Could Scotland become home to Europe’s lowest electricity bills? That’s the bold claim made by Greg Jackson, founder of Octopus Energy, who says switching to a “zonal pricing” system could significantly cut energy costs for Scottish households.
Currently, electricity prices across Great Britain are based on the most expensive electricity generation method—usually gas—even when cheaper renewable sources, such as wind, are abundant. This system pushes up costs for everyone, regardless of local generation capabilities.
Under zonal pricing, electricity prices would instead vary by region, reflecting local generation costs. Because Scotland produces more renewable energy than it consumes—especially from wind power—bills there could dramatically decrease.
Mr Jackson described the current system as “crazy,” pointing out that billions of pounds are currently wasted paying wind farms to switch off during periods of low demand. He argues zonal pricing could save Scottish households hundreds of pounds per year by directly linking prices to local renewable generation.
However, not everyone agrees. Rival firms including Scottish Power and Scottish and Southern Electricity (SSE) strongly oppose the idea, warning that zonal pricing could create a postcode lottery, disadvantaging households in parts of the country less equipped with renewable resources.
Keith Anderson, CEO of Scottish Power, warned that zonal pricing could disrupt £75 billion worth of planned investments in energy infrastructure. He argued that major infrastructure projects—such as new transmission lines designed to spread renewable energy across the UK—could be diverted away from Scotland, potentially hurting the economy and ultimately making renewable electricity more expensive in the long run.
Mr Anderson suggests the priority should be nationwide reductions in energy bills, achieved by boosting renewable capacity across the entire UK rather than targeting individual regions. He says wind farms naturally belong in windy areas, making the existing uniform pricing structure more logical.
Octopus Energy’s Jackson counters that lower Scottish electricity prices would attract businesses such as data centres, which are major energy users, potentially creating jobs and economic growth. Scottish Power disagrees, noting data centres typically prefer to be located near population hubs for connectivity.
Both sides have commissioned research backing their positions, yet uncertainty remains. The UK government is currently reviewing electricity market arrangements, including considering zonal pricing. A decision is expected in the summer, which could significantly reshape the UK’s energy landscape.
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