A new report has found that Britain’s current electricity market arrangements are inadequate to meet future energy demand.
The report calls for significant reform in the electricity market, emphasising the necessity of implementing zonal pricing to adjust electricity prices based on regional supply and demand.
Commissioned by Octopus Energy, the report outlines transitional measures aimed at protecting investor confidence while reducing consumer energy bills.
These recommendations align with the UK’s Clean Power 2030 Mission, which focuses on increasing the share of clean energy in the national electricity supply.
The report suggests several strategies for investment protection, including amendments to Contracts for Difference, measures to address “volume risk,” and exploration of “locational price risk” protections.
These strategies are intended to facilitate a smooth transition to zonal pricing while ensuring continued investment in renewable energy projects.
Tom Luff, Practice Manager for Electricity Markets and Policy at Energy Systems Catapult, emphasised the importance of investment protection during this transition.
He noted that the proposals aim to balance the interests of investors and consumers.
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