REMA: progress, decisions and what comes next

The review of the Electricity Market Arrangements (REMA) was launched in 2022 by the UK government to modernise electricity markets and support decarbonisation, aiming for a fair, affordable, and secure power system. 

In July 2025, a key decision was made when the government rejected zonal pricing and pursued Reformed National Pricing, encompassing a single national wholesale electricity price enhanced with strategic improvements. This includes the rolling out of a Reformed National Pricing Package (RNNP) with a strong emphasis on:

• Strategic Spatial Energy Plan (SSEP): A framework to guide where new electricity generation and storage should be built, aligning it with grid capacity and planning reforms.
• Centralised Strategic Network Plan (CSNP): A 25-year roadmap for expanding transmission infrastructure in line with SSEP insights.
• Reforms to network charging (TNUoS) and connection costs: Making costs more predictable and aligned with long-term planning signals for investors.
• Operational improvements: Updating how electricity balancing and settlement work, such as reducing minimum plant size in the balancing market, moving to shorter settlement intervals (like 5 or 15 minutes), and better unit-level bidding.

Final REMA decisions – which will include a full cost benefit analysis (CBA) of the different wholesale market reform options – are expected to be published before the next Contracts for Difference (CfD) Allocation Round (AR7) anticipated later this year. Primary legislation aimed at facilitating the necessary changes and delivery pathways to achieve REMA’s goals will also be introduced.  

This is a critical engagement window where industry, developers and system experts should participate in consultations and provide feedback to ensure reform practicality and performance.

The first SSEP is expected to be published in late 2026 where zones for generation, storage, and grid reinforcements will be prioritised in coordination with planning and investment pipelines. The SSEP will be updated every 3 years, so early feedback and practical alignment with real-world constraints is essential.

The CSNP will follow the SSEP and is expected to roll out by late 2027. This long-term plan will drive infrastructure decisions and investment priorities for the transmission network. It is expected that wider REMA reforms – including operational changes, investment signals, and consumer participation models – will continue to be phased in, likely into 2029.

Locational pricing: end of the road?

The current market, built around uniform national pricing and legacy infrastructure, has struggled to integrate high volumes of renewables efficiently – especially in constrained areas. Under the REMA pathway, the UK retains simplicity but adds coordination tools (SSEP, CSNP, and reformed charges) to mitigate inefficiencies without fully embracing regional pricing. However, if grid congestion worsens or regional imbalances grow, pressure may mount to revisit more explicit locational mechanisms.

Although the UK has opted for a RNNP, this is likely not the end of the story for locational market mechanisms. Even with zonal pricing officially ruled out, the underlying need for geographically variable signals may not have disappeared. Future developments may include:

• Enhanced constraint pricing with market mechanisms that reflect local grid congestion in generator revenues, albeit within a national pricing structure
• Locational investment incentives with targeted financial or regulatory support for siting generation and storage in optimal areas. 
• Distribution-level flexibility market with local balancing schemes that reflect regional system needs and perhaps even evolve into more granular pricing frameworks. 
• Differentiated network charges with more dynamic Transmission or Distribution Use of System (UoS) reforms that vary by region, offering an indirect form of locational signal.

In addition, as NESO’s Regional Energy Strategic Planning (RESP) activity develops, further opportunities for regional differentiation – or “synergisation” – may unfold. Regional conditions, priorities and spatial/location data are distinct focus areas within the Transitional RESP (tRESP), supporting the third electricity distribution price control (RIIO-ED3) process.

Navigating the path ahead

REMA signals a notable shift in how the UK thinks about power system design, prioritising strategic coordination over regional pricing complexity. For industry this is a call to action to bring engineering insight, operational realism, and consumer focus to a reform process which will define the evolution of the UK’s electricity market.

By asking critical questions, sector stakeholders can ensure these reforms deliver not only decarbonisation, but also network resilience, investment clarity and ultimately, a more efficient and affordable electricity system.

Although one potential REMA pathway may have closed, the challenge of navigating the complexity of multiple future possibilities remains.