SNP MP Calls for Zonal Pricing

Martyn Day, MP for Linlithgow and East Falkirk, has responded to the UK government’s ‘Review of Electricity Market Arrangements’ consultation advocating for the introduction of zonal pricing.

Zonal pricing would separate the electricity network into zones based on network constraints. Each zone would have its own wholesale market and the supply and demand would be balanced within the zone and across the boundaries with neighbouring zones.

Zonal pricing results in prices that vary across the network depending on real-time local generation and network constraints. Flexible generation, flexible demand, and interconnectors may then be incentivised to dispatch in a way that reduces system constraint payments.

Supporters argue that it could reduce bills by an average of £45 annually and save £51 billion over 15 years.

Martyn said: “Zonal pricing has already been implemented successfully in parts of Europe, there’s no reason it couldn’t be a success here.

“Under a zonal pricing system consumers would pay less for their electricity the closer they live to the infrastructure generating it, meaning that Scotland could have the cheapest electricity in Europe.

“In addition, there is a strong argument for Scotland to have her own zone as it would enable the electricity network to react more flexibly to changes in Scotland’s planning rules and laws.

“Zonal pricing is supported by Octopus Energy Chief Executive Greg Jackson, who during a Radio 4 interview stated that zonal pricing would help attract business to Scotland.

“Two additional benefits that Mr Jackson raised were that “zonal pricing reduces waste” and “everyone’s bills go down”, something which can only be advantageous for the environment and consumers alike.”

The consultation runs until the 7 May.