The UK Government has today announced major reforms to its electricity market, confirming it will maintain a single national pricing model rather than dividing the country into regional zones. The move aims to create a fairer, cheaper, and more secure energy system, while supporting Britain’s clean energy ambitions.

After an extensive consultation process that began in 2022, Ministers have opted to retain a unified national wholesale electricity price. The decision rejects proposals for zonal pricing, which would have resulted in consumers paying different rates depending on their proximity to energy generation sources.

Energy Secretary Ed Miliband stated: "Building clean power at pace and scale is the only way to get Britain off the rollercoaster of fossil fuel markets and protect families and businesses for good."

"As we embark on this new era of clean electricity, a reformed system of national pricing is the best way to deliver an electricity system that is fairer, more affordable, and more secure, at less risk to vital investment in clean energy than other alternatives."

Key reforms and investments

The government’s package of reforms includes:

• Strategic Spatial Energy Plan (SSEP): Set to be published next year by the National Energy System Operator (NESO), the SSEP will outline where new energy projects should be located across Britain up to 2050. This aims to speed up development, reduce grid connection delays, and provide investor certainty.

• Review of transmission charges: The government will work with Ofgem to review the current Transmission Network Use of System charges. This is intended to encourage the construction of energy projects in areas where generation is most needed, while making costs more predictable for developers.

• Upgrading grid infrastructure: In response to years of underinvestment, the government is accelerating key transmission projects like the Norwich to Tilbury line and the Sea Link cable between Kent and Suffolk. NESO estimates that up to £4 billion in constraint payments could be avoided by 2030 if critical upgrades are completed on time.

• Local benefits for communities: Households within 500 metres of new or upgraded electricity transmission infrastructure will receive electricity bill discounts of up to £2,500 over 10 years. Additionally, rural and coastal communities hosting clean energy projects will benefit from new facilities, improved transport links, and apprenticeships.

The reforms come as part of the Government’s wider Plan for Change, a strategic mission to deliver clean, homegrown energy that reduces reliance on fossil fuel imports and provides long-term price stability for consumers.

Industry reaction

RenewableUK welcomed the decision to abandon zonal pricing, with Executive Director of Policy and Engagement Ana Musat calling it “good news for billpayers.”

"This decision means consumers will pay less for electricity and gives confidence to private investors that the UK remains one of the best markets for renewable energy development."

"It also allows us to build more clean energy projects and infrastructure at lower cost, supporting job creation and supply chain growth while strengthening Britain’s energy security."

Musat also noted the government’s ongoing efforts to reform grid access charges and expand energy storage capacity will ensure the system remains flexible and efficient as more renewable power comes online.

Looking ahead

Today’s announcement marks a significant step towards the UK’s goal of achieving a clean power system by 2030. Over the past year, the government has approved projects capable of powering two million homes and committed £14.2 billion towards the Sizewell C nuclear plant—the largest expansion of nuclear power in Britain in over 50 years.

By reaffirming its commitment to national pricing and a strategic, long-term approach to infrastructure planning, the government is laying the groundwork for an energy future that is affordable, secure, and sustainable for all parts of the country.