Market reform to enable locational pricing and consumer-led flexibility, alongside strategic planning and a streamlined connections process, is key to an efficient, low-cost, clean energy grid.

Key points:

• Need for market reform and locational pricing: the introduction of locational pricing is crucial to align generation and demand with network capacity, reducing congestion and lowering the need for extensive grid reinforcement. It will signal where new energy infrastructure should be built, promoting efficient use of the grid and encouraging generation to be located closer to demand. Locational pricing is a key recommendation in REMA and has been supported by both Ofgem and NESO.
• Unlock flexibility to make the most of low carbon, non-dispatchable, low cost generation: to meet the clean power target efficiently, we must incentivise flexibility solutions, such as consumer-led flex, energy storage, and distributed generation. These solutions can help reduce reliance on costly and time-consuming grid reinforcement. Ofgem’s regulatory framework should encourage flexibility as a complement to grid expansion, ensuring network operators prioritise it where it provides better outcomes.
• Strategic planning and community engagement: Regional Energy Strategic Plans (RESPs) and Local Area Energy Plans (LAEPs) are essential for ensuring grid infrastructure aligns with local needs and decarbonisation goals. Early and meaningful community engagement, alongside clear and transparent incentives for hosting new infrastructure, will be key in facilitating timely network expansion while balancing environmental and social considerations.