Government opts for evolutionary approach to electricity market reforms

Responding to the Review of Electricity Market Arrangements (REMA), Wafa Jafri, Partner and Lead for Energy Strategy at KPMG in the UK, said:

“The Government’s Review of Electricity Market Arrangements (REMA) may disappoint some who will view it as a missed opportunity to reboot the market, but the evolutionary approach to improving existing mechanisms will create less uncertainty for investors than a fundamental overhaul of the whole market. The narrower set of options set out in the update today, will allow more focussed efforts on developing robust and impactful interventions to enable a net-zero power system by 2035.

“However, while the options have been narrowed down, there is still a significant amount of work to be done on the detail of the reforms needed. After three years of REMA policy development, it is time to move into implementation. It is therefore imperative that outstanding options are considered and decided on quickly – especially in relation to proposals on zonal pricing and contract for difference reform. Much of this work will now be for the party that forms the next government to tackle, given the scale of the job and the likely timing of the next election.

“The UK needs to attract unprecedented levels of private sector investment to meet its net zero ambitions. To compete for that capital with the Inflation Reduction Act in the US and the EU Green Deal, the UK needs to show a clear path forward. No regrets options - such as policy measures on long-duration storage or emissions limits in the Capacity Market - must be progressed as a matter of priority. These steps will help bring forward investment in the technologies to manage the system today, while allowing more time to consider the longer-term reforms on the operation of the future power system.”

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For further information please contact:

KPMG Media Relations

Claire Barratt

Mobile: +44 (0)7923 439264

claire.barratt@kpmg.co.uk

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