The UK government has ruled out zonal pricing for electricity and will retain a national pricing system under sweeping reforms to the energy system.
Ministers said the decision followed an extensive consultation launched in 2022 and will ensure energy consumers across Britain continue to pay the same wholesale price regardless of location.
The government said the move would protect households and businesses from regional price variation while supporting investor confidence and accelerating delivery of its clean power mission.
Energy secretary Ed Miliband said: “A reformed system of national pricing is the best way to deliver an electricity system that is fairer, more affordable, and more secure, at less risk to vital investment in clean energy than other alternatives.”
The reforms are part of the government’s Plan for Change and aim to address rising energy bills and reduce dependence on fossil fuel markets, which it blamed for recent price volatility.
The Department for Energy Security and Net Zero said the new package will strengthen investor certainty, lower costs through better planning, and accelerate the buildout of low-carbon infrastructure.
As part of the announcement on 10 July, the government confirmed the forthcoming Strategic Spatial Energy Plan will become central to grid reform.
To be published in 2025 by the National Energy System Operator (NESO), the plan will map out how to deploy new energy infrastructure on land and sea through to 2050.
Commissioned by the UK, Scottish and Welsh governments, the strategy is designed to cut grid connection waiting times, direct investment to priority locations, and provide clarity for developers.
In addition, ministers will work with Ofgem to review Transmission Network Use of System charges to make the costs of accessing the grid more predictable.
The government said this will encourage developers to locate projects where electricity is needed and lower system costs by limiting inefficient transmission build.
It added that current annual variations in transmission charges create uncertainty and drive up risk premiums in clean energy project financing.
On system efficiency, the government said it is working with NESO and industry to modernise the grid and reduce constraint payments, which it attributed to years of delay under previous administrations.
According to independent analysis from NESO, up to £4bn in constraint costs could be avoided by 2030 if critical upgrades are completed on time.
Projects flagged for delivery include the Norwich to Tilbury transmission line and the Sea Link offshore cable between Kent and Suffolk.
The government said it will launch a consultation later this year on reforms to reduce grid congestion, including options to allow NESO to better utilise small-scale assets such as battery storage.
It added that NESO is also progressing the Constraints Collaboration Project to explore further innovations to reduce curtailment and improve flexibility.
The reforms follow recent measures to ensure communities hosting clean power infrastructure receive direct financial benefit.
Households within 500 metres of new or upgraded transmission infrastructure will be eligible for bill discounts worth up to £2500 over ten years, under legislation in the Planning and Infrastructure Bill.
Plans have also been set out to provide cash boosts for rural and coastal areas hosting clean power projects, with support for community facilities, transport improvements, and apprenticeships.
Miliband said: “Building clean power at pace and scale is the only way to get Britain off the rollercoaster of fossil fuel markets and protect families and businesses for good.
“Our package of reforms will protect consumers and secure investment as we drive to deliver our clean power mission through our Plan for Change.”
The government said it has approved projects in the last year capable of powering 2 million homes and committed £14.2bn to Sizewell C in what it described as the biggest expansion of new nuclear in half a century.
It added that reforming grid planning, connection processes and investment signals will be critical to delivering its 2030 clean power target and long-term energy security goals.