Update on REMA Electricity Market: UK Government Announces Changes to National Pricing Rates in Energy Transition
The Department for Energy Security and Net Zero (DESNZ) has confirmed that the UK will retain a single national wholesale electricity market, rejecting the zonal pricing system that had been under consideration. This decision, announced in the REMA Summer Update on July 10, 2025, follows extensive industry consultations and debate since REMA began in 2022.
### Key Points of the Current Status
The government's decision to reject zonal pricing was due to the risks, complexity, and uncertainty that could hinder timely progress on climate goals and market stability. Instead, the existing system, where all areas pay the same wholesale price regardless of location, will continue but with significant reforms designed to better reflect locational signals through mechanisms other than zonal pricing.
These reforms focus on improving the efficiency of transmission and network charges, including changes to Transmission Network Use of System (TNUoS) charges, connection charges, and operational procedures. The Strategic Spatial Energy Plan (SSEP), commissioned from the National Energy System Operator (NESO), is integral to this reform, aiming to support coordinated and strategic network planning aligned with decarbonisation goals and infrastructure investment.
### Government Objectives Through REMA and SSEP
The UK government's objectives through REMA and SSEP are to achieve an affordable, secure, and efficient energy system while supporting the UK’s ambition for reliable, decarbonised power by 2030. The reforms aim to simplify network planning to optimize infrastructure investment and reduce market risk. They also seek to encourage a fair energy system that can adapt to growing renewable capacity and new technologies like battery energy storage.
The reforms also aim to support investor confidence to drive accelerated deployment of clean power sources and reduce electricity bills for consumers relative to scenarios without reform.
### Summary
The UK government’s Review of Electricity Market Arrangements (REMA) has settled on maintaining a reformed national pricing system without adopting zonal pricing, to streamline the transition to net zero electricity generation. The SSEP will guide strategic infrastructure development and investment, forming a cornerstone of the reforms alongside changes to network charges and operational rules.
Final detailed proposals and implementation steps are slated to be set out in the upcoming Reformed National Pricing Delivery Plan, expected to balance consumer affordability with clean energy expansion. This approach reflects a strategic decision to balance complexity, investment risk, and decarbonisation goals while maintaining market stability during a critical period before 2030.
Notable developments include the Sizewell C project, expected to meet 7% of the UK's energy needs for at least 60 years and support up to 70,000 jobs across the UK. Additionally, the Peak Cluster pipeline will transport carbon dioxide emitted at cement and lime manufacturing plants in Derbyshire and Staffordshire to the East Irish Sea for storage as part of the Morecambe Net Zero project.
Other significant developments include Assystem's plan to double its UK-based nuclear workforce across 10 sites, and UK company Urenco's 15-year, multi-billion euro deal to produce enriched fuel for EDF nuclear power stations. These developments underscore the UK's commitment to a sustainable and secure energy future.
- The reforms, part of the Review of Electricity Market Arrangements (REMA), will focus on enhancing the efficiency of transmission and network charges, specifically changes to Transmission Network Use of System (TNUoS) charges, connection charges, and operational procedures.
- The government, through the Strategic Spatial Energy Plan (SSEP), aims to encourage investment in infrastructure that aligns with decarbonisation goals and supports a fair energy system that can adapt to growing renewable capacity and new technologies like battery energy storage, making a significant contribution to the UK's financial sector and energy industry.
