REMA: Zonal pricing will not be introduced
Department for Energy Security and Net Zero published the 2025 REMA Summer update on 10 July 2025.
The government has decided to retain a single national wholesale market across Great Britain and introduce “an ambitious package of reform” to improve the efficiency of the future power system, the much-anticipated REMA update reveals.
What is the Review of Electricity Market Arrangements (REMA)?
In the British Energy Security Strategy, the government committed to a comprehensive review to ensure electricity market design is fit for purpose as the electricity system decarbonises.
This review mainly focuses on non-retail aspects of the electricity market design in Great Britain: Balancing Mechanism, ancillary services, Contracts for Difference scheme and the Capacity Market.
What is the latest?
The key decisions in the 2025 REMA Summer update are:
- A single national GB-wide wholesale electricity market will be retained. The government therefore does not intend to introduce zonal pricing.
- A reforms package to improve the effectiveness of national pricing model will be implemented.
What is included in the reforms package?
TNUoS and connection charges reforms
Transmission Network Use of System (TNUoS) charges are annual charges used to recover the costs of maintaining and operating the transmission network, while connection charges are one-off fees new generators pay when they connect to the network.
The government aims to deliver TNUoS reform within this Parliament as soon as possible, and by 2029 “at the very latest.” A detailed delivery plan later this year will set out how this deadline is to be achieved.
Strategic Spatial Energy Plan (SSEP)
The REMA update describes SSEP as the centrepiece of reformed national pricing. The first iteration of the SSEP, currently under development and subject to future consultation, is due for publication in 2026.
The government anticipates the SSEP will be driven and implemented through associated levers such as planning reform, reforms to the connections regime and network charging.
Operational efficiency
The government has identified the following measures as potential areas for reform:
- Lower mandatory Balancing Mechanism (BM) participation threshold: This would allow smaller assets, such as small-scale batteries, to participate in the BM. This would mean NESO would have more assets available to ‘call on’ when it needs to balance the system.
- Alignment of the market trading deadline with gate closure: The proposal is to bring the electricity market trading deadline back in line with ‘gate closure’ (the point when market participants must lock in their final plans for how much electricity they’ll produce or use in a given half-hour period).
- Physical Notifications that must match traded positions: This would mean the physical plans submitted by electricity generators, known as Physical Notifications, should match the trades they’ve made in the market.
- Unit-level bidding: This could support a level playing field between small and large market participants and allow for enhanced market power mitigation, particularly in relation to constraints.
In addition, together with NESO and Ofgem, the government continues to consider:
- Shortening the imbalance settlement period from 30 to 15 or 5 minutes: Shortening settlement periods would potentially be a major change to our market arrangements, with the potential for significant benefits but also significant costs and challenges associated with implementation. The government is working with NESO and Ofgem to consider the implications of this potential change and when it could be delivered.
Constraint management measures
Constraint management measures – through the Constraints Collaboration Project (CCP) – are set to help to reduce the impact of constraints and associated costs on consumers.
Leading options include long-term contracts to incentivise new demand to locate behind constraints (including data centre demand) and technical measures for increasing the flow of electricity over network boundaries.
What happens next?
The government will continue to develop the reforms package and will set out how this will be delivered in a ‘Reformed National Pricing Delivery Plan’ later this year. This is set to include:
- A vision of the future state of operations for the GB electricity market.
- A delivery timeline with key activities for implementing reformed national pricing.
- An overview of the legislation required to deliver this reformed national pricing package.
- How government plans for all locational signals to provide clear and consistent signals to project developers and investors.
- A separate consultation on proposals to make changes to the Capacity Market to ensure it can meet its objectives as the energy system changes will also be published later in 2025.
Furthermore, the government will publish the final REMA analysis later this year, including a full cost benefit analysis of the different wholesale market reform options.
Where can I find more information?
REMA Summer update 2025 is available on the gov.uk website.
How can Inspired help?
Although the impacts of these reforms and proposed measures remain to be seen, REMA impacts everyone either directly or indirectly – from businesses and households to suppliers and investors.
Working with an expert energy partner allows you to navigate changing regulatory landscape from an informed footing. If you would like to discuss how our experts could best support you, please email us at [email protected]
