REVIEW OF ELECTRICITY MARKET ARRANGEMENTS (REMA) POLICY

1. Introduction

The Review of Electricity Market Arrangements (REMA) was launched by the UK Government in July 2022 to reconsider whether Great Britain’s electricity-market design remained suitable for a system increasingly dominated by renewable generation, storage and flexible demand. REMA examined wholesale pricing, Contracts for Difference (CfDs), the Capacity Market, balancing arrangements, locational signals and flexibility. Its central objective was to develop a fair, affordable, secure and efficient electricity system capable of supporting clean power and net-zero objectives.

Importantly, REMA is no longer an open-ended review. In July 2025, the Government concluded that Great Britain should retain a single national wholesale electricity price rather than adopt zonal pricing. The resulting reforms are now being implemented through the Reformed National Pricing (RNP) programme, whose delivery plan was published in April 2026.

2. Why REMA Was Necessary

Britain’s market arrangements were largely developed when controllable fossil-fuel generation dominated the system. High levels of wind and solar generation create different problems: variable production, increasing network congestion, periods of very low or negative prices, greater balancing requirements and a need for flexible demand and storage.

The 2024 REMA consultation therefore considered reforms concerning wholesale-market location, price formation, balancing arrangements, renewable investment, flexibility and security of supply.

3. National Versus Zonal Pricing

One of REMA’s most important questions was whether Britain should abandon its single national wholesale price and divide the country into pricing zones.

Under zonal pricing, electricity prices could vary geographically according to network congestion and local supply-demand conditions. Supporters argued that this could provide stronger signals for generators, storage operators and consumers to locate where electricity has greater system value.

The Government ultimately rejected zonal pricing in July 2025 and chose reformed national pricing. The intention is to retain a national wholesale market while improving investment, operational and locational signals through other mechanisms.

4. Reformed National Pricing

The RNP programme now carries forward REMA’s principal reforms. The April 2026 delivery plan identifies measures intended to strengthen investment signals, improve operational efficiency and reduce constraint costs. Proposed operational reforms include lowering the mandatory Balancing Mechanism participation threshold, requiring Final Physical Notifications to correspond more closely with traded positions, and potentially aligning market trading deadlines with gate closure. Final decisions on several measures were planned for the second half of 2026.

REMA also considered longer-term reform of the CfD and Capacity Market, recognising that renewable investment support and security-of-supply mechanisms must function effectively in a predominantly low-carbon electricity system.

5. Case Name/Citation: Drax Power Ltd v Secretary of State for Energy and Climate Change [2014] EWCA Civ 1153

Facts: Drax challenged the Government’s refusal to treat one of its biomass-conversion units as satisfying criteria for an investment contract, an early form of CfD.

Legal Issue: Whether the Secretary of State had lawfully applied the eligibility criteria governing low-carbon investment support.

Judgment: The Court of Appeal upheld the Government’s appeal against the earlier High Court decision.

Legal Principle/Ratio: Electricity-market support mechanisms are governed by their statutory and policy framework, and courts will examine whether decision-makers have interpreted and applied that framework lawfully.

Significance: REMA and RNP reforms affecting CfDs must therefore provide clear eligibility criteria and preserve lawful administrative decision-making.

6. Case Name/Citation: Tempus Energy Ltd v Commission, Case T-793/14

Facts: Tempus challenged European Commission approval of the UK Capacity Market, arguing that demand-side response had not been adequately considered compared with conventional generation.

Legal Issue: Whether the Commission had sufficiently investigated whether the Capacity Market complied with State-aid rules.

Judgment: The General Court initially annulled the approval decision because further investigation should have occurred. That judgment was subsequently set aside by the Court of Justice in Commission v Tempus Energy, C-57/19 P.

Legal Principle/Ratio: Capacity-market design must be assessed carefully against competition, proportionality and technology-neutrality requirements.

Significance: The litigation highlights a central REMA concern: future electricity markets should allow generation, storage and demand-side flexibility to compete on appropriately designed terms.

7. Conclusion

REMA represented the most significant reconsideration of Great Britain’s electricity-market architecture since earlier Electricity Market Reform. Its final policy direction rejected zonal pricing and instead retained a single national wholesale market combined with stronger locational, investment and operational signals. Since April 2026, that agenda has moved into the Reformed National Pricing programme. REMA’s lasting legal significance lies in integrating renewable investment, system flexibility, security of supply, efficient dispatch and consumer affordability within a market framework designed for a substantially decarbonised electricity system.