We were pleased to see the Review of Electricity Market Arrangements (REMA) update from the Government yesterday and the continued mission, in delivering clean power by 2030 and accelerating to net zero across the economy. We’ve provided a summary in three areas:
- Reformed National Pricing Decision
- Strategic Spatial Energy Plan (SSEP)
- Transmission Network and Connection Charges
Reformed National Pricing Decision
Aim to provide stronger investment and locational signals, improve NESO’s operational capability, and ensure fair outcomes for consumers.
Reformed National Pricing will provide:
- Investor Certainty: Aligning transmission network charging (TNUoS) and connection charging with strategic and spatial planning and locational investment levers, reduces investment uncertainty.
- Fairness: Costs are not passed on to consumers based on where they live.
- Lower Costs: Supports the timely delivery of new generation in the right places, which lowers consumer bills.
Reformed National Pricing will be a combination of the Strategic Spatial Energy Plan (SSEP), and TNUoS and connection charges reform.
- There is no need for legacy or transitional arrangements ahead of CfD Allocation Round 7 (AR7).
- It has ruled out zonal pricing and balancing and settlement arrangements such as Dual-Imbalance Pricing and Quasi-pay-as-clear BM.
Strategic Spatial Energy Plan (SSEP)
- The SSEP is the centrepiece of reformed national pricing.
- It will guide energy system development across regions, helping to coordinate generation, storage, and network planning across land and sea.
- Will include reforms to planning, seabed leasing, network building through Centralised Strategic Network Plan (CSNP), charging, and connection regimes.
- The first SSEP iteration (currently under development and subject to future consultation) is due in late 2026 and reviewed every three-years thereafter, covering electricity and hydrogen generation and storage technologies.
- First SSEP iteration will assess infrastructure potential on a regional basis.
- Outputs of the SSEP will feed directly into and be published ahead of the CSNP.
Transmission Network and Connection Charges
- Investors today complain that TNUoS charges are too volatile year-on-year.
- Reforming TNUoS to reflect true long-term system benefits of new generation.
- Changes to increase the predictability of TNUoS, among other things.
We will work with Low Carbon Contracts Company (LCCC) and Electricity Settlements Company (ESC) to support them to support these plans. We look forward to reviewing the Reformed National Pricing Delivery Plan and the final REMA analysis later this year.