The Government’s decision in July on the Review of Electricity Market Arrangements (REMA) settled a long-running debate. Zonal pricing is off the table and government will keep a single national wholesale price, moving to Reformed National Pricing (RNP). The focus is now on delivery, with an RNP Delivery Plan due in late 2025. For long-term investors, the direction is clearer, but value will be determined by the specifics and timing of reforms.
Ministers confirmed a single GB-wide price, citing fairness and investor certainty, and set out the RNP workstreams that will do the ‘heavy lifting’ instead: a Strategic Spatial Energy Plan (SSEP), predictable network charging aligned to that plan, and operational reforms to improve efficiency. Independent commentary and the government update both point to stronger locational guidance without the disruption of zonal tariffs.
Charging and connections: predictability and sequencing
Ofgem is now taking forward reform of the Transmission Network Use of System (TNUoS). It has said that it recognises challenges with the existing methodology, and that charges can be viewed as unpredictable and volatile, which can hinder investment decisions and increase risk and cost to consumers. More predictable network charges could provide more effective signals to investors at the point of making investment decisions.
The Government has said it is prepared to use primary legislation to streamline code and licence changes, with an ambition to deliver within this Parliament (by 2029). Ofgem has also been working through near-term proposals such as CMP444 (introducing cap and floor to wider generation) while progressing wider connections reforms (TMO4+). The reforms aim to create a more coherent framework that will increase investor confidence in project delivery, by aligning charging design, spatial planning, and the connections framework.
Flexibility and the Balancing Mechanism
The Government, National Energy System Operator (NESO) and Ofgem are scoping balancing reforms that would lower participation thresholds and move the current 30-minute imbalance settlement to 15 or even five minutes. This comes alongside measures like unit-level bidding, tighter alignment of Physical Notifications to traded positions, and clearer gate-closure rules.
The outcome should increase the incentives for storage and demand-side response, making fast-acting assets more bankable. In addition, address ongoing concerns about the underutilisation of flexible capacity in real-time operations.
Cutting constraint costs
Constraints remain a significant system cost driver. NESO data shows that overall balancing costs were lower in 2023/24 than the previous year, but constraint costs remained the single largest component, accounting for around 59% of total costs over the winter period.
The RNP package now prioritises long-term contracts to attract new demand behind constraints, such as data centres or other large users, as well as complementary technical measures to move more power across network boundaries. These measures are designed to complement network investment and help contain costs until new transmission capacity is in place.
A system map that investors can plan around
The Strategic Spatial Energy Plan (SSEP), led by NESO, will set out where and when generation, storage, demand and networks should be developed. The first GB-wide iteration is due by the end of 2026, with a three-year review cycle thereafter.
NESO has published its methodology, which covers economy-wide modelling, spatial assessment, and statutory environmental appraisal, and confirms that it includes electricity and hydrogen. The SSEP aims to provide long-term visibility by integrating project planning, grid connections, and charging reforms into a single strategic framework.
A Capacity Market and related consultations
A Capacity Market (CM) consultation is expected later this year alongside the RNP Delivery Plan. The Government has signalled it will test whether the CM is still fit for a renewables-led system, including the role of flexibility and low-carbon adequacy. The consultation will be a critical moment for investors in flexible and low-carbon capacity, including storage, demand-side response and other firming technologies.
Why this matters for capital
For investors, the reforms signal that location will matter more. While the wholesale price remains national, charging and connection policies aligned with the SSEP will directly shape siting decisions, timelines and ultimately the cost of capital. Projects in areas with available grid capacity and lower constraint risk are likely to enjoy a competitive advantage. At the same time, reforms to the Balancing Mechanism and shorter settlement periods could open up additional value streams for flexible assets, provided market rules and platforms are implemented consistently.
Government’s willingness to create legislation for charging reform provides reassurance, but the execution risk remains. Confidence will be based on how quickly and consistently charging, planning, and operational reforms are implemented. For members, the key tests are predictable TNUoS aligned to SSEP, a connections regime that sequences consents with grid milestones, and balancing reforms that genuinely reward responsiveness.
We at GIIA will engage actively through the forthcoming RNP Delivery Plan and Capacity Market consultations to ensure investor requirements for clarity, resilience and stability are fully reflected.