The UK government has announced a package of reforms to the national electricity market aimed at making the system fairer, more affordable, and more secure. The changes are designed to support investment in clean energy while protecting consumers from volatile fossil fuel markets and high energy bills.
Following consultation since 2022, the government has decided to retain a single national wholesale electricity price, rejecting proposals to split the country into regional pricing zones. This approach is intended to maintain investment certainty and support the efficient roll-out of renewable energy. Key reforms include:
Strategic Spatial Energy Plan
A new long-term energy infrastructure plan, led by the National Energy System Operator (NESO), will be published in 2025. Commissioned by the UK, Scottish, and Welsh governments, the plan will guide where energy projects should be located across land and sea up to 2050, helping to speed up development, reduce grid connection delays, and lower costs.
Transmission charges
The government and Ofgem will review how transmission costs are calculated to encourage generators to locate new projects in areas that support system efficiency. Changes will aim to make these charges more predictable to reduce investor uncertainty and long-term project costs.
Improving system efficiency
To reduce constraint payments and improve grid capacity, the government is accelerating upgrades to outdated infrastructure. Projects already under way include the Norwich to Tilbury transmission line and the Sea Link offshore cable. NESO estimates that up to £4 billion in constraint payments could be avoided by 2030 if key upgrades are completed on time. A consultation is planned for later this year on additional reforms, including improving access to smaller grid-balancing assets like battery storage.
Local and community benefits
Households within 500 metres of new or upgraded transmission infrastructure will be eligible for bill discounts of up to £2,500 over 10 years. The government also plans to support coastal and rural communities hosting energy infrastructure with funding for community facilities, transport, and apprenticeships.
