Zonal Pricing

Zonal pricing is an electricity market system where prices vary across different geographic zones, reflecting local supply and demand conditions. It helps highlight areas where renewable energy is abundant and electricity is cheaper, encouraging efficient use of renewable resources.

How It Works
Electricity markets are divided into zones based on grid conditions and generation mix. Prices are lower in zones with higher renewable energy production and less congestion, while areas with limited supply or high demand may face higher prices.

Benefits: Renewable Energy Incentives
Zonal pricing encourages investment in renewable-rich areas by passing on lower costs to consumers. It also improves grid efficiency, supports cleaner energy use, and signals where infrastructure upgrades may be needed to reduce bottlenecks.

Future Outlook
As renewable energy grows, zonal pricing will become more important for balancing supply and demand efficiently. It is expected to guide future grid development, improve transparency, and promote renewable energy integration across electricity markets.