If not zonal then…? What next for Reformed National Pricing 

Context 

In the midst of wider political turmoil, the UK’s energy department has had a strong start to 2026. The bold decision to procure a record amount of offshore wind in AR7 was followed up by £15bn allocated through the Warm Homes Plan, the signing of the Hamburg Declaration, the Local Power Plan, and another strong outcome for solar and onshore wind in the second tranche of AR7 results released earlier this week.

The next headline publication is expected to be the delayed Reformed National Pricing (RNP) Delivery Plan. Originally promised pre-Christmas, the plan is now expected to land in the coming weeks and will set out the road ahead for electricity market design in Great Britain following the government’s decision last summer to reject zonal pricing.

The zonal decision was a pivotal moment in the current energy policy context, ending years of debate across the sector – notwithstanding the ESNZ Committee looking at locational pricing again in its recently launched inquiry – and ruling out a near-term cost of capital pressure on top of global inflation and high supply chain costs. However, the summer zonal update left several important unanswered questions, and the sector will be looking to the RNP Delivery Plan to provide clarity.

What to expect in the Reformed National Pricing Delivery Plan

We see four key areas that the plan will need to address to provide confidence to the market over the future shape of GB’s electricity system.

1. How the location of future assets will be managed

The Strategic Spatial Energy Plan (SSEP) will set out the government’s view of the most efficient location of future assets. The final pathway is now due in Autumn 2027. The National Energy System Operator (NESO) will send a range of pathway options to the Secretary of State in summer 2026 and there will be a public consultation on the preferred pathway in early 2027.

Developers will be looking for clarity in the RNP Delivery Plan on the levers government will use to ensure assets locate where the SSEP dictates. The various levers at the government’s disposal include key milestones in a project’s development, such as planning consent, seabed leasing, government contract award, grid connection, and network charge. Which of these the government decides to lean on, and how, will be fundamental in directing future investment in the system.

2. How the operation of assets will be handled to drive efficiency

The main benefits from a shift to zonal pricing would have come in the form of sharper operational signals with price variations across the country sending real-time incentives for assets to either dispatch, curtail, or absorb electricity.

It will not be possible to replicate these operational signals in a market with a single national price, but there are several things the government can do to drive efficiency in system operation. Many of these were referenced in the REMA Summer Update with interventions broadly split into two buckets: (a) improving market efficiency and operability, and (b) bearing down on network constraint costs. NESO published a Call for Input on the first of these earlier this week.

NESO will be responsible for technical changes like lowering the threshold to participation in the Balancing Mechanism and shortening the imbalance settlement period. It will also focus on options to limit instances of two-way assets (e.g. interconnectors and batteries) operating sub-optimally for the system. In other areas, NESO will work with DESNZ and Ofgem on proposals to increase flows over existing network cables and to use long-term contracting to locate demand behind constraints.

This part of the plan will be a complex package of reforms, many of which will remain as open questions requiring further consultation before any final decisions are taken.

3. Delivering the Plan: Timeline and dealing with transitional uncertainty.

We expect the RNP Delivery Plan to bring forward several strands of reform. It will come in the context of other significant policy development including the SSEP, ongoing reform to the connections process, and potential longer-term CfD reform. Clarity on the sequencing and interaction of these various workstreams will be vital to ensure the market remains investible.

It will also take several years for reforms to be implemented, creating an intervening period of uncertainty for assets that are either already in operation, in construction, or soon to take final investment decision. As a result, the plan will need to deliver some form of certainty to these assets with projects planning to bid into AR8, and AR9 of priority concern. Government will want to limit uncertainty being priced into CfD bids, especially when technology costs are already facing inflationary and supply chain related pressures.

4. Informing the Plan: Institutional roles and stakeholder engagement

The breadth of the expected RNP reforms means that the Department for Energy Security and Net Zero (DESNZ), NESO, the regulator Ofgem and market facilitator Elexon are all expected to play a role in design and delivery. This is a complex landscape for developers and the RNP Delivery Plan will need to set out roles and responsibilities for each strand of reform as well as clarity on the overarching governance to ensure a coherent programme. For example, the launch of the NESO Call for Input mentioned above (which only focuses on part of the overall programme), will have been confusing for a sector expecting the RNP Delivery Plan to be the next milestone.

There is also market expertise and intelligence that can only be found in industry. The RNP plan would benefit from a formal industry engagement framework to facilitate knowledge exchange and risk identification across industry and the institutions listed above, and ensure the best chance of a coherent, optimal outcome for RNP.

Central planning and how Flint can help

The rejection of zonal pricing was an implicit endorsement of central planning over markets. The government has largely taken responsibility for the future of the electricity market into its own hands. That places significant additional pressure on the upcoming RNP Delivery Plan to deliver the clarity set out above.

Regardless of what comes forward in the plan, one thing is clear – Reformed National Pricing will be an ongoing and complex work programme, and DESNZ will welcome industry input. Effective engagement will depend on deep understanding of the market and the risks and opportunities presented by the proposed reforms. With extensive experience shaping policy and market design, Flint is on hand to support you as you engage on RNP.

This blog was written by Phil McNally, Director and Rebecca Barnett, Partner, in the Flint Energy team. Phil brings market design expertise and experience in managing cross-government energy policy development from roles as an adviser to the Prime Minister in Number 10 Downing Street and in academia at UCL. Rebecca leads Flint’s energy practice and was most recently the Director of Major Projects at Ofgem. They help clients understand and manage political, policy and regulatory risks and opportunities faced by businesses operating in the energy sector.

Please get in touch if you would like to discuss further.