Assessing the impacts of the transition to a zonal market
As part of its Review of Electricity Market Arrangements (REMA), the government has explored the option of transitioning the GB electricity market to a zonal pricing regime.
LCP Delta were pleased to provide the initial analysis to the government that assessed the system and consumer impacts of “locational pricing”. This report found that moving to locational pricing decreases 2030 to 2050 electricity system costs by £5-15bn.
We continue to support government and industry in exploring the impacts of locational pricing, including two independent reports commissioned by SSE. In October 2024, we published new analysis that took the National Electricity System Operators ‘Beyond 2030’ network plans into consideration. In February 2025, we published a new report to assess how wholesale prices vary across the country under a zonal market and how this compares to prices in the national market.
Explore the reports
Our key insights
Our analysis shows that a move to zonal pricing has the potential to bring benefits to the British electricity system and to households.
However, these benefits may be offset by the additional risk premiums faced by investors, given the dramatic change to the way generators would be paid and the sheer scale of investment needed to reach net zero.
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Locational pricing could decrease electricity system costs by
£5-15bn -
Any benefits would be offset by a cost of capital increase of just
0.3% -
In 2030, wholesale prices in Northern Scotland would be close to zero in
6100 hours
