Cornwall Insight have cautioned that any move to introduce zonal electricity pricing across Great Britain is unlikely to be achievable before the end of the decade, even under the most ambitious timelines, and it could well be the mid-2030s before it is fully implemented.
With the Government expected to make a major decision on wholesale electricity market reform in the coming weeks, Cornwall Insight’s new analysis report ‘Revolution Takes Time: Implementing Zonal Power Pricing in GB’ states that, should zonal pricing be chosen, the scale of the changes required means implementation will take a minimum of five to six years from the decision point. The report, informed by Cornwall Insight’s long-term zonal power price forecasting, outlines all the necessary steps needed to deliver a zonal pricing market including design, consultation, legislative and regulatory reform, and market readiness.
Under a zonal pricing market, the country would be split into several zones, all with their own wholesale electricity prices, with the central premise being that the cost of moving power across the system should be accurately reflected in the wholesale price. These additional cost-reflective locational signals should, in theory, influence investment decisions and encourage a more efficient dispatch of power. However, several factors mean if it is chosen it will take many years to implement.
The complexity of the reform is driven by several factors:
• A lengthy consultation process on the market’s design will be required to ensure that all impacted parties have sufficient opportunity to put their view forward and ensure a smooth transition to the new arrangements.
• Wide-ranging opinions from market players as this has been a hugely divisive topic with many different parties coming out in support of and in protest of a potential zonal market. Striking the balance between consumer protection and an investment landscape that supports decarbonisation at scale will take time.
• New legislation required to enable the changes will face parliamentary scrutiny and may not happen before the next general election.
• Significant Code Reform will be needed to update industry frameworks and licence conditions.
• Transitional arrangements to avoid disruption for existing assets and market participants.
The timescales also consider the pace of previous industry code and licence condition changes. For instance, the transition from the New Electricity Trading Arrangements (NETA) to the British Electricity Trading and Transmission Arrangements (BETTA) took three years, despite simpler conditions and broader consensus. Today’s market is larger, more complex, and more politically sensitive, particularly given regional concerns around pricing differentials and investor impact.
Cornwall Insight’s report additionally notes that without further clarity on key schemes such as the Contracts for Difference (CfD), there is a risk that investor uncertainty could stall progress on renewables deployment, potentially threatening the Government’s 2030 clean power goals. With a longer timeline, and clarity on what comes next, the industry will have a better understanding of the market they are investing in and how that market could function in the future.
Cornwall Insight’s indicative timeline shows:
• 2025: Government decision • 2025–2029: Detailed consultation and design • 2027–2030: Legislative and regulatory changes • 2030–2031: Transitional period • Post-2031: Full implementation possible, depending on process pace and stakeholder consensus
Kate Mulvany, Principal Consultant at Cornwall Insight said:
"Zonal pricing would represent the most fundamental redesign of the GB electricity market in decades. It is an incredibly divisive topic in the industry, and regardless of the purported benefits, its implementation is going to take significant time and resource. Political backing and industry support may help, but a go-live before 2030 remains incredibly unlikely.
“The Government’s commitment to a decision by mid-2025 is welcome. But we must be realistic: this is the start of a long road, not the finish line. Clear, early communication and a credible delivery timeline will be essential to retain market confidence, keep renewables investment and avoid unintended consequences, which could have substantial impacts on government targets. Zonal pricing may still form part of the long-term vision for electricity market reform. But for now, its delivery sits firmly in the next decade.”
Notes to Editors For more information, please contact: Verity Sinclair at v.sinclair@cornwall-insight.com To link to our website, please use: https://www.cornwall-insight.com/
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About the Cornwall Insight Group Cornwall Insight is a leading provider of research, analysis, consulting and training to businesses and stakeholders engaged in the Great British and Irish energy markets. To support our customers, we leverage a powerful combination of analytical capability, a detailed appreciation of regulation codes and policy frameworks, and a practical understanding of how markets function.
