Powering Change: Key Insights from the REMA Summer Update 2025

Powerful change lies ahead in Great Britain’s energy industry, following the Government’s publication of the REMA Summer Update on 10 July 2025. It announced the retention of a single GB-wide wholesale market, along with a raft of reforms to boost the efficiency of the future power system.

The announcement marks a pivotal point in the energy transition process. For participants in the renewable energy industry, it’s never been more crucial to understand the implications of these changes - and what to watch out for next. Below, we explore the key details of the latest update and what you should be prioritising now. 

The road to the REMA Summer Update 2025

The Review of Electricity Market Arrangements (REMA) kicked off in July 2022 to consider how best to deliver a fair, affordable and secure power system. While REMA started under the previous Government, it remains in line with the current Government’s mission to make Great Britain a clean energy superpower and deliver clean power by 2030. 

In the REMA Autumn Update 2024, two approaches for wholesale electricity market reform were considered:

1. Zonal pricing, where the wholesale market would be split into several zones across Great Britain; and 
2. ‘Reformed national pricing’, where Great Britain would retain a single national price in the wholesale market, alongside substantial reforms and greater strategic and planning co-ordination. 

Conclusion: evolution, not revolution

Building on this previous work, the REMA Summer Update set out the following: 

• Retention of a single national, GB-wide, wholesale electricity market, rather than implementing zonal pricing, which risked causing unnecessary instability and uncertainty around future prices and zonal boundaries.
• Implementation of an ambitious approach to reformed national pricing, through a cohesive package of measures to improve the effectiveness of the national pricing model. These reforms aim to guide developers towards areas with better grid capacity and lower constraint costs, improving project viability. Co-ordinating network plans and siting decisions more effectively should also increase the efficiency of assets, deliver a more strategic and co-ordinated approach to the energy system, provide stronger signals for efficient siting of new assets, and improve overall operational efficiency, whilst also increasing stability and certainty for investors.

The Government anticipates that reformed national pricing will better inform investor decision-making, highlighting the attractiveness in price and supply of a particular location. There are, of course, a number of other factors that will influence decision making for investors, crucially, the state of the grid itself and the ease or difficulty of obtaining grid connections to promised timelines.  Some may question whether revolution may have been a better choice to deliver swift change, despite the upheaval it would cause in the short term.  

Reformed national pricing – what is actually involved? 

1. The new Strategic Spatial Energy Plan (SSEP) will essentially map where new assets, including electricity and hydrogen generation and storage, should be located. This will allow the Government and regulators to assess the most suitable locations, quantities and types of infrastructure needed to meet future demand with clean, affordable and secure energy. 
    

   The ultimate aim of the SSEP is to promote a coordinated approach to planning and to promote anticipatory network investment – in turn reducing waiting times for generation and storage projects to connect to the grid and cutting network constraint costs. The Government expects that it will mark a ‘step-change in how we plan and deliver our future energy system’.  This sounds promising, but it may require giving Ofgem heftier enforcement powers, or at the very least, further resources to enforce existing licence conditions which already require transmission owners, distribution network owners and the National Energy System Operator (NESO) to  coordinate and cooperate with each other to build a common understanding of cross-network impacts (positive and negative) that may result from their actions.
    

   The SSEP will be driven by and implemented through associated levers, potentially including planning reform, seabed leasing, network build (the Centralised Strategic Network Plan (CSNP)), reforms to the connections regime (already ongoing), and network charging (as set out in point 2 below). 

2. An overhaul of the Transmission Network Use of System (TNUoS) charging regime has been proposed, seeking to make it more predictable and investor friendly. The reform will align TNUoS charging with the new SSEP, sending clearer signals about where new generation sites should be built. 

3. There is renewed focus on reforming the Balancing Mechanism (BM), the key tool used by NESO to keep supply and demand in balance in real time. Proposed changes aiming to improve efficiency and transparency include:

   • Expanding access to the BM by lowering participation thresholds, enabling smaller assets such as small-scale batteries to participate. This would give NESO a broader pool of resources with which to maintain system stability. 

   • Aligning market trading deadlines with ‘gate closure’, the point at which market participants must confirm their generation or consumption plans for a given half-hour period. 

   • Physical Notifications (PNs) that must match traded positions will give NESO a clearer and more reliable picture of each asset’s projected output. 

   • Shortening the imbalance settlement period (to 15 or 5 minutes) and unit-level bidding are also being explored in order to level the playing field and reduce costs. 

The BM, while simple in concept, is complex in practice, as can be seen from the proposed changes above.  To make the BM effective, NESO’s control room must be able to despatch multiple assets efficiently and quickly enough to balance the system. Achieving this goal was the aim of the Open Balancing Platform, launched at the end of 2023; however, it had teething issues, and clearly has not been effective enough alone to improve efficiency. The control room’s operation will be made even more complex where there are lower participation thresholds, and shorter settlement periods. 

Generally speaking, the industry has always aimed to match PNs to traded positions, and participants have taken steps to trade up to gate closure to reduce their imbalance exposure.  It will be interesting to see what specific changes are going to be proposed, and any changes must include input 

What does this mean for you? 

The Government says that reformed national pricing will provide multiple advantages for investors – most notably thanks to increased certainty brought about by a more stable and predictable framework. This is all the more vital because of the long lead times in building new generating capacity. 

Reforming TNUoS and connection charging to align with strategic and spatial planning, as well as other locational investment tools, will reduce ambiguity and support long-term investment. It is also anticipated that the changes will lower the cost and complexity of investing, creating a more attractive environment for investment. As new sources of funding from the public and private sectors become available, this clarity around the key investment framework will be paramount. 

These latest developments will be of interest to those developing or establishing renewable and conventional energy projects, as well as investors and others in the industry. In particular: 

1. Certainty: the retention of a single national wholesale electricity market and the rejection of zonal pricing removes a major source of uncertainty for investors - particularly important for those participating in Contracts for Difference (CfD) Allocation Round 7. 
2. Location: the reformed national pricing approach includes stronger locational signals for asset siting and strategic planning through the SSEP and the CSNP. The reformed TNUoS charging should also send an effective and predictable signal about where new investment should be located. This package of reforms aims to guide developers towards areas with better grid capacity and lower constraint costs, improving project viability. Better co-ordination of network plans and siting decisions should also increase the efficiency of assets.
3. Operational efficiency and grid access: reforms to the BM will help NESO to better understand the balance of supply and demand and improve system reliability. The SSEP will map out optimal locations for electricity and hydrogen generation and storage, helping developers align with national infrastructure plans. This seeks to reduce grid connection delays and improve access to transmission capacity. 

Some of these changes will sound familiar to investors and stakeholders. They appear to be a further iteration of the current regional development plans ¹ and / or electricity ten year statements ², which are only useful insofar as they are accurate and up to date. Hopefully there will be lessons learned about how these plans have been developed and how much success (or lack thereof) they have had. It will be crucial for NESO and Government to engage with stakeholders to ensure that the proposed changes work in practice.

What next? 

Following the REMA Summer Update, we are expecting a fresh wave of developments over the coming period: 

• Legislation – primary legislation is needed to make the required changes; further detail is expected to be set out in the Reformed National Pricing Delivery Plan (RNPDP) later in 2025.
• SSEP – NESO was commissioned to develop the SSEP in October 2024; the RNPDP will set out how the SSEP and associated levers will interact. The first iteration of the SSEP is due for publication in 2026 and will include electricity and hydrogen generation and storage technologies. The outputs of the SSEP will feed directly into the CSNP. 
• Network Charging – the Department for Energy Security & Net Zero (DESNZ) and Ofgem are working together to reform connection charging and TNUoS charging; DESNZ will seek time-limited powers (through primary legislation) for the Secretary of State and/or Ofgem to make necessary modifications to codes and/or licences. The Government is aiming to deliver TNUoS reform as possible within this Parliament, and by 2029 at the very latest. 
• Balancing and settlement arrangements – changes will be introduced to give NESO the tools and framework to redispatch effectively and securely, and code changes will be supported through primary legislation, as above. NESO will launch a consultation on measures later in 2025.
• Final REMA analysis – this is due to be published later this year, including a full cost benefit analysis of the different wholesale market reform options.

What should you be doing now? 

These changes will certainly take some time to implement. However, as the dust settles from the Government’s latest announcement, those in the industry should consider taking the following steps: 

• Check your contracts: start considering how your prices might be affected and check your existing revenue agreements and PPAs for ‘change in law’ clauses. REMA reforms represent a regulatory regime shift, which may trigger these provisions. Check whether the clause covers regulatory changes, grid access or connection cost changes, and tax or subsidy arrangements. Does your clause allow for tariff renegotiation, compensation for increased costs, and termination rights? Consider taking legal advice – some agreements have ambiguous or narrow definitions of what constitutes a change in law. 
• Review your project siting strategies: reassess site selection criteria to factor in future locational signals and grid constraints. Projects in optimal zones may benefit from faster connections and lower costs. 
• Future-proof your new contracts: new PPAs should include robust provisions in relation to regulatory changes, as REMA reforms are rolled out through 2026. Make sure you have clearly defined change in law clauses, mechanisms for tariff adjustment or compensation, and international arbitration or dispute resolution options. 
• Get involved: look out for consultations, which offer an opportunity to help shape future change – for instance, a consultation on proposals to make changes to the Capacity Market will be published later this year.  
• Watch this space: now, more than ever, it’s crucial for stakeholders to be aware of developments as they happen. You can contact remamailbox@energysecurity.gov.uk to be added to the mailing list to receive updates about REMA and related events. Keep an eye on the Clyde & Co website for our insights as the policy develops.  

If you would like tailored advice or support in navigating the implications of REMA for your business, please don’t hesitate to get in touch with our team. We’re here to help you understand the evolving regulatory landscape and make informed decisions with confidence.

1. https://www.neso.energy/publications/regional-development-programmes-rdps

2. https://www.neso.energy/publications/electricity-ten-year-statement-etys