Zonal pricing: Trade Associations and Unions write to Secretaries of State over risk to UK Industry

The UK’s energy-intensive industries, including steel, glass, and ceramics, unions, and renewable industries have written to Secretaries of State Ed Miliband and Jonathan Reynolds, stating that they require a secure, competitive, and low-carbon electricity system. However, the continued consideration by DESNZ of the zonal pricing model under the Review of Electricity Market Arrangements (REMA) poses a significant risk to the shared objective to drive industry investment and decarbonisation.

Competitive electricity prices are absolutely essential for the steel industry to survive within a highly competitive global market. The Government has yet to demonstrate that zonal pricing will not harm energy-intensive industries. For UK steelmakers, zonal pricing would likely result in higher electricity costs in key industrial regions, such as Yorkshire and South Wales, where demand is high but local renewable generation is currently limited. The model would exacerbate existing cost pressures, undermining the competitiveness of domestic steel production at a time when international counterparts benefit from more increasingly favourable industrial energy pricing. Instead of introducing zonal pricing, the signatories is calling on the UK Government to commit to a Reformed National Market.