To gain insight into the factors influencing power pricing, Savills has used its new Electricity Price Forecasting tool to investigate the impact of locational variation on annual energy bills by modelling a standard warehouse across 14 Distribution Network Operator (DNO) regions. The modelling has kept all other inputs constant to isolate location as the primary variable affecting pricing.

The graph below provides a snapshot of how power prices vary by UK location with annual costs differing by up to 15%. It reveals that regions like North Wales face the highest costs, while London and Yorkshire are among the least expensive.

The key variables causing the pricing differences are: Distribution Use of System (DUoS) daily standing charges, capacity charges, time-of-use rate charges, and reactive power charges, which together account for 13.5% of total annual costs on average. Substantial contributors are capacity (5.6%) and time-of-use (6.5%) charges.

The graph indicates that DUoS charges can account for circa 10-20% of total costs depending on location. While often overlooked, these charges can be significant.

Why do prices vary?

Ofgem sets an allowed revenue for each DNO under the Revenue = Incentives + Innovation + Output (RIIO) framework, which is recovered from customers through DUoS charges based on an Ofgem approved methodology, depending on connection voltage.

These methodologies ensure that DNOs recover costs fairly, reflecting each region’s network conditions, infrastructure, and consumer base, which results in regional price variations. Key factors influencing the differences include population density, network infrastructure and capacity, peak demand patterns, reinforcement costs, to name a few.

Remote rural areas face higher DUoS charges due to extensive, sparsely populated networks, increasing infrastructure costs per consumer. Conversely, cities benefit from lower charges, due to higher grid capacity and a larger consumer base sharing the costs.

Why does this matter?

Understanding the core elements of an electricity bill facilitates a targeted approach towards minimising costs, and maximising operational benefits.

Common issues include operating within costly red-band periods due to over-reliance on the grid, sub-optimal sizing of import connections which incur increased capacity charges, and a general lack of flexibility and diversity regarding electricity generation. Understanding power pricing logic offers solutions to challenges of this nature.

Delivering value

Modelling electricity bills for proposed and existing sites, such as offices, industrial buildings, warehouses, and other commercial premises, in target locations and providing cost forecasts give clients clear insight into the UK energy pricing landscape. This reduces project risk, supports informed planning, and highlights regional commercial viability. By forecasting regional pricing, clients can minimise exposure to higher costs and optimise their strategies.

Analysing electricity pricing enables businesses and property owners to identify cost saving opportunities. The postcode lottery presents an opportunity: higher electricity costs translate into greater potential savings from onsite solar generation or using batteries to adjust load patterns and shift consumption out of costly red‑band periods. By being equipped with data driven cost breakdowns, well informed decisions can be made about the regions that best align with long term objectives, as well as renewable solutions that optimise load patterns and enhance sustainability.

Further information

Contact Jordan Mbonu or Remy Shaieb

Unlocking the power of private wire: A smarter path to renewable energy