The UK government has confirmed it will maintain a national wholesale electricity pricing system, abandoning proposals for zonal pricing as part of a broader set of reforms aimed at accelerating clean energy deployment and improving grid efficiency.
Ministers said the decision follows a consultation launched in 2022 and is intended to keep wholesale electricity prices uniform across Britain, regardless of region. The move is designed to shield consumers from regional pricing disparities and boost investor confidence in the UK’s energy market.
“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,” said Energy Secretary Ed Miliband.
The reforms are part of the government’s wider Plan for Change strategy, which aims to reduce reliance on fossil fuel markets and address recent energy bill volatility. The Department for Energy Security and Net Zero said the measures will improve long-term planning, lower costs, and accelerate the rollout of low-carbon infrastructure.
A key component of the package is the forthcoming Strategic Spatial Energy Plan, to be published in 2025 by the new National Energy System Operator (NESO). The plan will map energy infrastructure needs across land and sea through to 2050 and guide where new projects should be located to improve efficiency and speed up grid connections.
To improve cost predictability for project developers, the government also announced a review of Transmission Network Use of System (TNUoS) charges in collaboration with Ofgem. The review aims to reduce annual cost fluctuations and risk premiums in clean energy financing.
“Current annual variations in transmission charges create uncertainty and drive up risk premiums in clean energy project financing,” the government said in a statement. It added that more predictable pricing will encourage developers to build in locations where power is needed most and avoid unnecessary grid expansion.
Alongside the pricing reforms, the government pledged to modernise grid infrastructure and reduce constraint payments, which are made when the grid cannot accept power due to bottlenecks. NESO estimates that up to £4 billion in constraint costs could be saved by 2030 if critical upgrades, including the Norwich to Tilbury transmission line and the Sea Link offshore cable, are delivered on time.
Further consultations later this year will explore options to reduce grid congestion, including expanding the role of small-scale assets such as battery storage. NESO is also developing the Constraints Collaboration Project to investigate additional methods for improving grid flexibility and reducing curtailment.
The announcement follows recent government measures offering financial incentives to communities near new transmission infrastructure. Households within 500 metres of such projects could receive energy bill discounts of up to £2,500 over a decade. Additional funding will support rural and coastal communities with investments in local facilities, transport, and training.
“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,” Miliband said. “Our package of reforms will protect consumers and secure investment as we drive to deliver our clean power mission through our Plan for Change.”
The government said it has approved clean energy projects over the past year capable of powering 2 million homes and has committed £14.2 billion to Sizewell C, part of what it called the biggest expansion of nuclear energy in five decades.
Officials noted that reforming grid planning, connection processes, and investment signals will be essential to achieving the UK’s 2030 clean power target and long-term energy security.
