Key Updates on REMA 



The Department for Energy Security and Net Zero (DESNZ) expects to complete REMA development by mid-2025, with a final decision anticipated by late 2025. Additional consultations will determine how and when the final decision will be implemented, with the current aim of aligning REMA timelines with Allocation Round 7 (AR7) for Contracts for Difference (CfD). However, key details remain unresolved, making cost analysis particularly challenging.

2. Zonal pricing favoured by Ofgem 

Ofgem has indicated a preference for a Zonal Pricing model, which DESNZ is currently evaluating. The current proposal includes 12 zones, though these boundaries are expected to shift slightly over time. So far, no public impact assessment or detailed zone information has been released. The Department views that  Zonal Pricing could result in lower Transmission Network Use of System (TNUoS) charges, however it also is likely to impact CfD and Capacity Market (CM) mechanisms, introducing potential risks and uncertainties. 

3. Implications for business energy users 

Businesses that can adjust their energy consumption in response to market signals stand to benefit from these changes by capitalising on accessibility to this lower cost energy. However, businesses with fixed or inflexible energy demand may experience increased costs as pricing structures evolve. While DESNZ is considering protections for domestic consumers, similar safeguards for non-domestic users are not currently planned. Support for Energy-intensive industries (EIIs) is being reviewed with a number of potential additional support options being considered. 

4. Future reforms and additional complexity 

Further TNUoS reforms are expected following REMA decisions, potentially adding further complexity to the electricity market. While these future reforms are still speculative, they could significantly impact cost structures and long-term business planning.