Phil Hewitt, Director, Montel Analytics:
“The market has been asking for clarity for some time and the imminent arrival of the 7th Auction Round for renewables has been the catalyst that has finally closed the high-level debate over whether to have zonal or national wholesale pricing. This is a good thing after three long years.
Locational pricing still comes through changes to transmission charging so the market will want clarity on that and soon. There are still many detailed questions to be answered, as the government’s announcement today makes clear, so there will be more debates. These will be important for consumer costs but unlikely to play out on front pages. REMA is not finished, but the major battle is over…
“The theme of the update seems to be clarity and reducing uncertainty. Regardless of which side of the argument you’re on, everyone is pro-decision …
“There are still outstanding uncertainties, including reforms to transmission charges (TNUoS) and how the balancing mechanism will evolve. But the shift from today’s system to a reformed national pricing model is smaller and more manageable than a switch to zonal. That reduced uncertainty seems to have been the deciding factor.”

David Whitehouse, chief executive, OEUK:
“The government’s decision to rule out zonal pricing and commit to this reformed national approach provides crucial certainty for investors and is vital for supporting clean growth opportunities, particularly in the UK’s industrial heartlands. These reforms mark an important step towards a more sustainable electricity market for the UK. This announcement can help to lay the best path to deliver clean, secure, and competitive domestically produced energy across the nation.
“These reforms are an important stepping stone to the UK’s energy future. It is imperative we now get the other steps right – such as a successful seventh allocation round for the offshore wind industry, enabling firms to create new projects and jobs and keep their operations and people here in the UK.
“To accelerate progress to net zero and safeguard jobs and communities we must also unlock investment in the homegrown oil and gas we need for the decades ahead. Policymakers must back firms with pragmatic policies, including the forthcoming Strategic Spatial Energy Plan, which must back a diverse mix of energy sources that are produced here rather than imported. This is the path to the affordable and secure energy future and economic growth we all want to see.”

Caroline Bragg, CEO, ADE:
“The Government needs to get a handle on the cost of living. But, by rejecting zonal reforms that align us with our peers, today’s decision risks higher costs. Piecemeal tweaks won’t deliver the lower bills for all that Ofgem itself says is possible. With grid costs potentially hitting £8 billion by 2030, how does the status quo stop consumers footing the bill?
“Everyone knows the old system is dead. Government must now prove this won’t become a hollow victory, emboldening net zero opponents with decade-long tinkering and rising costs. Now the decision is made, ADE: Demand is ready to work with the Government on the substantial pricing reforms still needed to ensure net zero actually cuts everyone’s bills.”

Keith Anderson, Chief Executive, ScottishPower:
“This is the right decision from Government as it lifts a big cloud of uncertainty over investment in the energy system. Now we will crack on with investment in the grid to deliver the goals of Clean Power 2030 – supporting economic growth and energy resilience and removing up to £5 billion of annual constraint payments by making the energy system more efficient.”

Ross Driver, Fund Manager, Foresight Solar:
“We need evolution, not revolution, to support the renewable energy build-out and future-proof our electricity network. This is a positive and timely decision for the UK energy system, offering much-needed certainty to investors, policymakers, and consumers driving the low-carbon transition.

“Achieving net-zero is challenging enough without shifting the goalposts. Clear direction and collaboration between public and private capital are essential for delivering long-term infrastructure. Along with the proposed changes to the planning framework and the grid queue, dropping the idea of zonal pricing is a step in the right direction.”

Greg Jackson, founder and chief executive, Octopus Energy:
“Electricity bills are spiralling and zonal pricing would have reversed that.
“The government and generators need to come up with an alternative which will prevent the now seemingly inevitable price rises that will hit over the next few years.”

Dr Simon Cran-McGreehin, Head of Analysis, Energy and Climate Intelligence Unit:
“A major flaw in the UK’s energy system revealed by the ongoing energy crisis is the heavy reliance on gas for both heating and electricity generation which itself generated a double whammy hit on people’s gas and electricity bills as well as costing the tax payer billions in subsidising those bills.
“Market reform could help to solve this, reducing the times that gas sets the electricity price which currently stands at over 90%. The other solution is more renewables to squeeze out gas and electricity which has become more British over the past decade as we have rolled out wind and solar.
“As volatility remains on the international gas markets, which foreign actors like Putin can meddle in, every wind turbine we install means less gas imports are needed from abroad as the North Sea continues its inevitable decline. This stabilises prices and improves our energy independence, meaning in future we’ll be shielded from another crisis.”

Graham Pannell, Fairer Energy Future:
“This is good news for Britain. Reformed national pricing will ensure a fairer energy future, in which households aren’t subjected to arbitrary differences in energy costs based on where they happen to live. Reformed national pricing provides the best option for keeping everyone’s energy bills lower, supporting green jobs and investment, and realising the government’s clean power 2030 goals.
“We look forward to working with the Government, embracing national reform and co-designing changes that deliver real benefits for consumers across the UK.”

Lucy Whitford, Managing Director, RES UK&I:
“The decision to back a Reformed National Market is a once-in-a-generation moment, which secures billions of pounds of investment for the UK economy for decades to come. We can now look to the horizon with renewed confidence that we will deliver an electricity system that is fit for purpose: clean, cost-effective and built around the needs of consumers.”

Chris Matson, Partner, LCP Delta:
“… With this decision, the zonal pricing debate can now be put to bed and industry can move forward with greater focus, investing the capital required to meet the UK’s ambitious decarbonisation targets.
“While an earlier commitment would have been preferable, today’s announcement significantly reduces investment risk and increases the likelihood of achieving the Clean Power 2030 ambition.
“… a core challenge remains to integrate high levels of renewable generation into a system which lacks the capacity to transmit power from areas of generation to areas of high demand. We look forward to working with policy makers on options to ensure that the energy transition delivers for all stakeholders.
“Constraint costs – which zonal pricing aimed to reduce – will continue to be a significant issue under the national pricing system. Our analysis shows that, even accounting for announced network upgrades, constraint costs could double from last year’s levels to reach £3.2bn per year by 2035. Further investment in network upgrades, demand-side flexibility, and storage will be crucial to bringing down these costs.”