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How should locational signals, strategic planning and investor certainty work together under Reformed National Pricing? This paper sets out Regen's view on the future of transmission network charging, arguing that locational signals should support delivery of the Strategic Spatial Energy Plan while remaining predictable, proportionate and cost-reflective. It also contains Regen's response to Ofgem's consultation on locational charges and regulatory siting levers.
Reformed National Pricing will play a major role in shaping where generation, storage and demand locate across Great Britain. In this response to Ofgem's call for input, Regen argues that locational charging reform must be designed alongside wider reforms to strategic planning, connections and market arrangements. We support reform of transmission network charging (TNUoS), and believe charges should be aligned with the Strategic Spatial Energy Plan (SSEP), and based on the planned future network. Charges should provide stronger and more predictable investment signals, and support delivery of the Clean Power Plan at least cost to consumers.
A central theme of this paper is that locational charging cannot be considered in isolation. The role and effectiveness of TNUoS will depend heavily on wider reforms to strategic planning, connections and other siting levers under Reformed National Pricing, including DESNZ's separate consultation. Regen therefore calls for a more joined-up approach across the RNP programme.
Regen has long supported reform of locational signals and network charging. Drawing on the principles established in Regen's Progressive Market Reform Agenda, we consider the following priorities critical to reforming locational transmission network charging:
1. Locational signals sent by TNUoS need to be aligned with the strategic plan
2. Locational signals sent by TNUoS need to remain appropriately cost reflective
3. TNUoS should be forward-looking, based on the expected utilisation of the planned network by generation, demand and interconnectors
4. Locational charging signals should primarily reflect deviation from the strategically planned network, rather than recover the costs of the strategically planned network
5. TNUoS zones should be aligned with the SSEP’s zones and may need more granularity
6. Demand customers should receive an equally strong locational signal via TNUoS
7. TNUoS should be predictable and stable over the term of investment
8. TNUoS charges should not change due to factors beyond the control of the customer/generator, for example, because of delays tonetwork build
9. Reform should be implemented with urgency to support investor confidence and the delivery of the Clean Power Plan.
Regen has engaged extensively in the development of Reformed National Pricing and related electricity market reforms. Explore our consultation responses, position papers and insight reports below.
If you’re interested in discussing our work on Reformed National Pricing, please reach out to Andrew Barry, our markets lead, or Johnny Gowdy, our director.
Regen is a membership organisation – we provide our members with regular updates and market insight, and frequently convene diverse voices from across the sector to discuss key issues affecting the energy transition. If you're interested in Regen membership, see our membership page or reach out to Hannah Stanley.
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