Our current energy system is creaking under the strain of a design that’s decades out of date, leading to baffling inefficiencies and, frankly, burning our money. That’s the stark message from Greg Jackson, founder of Octopus Energy, who argues for a smarter approach: zonal pricing. If you’re tired of high energy bills and want to see a system that truly embraces renewables, this is a change you’ll want to know about.
Imagine this: on a windy day, a wind farm is paid to shut down because the grid can’t handle the power. Then, to make up the shortfall, we pay to fire up expensive gas power plants. It sounds ludicrous, but as Jackson highlights, this is the reality of our outdated national grid. In the first 2.5 months of 2025 alone, the UK spent a staggering £300 million on this very practice – paying to not use cheap, green energy, and then paying again for expensive, polluting alternatives. This isn’t just wasteful; it directly inflates our energy bills.
The Root of the Problem: A System Not Built for Renewables
The core issue, Jackson explains, is that our energy system was designed for a bygone era of coal power, not for the dynamic and geographically diverse nature of renewable energy sources like wind and solar. This results in a national pricing system where the most expensive form of generation often sets the price for everyone, regardless of cheaper, cleaner energy being available locally.
The Solution: Smarter, Localised Energy with Zonal Pricing
Octopus Energy is championing zonal pricing as a powerful solution. Instead of one national price, electricity costs would vary across different “zones” based on local supply and demand. If an area has an abundance of wind or solar power, the price there would naturally be lower. This incentivises using energy when and where it’s cheapest and greenest.
The Benefits Stack Up:
Greg Jackson outlines several compelling advantages to adopting zonal pricing:
- Significant Cost Savings: Projections suggest zonal pricing could slash a massive £3.7 billion a year from UK energy costs.
- Lower Wholesale Costs: By prioritising cheaper renewable energy where it’s generated, we reduce reliance on expensive fossil fuels.
- A More Efficient System: It tackles bizarre inefficiencies like interconnectors flowing the wrong way or batteries charging when they should be discharging, simply due to flawed pricing signals.
- Fairer Bills: Ironically, areas rich in renewable generation often face high standing charges. Zonal pricing could rebalance this, meaning those in windy or sunny spots could see real benefits.
- Encouraging Productive Investment: Rather than damaging investment as some incumbents claim, Jackson argues it encourages smarter spending on infrastructure that truly supports a renewable future, not just propping up an old system.
Addressing the Naysayers
Concerns about a “postcode lottery” are often raised. However, Jackson points out that bills already vary regionally. Zonal pricing, he argues, would lead to overall savings for everyone by tackling systemic waste, with particularly positive impacts for areas generating plentiful green energy. Supporters of this shift include key industry players like Ofgem (the regulator), the Energy System Catapult, and the Energy System Operator, all recognising the need for a modernised approach.
Time for a Change: Embrace a Greener, Cheaper Future
The message is clear: the current system is “built on burning money.” Zonal pricing offers a viable, well-supported path to lower energy bills and a system that genuinely makes the most of our renewable resources.
If you’re interested in being part of an energy company that’s pushing for these kinds of innovative and cost-saving solutions, you might want to check out Octopus Energy. You can explore their offerings and potentially get a great deal by using this referral link:
It’s time to move beyond an outdated system and embrace a future where energy is cheaper, greener, and works smarter for everyone.