Scotland could see some of the cheapest electricity prices in Europe—if a major shake-up in the UK’s energy pricing system goes ahead. That’s the view of Octopus Energy’s boss Greg Jackson, who argues that bills should be calculated regionally rather than at a national level.
The Case for Zonal Pricing
Right now, electricity prices across the UK are set based on the costliest form of energy being used anywhere in the country at a given time. Since gas is still a major source of power, bills remain high—even in places like Scotland, where renewable generation is abundant.
Jackson believes a new pricing system, known as zonal pricing, could change that. Under this model, electricity costs would be tied to the most expensive unit generated in a particular region. In Scotland, where wind power dominates, that could mean dramatically lower bills for households and businesses.
“It’s crazy that we’re wasting billions switching off wind farms when demand is low,” Jackson told BBC Scotland News. He claims that with zonal pricing, some Scottish households could see their bills drop by hundreds of pounds per year.
The Opposition: A Postcode Lottery?
Not everyone is convinced. Energy giants like Scottish Power and SSE argue that zonal pricing would create a postcode lottery, with some areas enjoying cheap power while others continue paying high prices.
- Investment Risks: Critics warn that major infrastructure projects planned for Scotland could be relocated to other parts of the UK if zonal pricing is introduced.
- Market Uncertainty: Scottish Power’s CEO, Keith Anderson, says that £75bn of planned investments could be put at risk if companies are unsure about long-term pricing structures.
- Transmission Issues: The UK’s biggest electricity system upgrade in history aims to make energy distribution more efficient. Some fear that regional pricing could interfere with these plans.
“Let’s bring down bills for everyone, not just for some,” Anderson argued, suggesting that more investment in national grid infrastructure is a better approach than breaking the market into regions.
Could Scotland Benefit Regardless?
Even without zonal pricing, Scotland’s renewable boom is reshaping the energy landscape. The country already exports a significant amount of electricity to England and Wales, thanks to its vast offshore wind capacity.
A quick snapshot of Scotland’s renewable energy production:
| Year | Wind Energy Output (GW) | Share of Scotland’s Electricity |
|---|---|---|
| 2022 | 8.4 GW | 60% |
| 2023 | 10.2 GW | 65% |
| 2024 | 12.5 GW | 70% |
Jackson argues that lower electricity costs could encourage energy-intensive industries, such as data centers, to relocate to Scotland. That would reduce the need for expensive network upgrades to transfer power south.
Scottish Power disagrees, pointing out that data centers are built near large populations to ensure fast connectivity. The energy company insists that a national approach is the best way forward.
What Happens Next?
The UK government is still reviewing its electricity market structure, with a decision expected this summer. Both sides are standing firm, citing their own research to back their claims.
Will Scotland get the cheapest electricity in Europe? It depends on whether the government prioritizes national investment or regional market reforms. Either way, the future of UK energy pricing is about to change in a big way.
