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Review of Electricity Market Arrangements (REMA)

What is Rema?

REMA (Review of Electricity Market Arrangements) is the most radical overhaul of the electricity markets in a decade. Launched in spring 2022, these reforms are a major government review into how Britain’s electricity markets are designed. They aim to deliver a cost effective, resilient and secure net-zero electricity system by 2035. These highly technical and complex reforms to our wholesale electricity markets aim to expand and accelerate the use of renewable energy in Great Britain.

REMA is intended to improve our energy security and help deliver a decarbonised and cost-efficient power system whilst reducing our exposure to unpredictable international gas markets.

Why does it matter?

REMA matters because it will fundamentally shape how everybody will pay for their electricity in ten-years time. The detail is being shaped now – but the consumer outcomes won’t become apparent for many years. This is why we need to start thinking about these changes now.

Scope of REMA?

The focus of REMA is on creating efficient and clearer pricing signals in wholesale markets and the wider electricity system to incentivise sufficient low carbon power in both operational (shorter) and investment (longer) time-scales. In current wholesale markets there is a lack of long-term price signals to encourage more investment in renewables. This is one of the main problems that REMA is trying to resolve. These reforms aim to ensure commercial viability for renewable energy in future electricity markets.

What is our role? 

Sustainability First argues that end-user interests must be at the heart of this complex set of energy reforms. An end-user includes ordinary consumers – individuals, households, business and communities.

Our interest in REMA is to ensure that outcomes for end-users are fair - including who pays and who benefits. Sustainability First was pleased to support the Department for Energy Security and Net Zero, together with Citizens Advice in the set-up of a new REMA End-User Forum (EUF). The aim is to help encourage government, the regulator and energy companies gain insights into the potential impacts for end-users of these reforms. End users should not be an afterthought.

New, more cost-reflective approaches to wholesale-pricing aim to drive flexibility – whether from energy generators or end-users - and promote ‘whole-system’ efficiency. As the electricity system grows to meet the needs of electric vehicles and electric heat, more cost-reflective price signals will flow through into shaping retail prices for consumers.

New opportunities and risks will arise for all customers and potentially might change prices depending on where end-users are located on the electricity network.The initial forum has now been reconvened by DESNZ as a more targeted End-User Challenge Panel (EUCP).

The End User Challenge Panel – and the earlier End User Forum - convenes a broad group of different interests and is intended to enable engagement and feedback on the REMA design process. The Panel cannot make or alter fundamental policy decisions. But it is relevant to all of us as End Users. 

Along with Citizens Advice and Sustainability First, Panel attendees include Consumer Scotland, National Energy Action, Fair by Design, Fuel Bank Foundation, Energy Intensive users Group, Energy Systems Catapult, The Energy Landscape, Energy Saving Trust, E3G and Green Alliance, with Energy-UK as observer on behalf of retailers

Terms of reference for the original End-User Forum can be found here.

It is expected that DESNZ will reconvene the End-User Challenge Panel following publication of their second REMA consultation. It is hoped they will also make use of the panel for feedback on other relevant DESNZ work-streams and programmes, including energy retail and energy affordability.

What is the wider impact? 

We hope in due course the Panel will also inform the government’s retail strategy and help address energy affordability for the long-term. Separately, theDESNZ REMAengagement team has also worked with a Market Participant Forum(MPF) to better understand REMA issues from the viewpoint of market-players (energy producers and suppliers, renewables and storage developers)

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