This review of electricity market arrangements will identify reforms needed to transition to a decarbonised, cost-effective and secure electricity system.
This consultation seeks views on a range of options to deliver an enduring electricity market framework that will work for businesses, industry, and households.
We welcome views from a range of stakeholders including:
- energy industry
- non-governmental organisations (NGOs)
- consumer groups
- policy think-tanks
The recent rise in energy prices has unavoidably led to an increase in the cost of living in the UK.
In the short term, the government has announced a huge support package to shield consumers from the worst impacts of volatile international energy markets this winter. But the long-term solution to this rise is to reduce reliance on fossil fuel-fired generation, and to unlock the benefits – to consumers, businesses, and the climate – of our cheap, abundant renewables in Great Britain.
A key part of this will be ensuring that our power markets are fit for purpose over the period to 2035 and beyond, and that is why we have announced a Review of Electricity Market Arrangements (REMA).
Our electricity markets have driven significant decarbonisation since 2010: we have built 37GW1 of renewables and moved away from coal generation, reducing emissions from our power sector by around 68%2 whilst maintaining high levels of security of supply.
As a result, we have decarbonised faster than any other G7 country. However, meeting our commitment to deliver a fully decarbonised power sector by 2035, subject to security of supply, will require an even faster scale-up of low carbon technologies.
This will be an opportunity to drive innovation across the energy sector, create hundreds of thousands of well-paid, highly-skilled jobs, and to reduce our dependency on energy imports by growing our domestic energy supply, helping to lower consumer bills. But alongside these opportunities, the increasing volume of variable renewables, such as wind and solar power, will pose great challenges for managing the electricity system.
So our electricity markets need to be updated to manage these challenges. They will need to unlock unprecedented levels of investment across the full range of low carbon technologies, including low carbon generation, electricity storage, and flexible demand from consumers; maintain the security of supply, in an increasingly uncertain geopolitical context; and ensure that we can operate the network safely and cost-effectively as variable renewables come to dominate the capacity mix.
In short, this means ensuring that our market arrangements support consumers by facilitating a low cost, low carbon and secure electricity system. This consultation is our first step in the REMA programme (our timeline is set out below). It sets out our objectives for electricity market design, our case for change, and an initial assessment of options for reform.
At this stage we are keeping most options on the table, from the continued evolution of existing schemes to more fundamental change. A key priority for us will be ensuring that existing progress is not undermined, and that investors remain confident in our market arrangements throughout the transition.
Whilst this programme runs, all existing schemes will continue, and there will be further consultation on any specific reforms arising from this Review.
The IET Board of Trustees has decided to respond to the following consultation and will accept responses from IET members including Member, Fellow, Honorary Fellow, Student, and Associate. Please provide your membership number with your consultation response.
Please respond no later than 9am on 10 October 2022 to Hannah Rees with "Review of Electricity Market Arrangements" in the subject line.