What Is The Reformed National Pricing Delivery Plan And How Will It Affect Energy Projects?

Following an extensive Review of Electricity Market Arrangements (REMA), the Department of Energy Security and Net Zero (DESNZ) has now released its delivery plan for reform of the national electricity market – the Reformed National Pricing delivery plan (RNP).

The Reformed National Pricing delivery plan represents one of the most significant structural reforms to the GB electricity market in recent years. For developers, investors, network operators and other energy sector participants, the RNP will reshape how projects are sited, connected and remunerated — making it essential to understand the practical implications of these reforms as they take shape.

Why was the Review of Electricity Market Arrangements launched?

The REMA process, which began in 2022, was launched in the wake of a growing sentiment that the current market structure in Great Britain was insufficient for delivering the energy transition. This process set about a complete review of the non-retail components of the market, and in particular considered a move from the single national electricity price to a zonal pricing model.

In July 2025 it was determined that Great Britain should retain a single wholesale market price. As a result of this determination, and the broader findings of the REMA consultation process, a range of reforms have been proposed under the newly announced RNP.

What is the Reformed National Pricing delivery plan?

Strategic Spatial Energy Plan

The RNP sets out a clear goal – to encourage development of energy infrastructure in proximity to the areas of high demand. The Strategic Spatial Energy Plan (SSEP), which is to be produced by the National Energy System Operator (NESO) every three years, will set out a geographic plan for both generation and storage technologies. This will include the capacity and timings of developments required to meet not only forecasted demand, but also net zero ambitions.

The RNP has identified the following mechanisms, which are intended to support the delivery of the SSEP by influencing project development decisions in geographic areas that will minimise long-term system costs:

• Network build – the SSEP will be used as the basis for the Centralised Strategic Network Plan (CSNP) for transmission infrastructure. The CSNP will detail the network buildout, including reinforcement projects to meet future capacity needs, to be delivered through Ofgem's price control regime;
• Seabed leasing – the SSEP will include marine elements, to determine where offshore projects can be developed. This will also consider how offshore zones can be included in other investment levers such as the connections regime and Contracts for Difference (CfD) allocation rounds;
• Planning reform – the SSEP will be formalised within other planning regimes, such as the Nationally Significant Infrastructure Project regime;
• Connections Regime – the SSEP will be aligned with the connection process to not only reduce delays, but also ensure that strategic projects are delivered in priority. The RNP would also enable the SSEP to limit the volume of connection agreements, prioritising different technologies within SSEP zones;
• Locational charges – locational charges currently delivered through the Transmission Network Use of System Charges and connection charging regimes, may be reformed to ensure they are consistent with the SSEP; and
• Investment support – support schemes and incentives such as the CfD and Long Duration Energy Storage (LDES) scheme, may be amended to include geographic criteria in alignment with the SSEP.

Consultation on these mechanisms has recently closed, and a determination is expected soon.

Constraints Management

In light of historic underinvestment in the network which is failing to keep pace with the growth of generation projects, and a marked increase to constraint costs, the RNP has also identified a need to manage network constraints. As a result, a Constraints Management Action Plan (CMAP) has been proposed, which focuses on the following:

• Reducing the volume of constraints – this approach will include an acceleration of the network build and critical transmission projects under an urgent programme of actions, accelerating construction schedules for critical projects, and reforming system access and the management of outages. There will also be a concerted effort to make the best use of the existing network, including supporting the roll out of dynamic line rating technology for determine the actual capacity, rather than conservative estimates currently used, of overhead transmission lines; and
• Managing the cost of constraints – this approach will include working to support NESO in taking action ahead of gate closures, promoting more efficient use of batteries and LDES technologies, and considering wider usage of flexible demand and interconnectors. DESNZ also noted their intention to allow data centres in eligible AI Growth Zones to be exempt from paying a portion of their costs into the electricity system, where the data centres have harnessed excess electricity and reduced the cost to the wider electricity system. This would see a reduction in electricity costs of £24/MWh in Scotland, £16/MWh in Cumbria, and £14/MWh in the North East from April 2027.

Balancing and Settlement

The RNP also flagged an intention to reform balancing payments, to account for the greater grid capacity and wider variety of technologies that are now connected. The proposed reforms have not yet been finalised, but a final decision is planned for the latter half of 2026 regarding:

• Lowering the mandatory participation threshold for the Balancing Mechanism – which would require smaller assets to participate in the Balancing Mechanism, allowing NESO greater availability to balance the system when required. This would also aim to increase competition in the Balancing Mechanism, and therefore reduce balancing costs;
• Requiring Final Physical Notifications to match traded positions – which would not only encourage participation in the Balancing Mechanism and provide NESO with better forecasting abilities, but would also require participants to be in a self-balanced position and reduce the volume of redispatch required by NESO; and
• Aligning the market trading deadline with Balancing Mechanism gate closures – rather than the current ability to trade up until real-time. This would increase NESO's certainty regarding balancing actions post gate closure, and ensure that both Balancing Mechanism Units and non-Balancing Mechanism Units are both subject to the same trading rules.

Further reforms are also being considered on unit-bidding, and whether to shorten the imbalance settlement periods to either 15 minutes or five minutes, with an initial decision on these matters expected in the latter half of 2026.

Read the original article on GowlingWLG.com