Greg Jackson the boss of Octopus Energy – who has long advocated for zonal pricing – says it’s like the battle between video shops and streaming.
Under the current national system, wholesale electricity prices are the same across the UK, regardless of whether power is produced cheaply from wind in Scotland or more expensively from gas in the Midlands.
Octopus argues this “one-size-fits-all” model causes massive inefficiencies and waste, with £500 million paid this year alone to turn off wind turbines in one area while ramping up gas plants elsewhere.
Economic growth needs lower energy prices for businesses and families. Zonal pricing could deliver huge savings for everyone by 2028. Of course, some incumbents don’t like it, just like Blockbuster didn’t like Netflix, but Blockbuster couldn’t lobby their way out of it.”
Greg Jackson, CEO Octopus Energy
Octopus argues zonal pricing – a model that sets energy prices based on local supply and demand, could unlock “huge savings” for households, industries and the government.
FTI Consulting research cited by Octopus estimates annual savings of £15 million for Scunthorpe steelworks, £5.98 million for a North East car factory and £19 million for a Scottish glassworks, among others.
Currently, the government helps around 370 large industrial users with energy bills through the ‘British Industry Supercharger’ scheme, funded by a levy on households and other businesses.
Octopus argues zonal pricing could cut £900 million from the cost of that scheme over the next decade, reducing the burden on ordinary consumers.
The proposal faces opposition from large parts of the sector who argue it will stall renewable investment. But Octopus insists reform is essential to support clean energy growth and competitiveness.
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