Zonal pricing has once again become a topic of debate after a group of 11 trade groups wrote an open letter criticising the proposition, made as part of the Review of Electricity Market Arrangements (REMA).
In this guest blog, Tom Smout, senior associate at Aurora Energy Research, discusses the opening of the second REMA consultation and weighs the impact of Locational Marginal Pricing.
The energy industry's welcome for the opening of the Review of Electricity Market Arrangements' second consultation has been somewhat dampened by the UK government's coinciding support for new gas power plants.
Energy secretary Claire Coutinho has announced that a zonal pricing system could be introduced in Britain and confirmed the UK government's support for new domestic gas power plants.
A cost benefit assessment of locational pricing systems in Britain has found that implementing a nodal pricing system could deliver up to £51 billion in consumer savings, but benefits face regional disparities.
The RAC and EV campaign group FairCharge have called on the UK government to decouple electricity wholesale prices from gas in a bid to reduce the costs associated with EV charging.
Without reform of the market, the UK will miss its 2035 electricity decarbonisation target according to a new report from centre-right think tank Onward.
