29/07/2025
Welcome to our July Energy Matters Newsletter
The energy sector is a rapidly changing market with daily updates on technological advances, regulatory reviews, policy updates, funding decisions. In each edition of our Energy Matters Newsletter, we aim to provide a user-friendly, summary update of some of the key issues we are seeing across the renewable energy and resource management sectors.
If you would like to discuss any of the issues raised, please contact a member of our energy team.
Energy Spotlight
Government rejects zonal pricing for the electricity market
On 10 July the UK Government released its ‘summer update’ which announced that it had decided not to implement zonal pricing and instead retain a single national GB-wide wholesale market. Rt Hon Ed Miliband MP, Secretary of State for Energy Security and Net Zero, said that by introducing an ambitious package of reform to improve the efficiency of our power system it would lay the “foundation for cheaper, more secure, and clean homegrown power for homes and businesses across Britain.”
The Review of Electricity Market Arrangements (REMA) Programme was set up in 2022 to consider how best to deliver a fair, affordable and secure power system.
One of the main challenges REMA has considered is the misalignment between where our energy is generated and the availability of transmission networks to get the power to consumers. Scotland produces almost half of the UK’s wind power, whereas greatest electricity consumption tends to be in London and the South East.
There were two broad approaches under consideration to reform the wholesale electricity market:
- zonal pricing, where the electricity wholesale market would be split into several zones across GB;
- and reformed national pricing, which would retain a single national price in the wholesale market, alongside substantial reforms and greater strategic and planning co-ordination.
Under Zonal pricing, Great Britain would have been divided into multiple geographic zones with electricity cost set by local supply and demand. The aim of this approach would be to encourage energy intensive industries to locate in generation rich areas which incentivising generators to locate in high demand regions.
During the consultation there were a range of views expressed with strong arguments for and against zonal pricing. Many stakeholders argued that zonal pricing would result in greater complexity and risk and have had a detrimental effect on the prices consumers pay for their energy - effectively creating a postcode lottery and bill inequality. In addition, Government’s analysis showed that to implement zonal pricing would take “substantial change across the industry” which would take seven years - at a crucial time of the transition to clean energy.
Instead the Government has opted for the policy of reformed national pricing which includes:
- A review of network charging structures
- Enhanced strategic infrastructure planning
- Investment in storage and streamlined connection processes
The Government has said it is conscious that investors need as much certainty as possible and has published the decision now given how crucial it is for investors in the next CfD allocation round (AR7) and across the economy. Following this announcement, the government has stated it will:
- publish a Reformed National Pricing Delivery Plan, setting out the next steps on design and delivery later this year
- publish the final REMA analysis later in the year, including a full cost benefit analysis (CBA) of the different wholesale market reform options
- work in partnership with NESO to deliver the Strategic Spatial Energy Plan (SSEP) by the end of 2026, work with Ofgem to drive forward the review of Transmission Network Use of System (TNUoS) and connection charges, and work with NESO to launch a consultation on balancing reform (later this year) and complete their Constraints Collaboration Project
Read the full announcement here.
Quick Links
|
Carbon Capture Storage / Usage
Acorn carbon capture project to get £200m
BBC News 12 July 2025
UK Energy Secretary Ed Miliband has confirmed that £200m will be provided to progress the Acorn Carbon Capture and Storage (CCS) scheme in Aberdeenshire.
Electric Vehicle Infrastructure
£63 million boost for Britain's electric vehicle infrastructure
Department for Transport 13 July 2025
£63 million package to support at-home charging for households without driveways, transition NHS fleets to save millions for the health service in England, create thousands of chargepoints at business depots across the UK.
Net Zero
Government announces plans for UK to become sustainable finance capital of the world
Department for Energy Security and Net Zero 25 June 2025
Energy Secretary Ed Miliband outlines plans to support banks and large companies in developing climate transition plans.
Climate Change Committee report states UK can reach net zero by 2050
Climate Change Committee 25 June 2025
The UK can reach its net zero targets for 2050, and its interim carbon budgets for 2030 and beyond, the government’s statutory climate advisers have reported
Energy Sector Reform and Contract for Difference (CfD)
Government produce second response to the Contracts for Difference scheme for Allocation Round 7
Department for Energy Security and Net Zero 15 July 2025
The second, final government response covers all remaining proposals and sets out the government’s decisions on the Contracts for Difference scheme.
Government publishes its Clean Energy Industries Sector Plan
Department for Energy Security and Net Zero 23 June 2025
Government publishes its Clean Energy Industries Sector Plan to ensure the clean energy revolution is built in Britain.
Government has announced a series of reforms to Contracts for Difference
Contracts for Difference 16 July 2025
The UK Government has announced a series of reforms to its main clean energy subsidy scheme, Contracts for Difference (CfD), ahead of the next auction round in August.
Government confirms reforms to the national pricing electricity market
Department for Energy Security and Net Zero 10 July 2025
Government confirms reforms to the national pricing electricity market that will create a fairer, cheaper, more secure, and more efficient energy system.
Government announces cuts to UK businesses electricity bills
Department for Energy Security and Net Zero 23 June 2025
More than 7,000 British businesses are set to see their electricity bills slashed by up to 25% from 2027, as the Government unveils its new Industrial Strategy.
Nuclear
EDF confirms a 12.5% stake in Sizewell C plant
Department for Energy Security and Net Zero 8 July 2025
French energy firm EDF confirms it will take a 12.5% stake in Sizewell C – in a major boost for UK growth and energy security.
Government to develop National Policy Statement for fusion energy
Department for Energy Security and Net Zero 17 July 2025
The plans will see fusion introduced into the Nationally Significant Infrastructure Project regime, putting fusion energy projects on the same footing as other clean energy technologies such as solar, onshore wind and nuclear.
Solar and Battery
UK Government invests £452m in battery innovations
Edie 7 July 2025
The UK Government has committed £452m to a new Battery Innovation Programme aimed at supporting the commercialisation of next-generation battery technologies, for applications including transport.
Government announces new Solar Roadmap
Department for Energy Security and Net Zero 30 June 2025
The Solar Roadmap details government and industry actions that will be delivered to radically increase the deployment of solar in all its forms across the UK.
Wind
Government publishes new Onshore wind strategy
Department for Energy Security and Net Zero 4 July 2025
The Onshore Wind Taskforce Strategy sets out over 40 actions, primarily government commitments, to resolve the key blockers to onshore wind in the UK.
Energy Secretary approves largest Irish Sea offshore wind farm
Department for Energy Security and Net Zero 4 July 2025
Mona offshore wind farm has the potential to power the equivalent of more than 1 million homes with clean, secure, homegrown power
Great British energy lands deal to deliver offshore wind jobs
Department for Energy Security and Net Zero 17 June 2025
The government and Great British Energy have today joined forces with industry and The Crown Estate to invest £1 billion in offshore wind supply chains
