The Department for Energy Security and Net Zero (DESNZ) is expected to scrap controversial proposals for zonal electricity pricing, which would have seen wholesale electricity prices vary across the UK depending on location. The move follows months of lobbying from energy-intensive industries and manufacturing groups, including steel and aluminium.
Under the original proposal, industrial sites in regions with limited local renewable generation or constrained grid capacity risked being charged significantly more for electricity, regardless of their energy efficiency or carbon performance. For the aluminium sector, this could have compounded already high input costs and further undermined competitiveness against international producers.
The decision to drop zonal pricing is seen as a major win for UK manufacturing and reinforces the need for electricity market reform that supports domestic industry rather than creating additional regional disadvantages.
Nadine Bloxsome, Chief Executive Officer of ALFED, said:
“ALFED welcomes the Government’s reported decision to rule out zonal electricity pricing, which would have disproportionately penalised many aluminium producers in the UK.
The aluminium sector is already burdened with some of the highest industrial electricity costs in Europe, and this proposal risked exacerbating regional inequalities while jeopardising investment and operational certainty.
For our members, particularly those operating in rolling, extrusion, and recycling – energy remains one of the largest overheads. Clarity on national electricity pricing is essential to maintaining competitiveness, accelerating decarbonisation, and securing long-term investment across the aluminium value chain.
We now urge Government to ensure that any reformed national pricing model recognises the strategic importance of energy-intensive sectors and delivers a level playing field for UK metals manufacturing.”
