Plans to overhaul electricity market in the UK by implementing zonal electricity pricing may lead to an additional £3bn on household energy bills each year until the 2040s, according to the government's clean power adviser.
The zonal pricing would raise the cost of building new windfarms, potentially requiring higher subsidies for renewable energy developers and leading to increased energy bills and delayed clean energy investments.
An independent report by the UK Energy Research Centre (UKERC) warns that implementing zonal pricing could result in higher costs for renewable energy subsidy contracts and potentially eradicate the benefits of the scheme.
The proposal has received mixed reactions, with criticism regarding its impact on remote areas and profitability of clean energy projects, while supporters argue that zonal pricing would encourage high energy users to areas with ample energy supplies.