This update brings much-needed clarity to stakeholders after two years of extensive engagement. Government has decided to retain a single national GB-wide wholesale market and introduce a package of reform to improve the efficiency of our future power system, there for their decision is not to implement zonal pricing.
The Strategic Spatial Energy Plan (SSEP) is central to delivering reformed national pricing, using levers like planning reform, seabed leasing, network planning (CSNP), connections reform, and network charging. Aiming to spatially optimise infrastructure across GB, the first SSEP covering electricity and hydrogen will be published in 2026, providing regional assessments and greater clarity for industry while preserving market competition.
Key Outcomes of the REMA Summer Update
Decision to Retain the National Pricing Model
The Government has confirmed it will not proceed with zonal pricing at this time. Following evidence and feedback, DESNZ concluded that the costs, complexity, and potential investor disruption outweighed the benefits. The current national pricing model will remain in place, with improvements to better reflect locational signals through existing mechanisms.
Review of Transmission Network Use of System charges (TNUoS)
As part of delivering the Strategic Spatial Energy Plan (SSEP) under reformed national pricing, the Government will reform the Transmission Network Use of System (TNUoS) and connection charging regimes for both generation and demand. This aims to address investor concerns over volatility and unpredictability in current charges, which increase consumer costs and reduce investor certainty. By aligning TNUoS with the long-term system benefits of generation, the reforms will send clearer, more predictable locational signals that support better siting of new projects without the complexity of zonal pricing. A detailed delivery plan will be published later this year, with full implementation expected by 2029 at the latest and legislation introduced as early as possible. Ofgem will launch the review shortly, covering:
A review of TNUoS objectives to align with the SSEP.
Compatibility between TNUoS, the SSEP, and the Centralised Strategic Network Plan (CSNP).
Updates to cost drivers to reflect spare capacity, constraints, and future build.
Measures to increase predictability of charges.
Rebalancing of connection charges and TNUoS, with possible deepening of connection charges.
Review of charges for storage and demand.
Consideration of transitional and implementation arrangements.
Operational Efficiency
To improve the operational efficiency of the electricity system, particularly around managing network constraints, the Government, NESO, and Ofgem have identified a package of reforms. These measures aim to enhance real-time balancing, reduce system costs, and increase flexibility, delivering savings for consumers and improving system transparency.
Key reforms under consideration include:
Lowering the Balancing Mechanism (BM) participation threshold to allow smaller assets (e.g., small batteries) to participate, improving flexibility and system response.
Aligning the market trading deadline with gate closure to give NESO a clearer picture of the system ahead of real-time balancing.
Requiring Physical Notifications to match traded positions, ensuring NESO can accurately assess system balance.
Introducing unit-level bidding, enhancing market power mitigation, transparency, and fairness across asset sizes (subject to further evidence).
Considering shorter imbalance settlement periods (15 or 5 minutes) to boost granularity, support fast-acting technologies like batteries, and shift volumes from the BM to the wholesale market.
Additionally, the Government is supporting code modification P462, which would prevent generators from factoring subsidies into BM prices—making balancing costs more transparent and cost-reflective. P462 is under cost-benefit analysis with Ofgem expecting final recommendations in 2026.
These operational reforms may require legislative support, and the Government will work with NESO and Ofgem to assess the timing, benefits, and feasibility of each measure as part of broader electricity market reform.
Strengthening the Capacity Market
A package of reforms to the Capacity Market (CM) will be brought forward to ensure the scheme supports low carbon flexibility and system security. This includes a focus on enabling investment in long-duration storage, demand side response, and hydrogen.
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.
5. Evolving Contracts for Difference (CfDs)
The CfD scheme will be retained as the main route to market for low carbon generation, with reforms to enhance market responsiveness, support dispatchable low carbon technologies, and ensure better locational and system value.
6. Supporting Flexibility and Efficient Dispatch
The Government will continue to reform ancillary and flexibility services and improve price signals across markets. This includes work with Ofgem and National Grid ESO on reforms to support efficient dispatch in a high-renewables system.
Next Steps for Government
publish a Reformed National Pricing Delivery Plan, setting out the next steps on design and delivery later this year.
publish the final REMA analysis later in the year, including a full cost benefit analysis (CBA) of the different wholesale market reform options.
work in partnership with NESO to deliver the Strategic Spatial Energy Plan (SSEP) by the end of 2026, work with Ofgem to drive forward our review of Transmission Network Use of System (TNUoS) and connection charges, and work with NESO to launch a consultation on balancing reform (later this year) and complete their Constraints Collaboration Project
Further consultations will follow on CM and CfD reforms and on better valuing flexibility in the system.
No major change to wholesale market structure will be pursued in this phase of REMA.
Ofgem and industry will continue to lead on operational and market dispatch improvements within the existing market design.
Next Steps for techUK
We are working with NESO on the development of the Strategic Spatial Energy Plan (SSEP) to support the efficient and coordinated deployment of energy infrastructure in line with the digital tech sector across Great Britain.
We will be working closely with Ofgem to ensure that the Transmission Network Use of System charges are appropriately designed to enhance investment in the growth of the digital tech sector.
techUK’s Perspective
We are glad to finally see a decision, and while zonal pricing has been ruled out for now, we welcome the focus on unlocking flexibility, reforming legacy schemes, and improving market signals, with more clarity in implementation being expected.
The UK cannot sustain a globally competitive digital economy while data centres, critical to AI, cloud computing, and high-performance technologies, continue to face disproportionately high industrial energy costs. Unlike other energy-intensive sectors, data centres are currently exposed to the full burden of network, policy, and balancing charges, despite playing a leading role in renewable energy investment. In light of the REMA decision to retain national pricing while seeking to improve locational signals through existing mechanisms, for which we would hope to receive more clarity, our hope is that energy pricing structures will be modifiedd to reflect the strategic importance of digital infrastructure. If the UK is to be a tech maker, not merely a tech taker, these barriers to growth must be addressed as a matter of urgency.
We look forward to working with DESNZ and Ofgem on the next stages of policy development, particularly around how digital technologies and innovative business models can support a more dynamic and efficient power system.
Get Involved
techUK will be working with members through our working groups to ensure that our sector is appropriately represented in energy planning, policy and regulation, and pricing control.
Energy Digitalisation Working Group, sign up here.
For more information or to register your interest, contact [email protected].
Smart Infrastructure and Systems Programme activities
techUK champion the role of technology in driving positive outcomes in our built infrastructure; from hitting net zero goals to improving safety. In doing so, we also optimise the commercial and regulatory landscape to ensure innovation in infrastructure can flourish. Visit the programme page here
Digital Twinning of Everything and Everyone
Read our latest Green Paper exploring the future of Digital Twinning in the UK.
Call for Submissions: techUK Automated Mobility Campaign Week 2025
techUK is excited to announce its upcoming Automated Mobility Campaign Week, a key opportunity to explore and highlight the transformative potential of autonomous vehicle technology in the UK. This campaign will run as part of techUK's wider campaign programme, offering techUK members the chance to share their insights and expertise on the future of Connected and Automated Mobility. Submission Deadline: Friday 31 January 2025.
Our members develop strong networks, build meaningful partnerships and grow their businesses as we all work together to create a thriving environment where industry, government and stakeholders come together to realise the positive outcomes tech can deliver.
Teodora’s rich background varies from working in business development for a renewable energy lobbying association in Brussels to the fast moving technology innovation startup scene in the UK.
She has designed the market strategy for a German renewable energy engineering scale up for the UK, listed on Nasdaq private market, and now one of the fastest growing scale ups in the world. Previous experience also includes managing a renewable energy startup in London, which has built a small-scale biomass CHP power plant. Teodora is passionate about cross-industry collaboration and working together with academia to inform the design of future educational models and skill building.
Most recently Teodora has ran the commercial activities and business development at Future Cities Catapult, focusing on innovation in cities, digital health and wellbeing, mobility, and infrastructure. Teodora is a passionate STEM Ambassador and a vocal advocate for women in tech.
Programme Assistant, Data Centres, Climate, Environment and Sustainability, Market Access, techUK
Lucas Banach
Programme Assistant, Data Centres, Climate, Environment and Sustainability, Market Access, techUK
Lucas Banach is Programme Assistant at techUK, he works on a range of programmes including Data Centres; Climate, Environment & Sustainability; Market Access and Smart Infrastructure and Systems.
Before that Lucas who joined in 2008, held various roles in our organisation, which included his role as Office Executive, Groups and Concept Viability Administrator, and most recently he worked as Programme Executive for Public Sector. He has a postgraduate degree in International Relations from the Andrzej Frycz-Modrzewski Cracow University.
Teodora’s rich background varies from working in business development for a renewable energy lobbying association in Brussels to the fast moving technology innovation startup scene in the UK.
She has designed the market strategy for a German renewable energy engineering scale up for the UK, listed on Nasdaq private market, and now one of the fastest growing scale ups in the world. Previous experience also includes managing a renewable energy startup in London, which has built a small-scale biomass CHP power plant. Teodora is passionate about cross-industry collaboration and working together with academia to inform the design of future educational models and skill building.
Most recently Teodora has ran the commercial activities and business development at Future Cities Catapult, focusing on innovation in cities, digital health and wellbeing, mobility, and infrastructure. Teodora is a passionate STEM Ambassador and a vocal advocate for women in tech.