A coalition of energy investors, trade associations, unions and clean energy developers has called on Chancellor Rachel Reeves to abandon plans for introducing zonal pricing in Britain’s electricity market, warning the proposed reform could deter investment and increase consumer bills.
In a letter sent to Reeves, the Fairer Energy Future campaign said the proposed changes could undermine the UK’s renewable energy targets and harm economic growth. “Zonal pricing would delay delivery of the government’s energy goals and risk undermining economic growth,” the group said.
The coalition pointed to analysis by Biggar Economics estimating that up to £30 billion in planned renewable investment in Scotland could be jeopardised under the new system. Additional modelling by the UK Energy Research Centre (UKERC) suggests future strike prices in Contracts for Difference (CfD) auctions could rise by as much as £20 per megawatt-hour due to heightened investor risk.
According to UKERC, the reforms could also increase annual household electricity bills by £3 billion. “We believe there is a better way forward that supports both investment and fairness,” the campaign said.
The group is instead backing an Enhanced National Pricing model, which it argues would accelerate investment, reduce costs, and maintain consumer fairness. Recent polling cited by the campaign found that 85% of UK consumers do not view zonal pricing as fair, while 70% expressed support for a continued national pricing approach.
Several major renewable developers, including BayWa r.e., Boralex, ERG, CWP Energy, Fred Olsen Renewables, Nadara, OnPath Energy, and Voltalia, have joined the campaign. Trade unions such as GMB, Unite, Prospect, and Community have also urged the government to drop the proposal.
The campaign said its preferred approach would focus on delivering planned grid upgrades and strengthening the National Energy System Operator’s ability to manage supply and demand, aiming to reduce constraints, enhance energy security, and lower costs across the UK.
