and Infrastructure at Downing
Downing’s dedicated team of renewable energy and infrastructure specialists provide investors with access to renewable energy, grid infrastructure and energy storage opportunities across the UK and Northern Europe. From developing and constructing large-scale renewable energy projects to in-house asset management, we have integrated teams providing end-to-end capabilities.
Share
Key takeaways from this episode:
The UK government are considering implementing zonal pricing in discussion with REMA. In this video Tom Williams and Coos Battjes explore why this is being considered and what the proposed reforms may look like.
One of the key challenges faced is the imbalance in generation in the UK: most generation is in the north, while most demand is in the south. Proposed reforms suggest 2–12 pricing zones with electricity prices varying by region. This means that high-demand areas like London could face higher prices, while regions in northern Scotland may see lower ones.
This creates a potential postcode lottery, raising concerns about fairness, industry impact, and inflation. While in the long-term, zonal pricing could encourage demand to move closer to generation sources, short-term problems may outweigh this benefit.
The pair also explore other alternatives, such as transmission tariffs, grid connection tariffs, and directing data centres and new industries to the north to balance demand and reduce curtailment costs. The agreed that zonal pricing is a politically sensitive topic that, although potentially bringing long-term gain, there will be short-term pain.
Energy and Infrastructure at Downing
Downing’s dedicated team of renewable energy and infrastructure specialists provide investors with access to renewable energy, grid infrastructure and energy storage opportunities across the UK and Northern Europe. From developing and constructing large-scale renewable energy projects to in-house asset management, we have integrated teams providing end-to-end capabilities.
Please fill out the form to download the full report
Share
Sign up to stay up to date with the latest insights and investment opportunities
Learn more
Downing LLP does not provide advice or make personal recommendations and investors are strongly urged to seek independent advice before investing. Investments offered on this website carry a higher risk than many other types of investment and prospective investors should be aware that capital is at risk and the value of their investment may go down as well as up. Any investment should only be made on the basis of the relevant product literature and your attention is drawn to the risk, fees and taxation factors contained therein. Tax treatment depends on individual circumstances of each investor and may be subject to change in the future. Past performance is not a reliable indicator of future performance. Downing LLP is authorised and regulated by the Financial Conduct Authority (Firm Reference Number 545025). Registered in England No. OC341575. Registered Office: Downing, 10 Lower Thames Street, London, EC3R 6AF.
VAT Number: 112 940 149