Overview

• The government formally abandoned zonal pricing after a consultation dating back to 2022 and confirmed it will retain a single national wholesale electricity price
• Major energy firms including SSE, Scottish Power and RWE welcomed the decision, saying it provides much-needed clarity for investors and developers
• Zonal pricing had aimed to reflect local supply and demand by lowering rates in surplus regions like Scotland and raising them in high-demand areas such as southern England
• Officials are now designing alternative incentives, including payments to battery storage operators for capacity in generation-rich zones and reforms to transmission network charges
• The move resets the Review of Electricity Market Arrangements ahead of the AR7 renewables auction in early August and underpins the government’s Clean Power 2030 objectives