Octopus Energy asks Treasury to back zonal energy pricing

According to The Guardian, the business, alongside more than 3,700 of its customers, wrote to the Treasury calling for an immediate introduction of postcode electricity pricing.

This would mean areas with ample electricity generation compared to local demand would have lower market prices than more populous urban areas where demand outstrips the amount of local generation.

It comes as ministers are preparing to decide whether to divide England, Wales and Scotland’s electricity market into different zones.

Octopus believes the move would encourage data centres and factories to move to the north of the country to take advantage of lower market prices, while generators would build new power projects in densely populated areas.

In an email to its customers, Octopus Energy chief executive Greg Jackson claimed the change would lower energy bills for all homes and businesses based on the findings of "the most thorough analysis", which was commissioned by the business last year.

It also included a short survey asking business customers to indicate whether they support the changes – with those voting in favour later being informed the name of their business has been automatically added to a letter to the government, although they could still opt out by a set deadline.

However, major renewable energy developers fear this will deter investment at a crucial juncture if the government is to meet its 2030 clean energy targets.

This concern is supported by a study from the UK Energy Research Centre, which said the overhaul could drive up the cost of building wind farms and risk piling an extra £3bn on to household energy bills every year until the 2040s.