Britain’s wholesale electricity pricing to be reformed

On 10 July 2025, the Department for Energy Security and Net Zero published the outcome of its Review of Electricity Market Arrangements (REMA), concluding that tolerating the inefficiencies of a reformed national pricing system strikes a better balance for delivering the Government’s objectives of creating a more efficient, flexible and sustainable energy system compared to the associated risks of a more fundamental shift to zonal pricing. The publication marks the end of an extensive, complex and, at times, emotive process. The growing mismatch between how the UK electricity markets and transmission infrastructure are structured on the one hand and how renewable and other low carbon technologies operate and are sited on the other will now be addressed through adjustments and revisions to the existing system.

Key takeaways from the decision are:

1. Zonal pricing has been definitively ruled out - the Government has rejected splitting the electricity wholesale market into several zones across Great Britain.
2. Reformed national pricing will be implemented - a package of reforms to improve the effectiveness of the national pricing model will be implemented whilst retaining a single national wholesale electricity market.
3. The Strategic Spatial Energy Plan (SSEP) forms the centrepiece of a reformed national pricing mechanism – the SSEP will spatially optimise the energy system across Great Britain, identifying the best locations, quantities and types of electricity and hydrogen generation and storage.
4. Transmission Network Use of System (TNUoS) and connection charging will be reformed – reforms to these charges will provide predictable locational investment signals and support SSEP delivery.
5. Operational efficiency improvements will be delivered – reforms will allow the National Energy System Operator (NESO) to have greater visibility on the assets on the system to improve balancing and settlement arrangements and constraint management measures.

Read more in our client alert. If you have questions about the nature or impact of the reforms for your business, please do get in touch with our energy experts who will be happy to assist.