What is REMA?
- Announced in April 2022, REMA looks to address the long-standing inefficiencies of the UK’s energy market design.
- REMA covers non-retail aspects of electricity markets and looks to balance supply and demand.
- Its policies aim to incentivise investments into electricity generating assets.
- REMA’s scope includes the balancing mechanism, ancillary services, Contracts for Difference (CfD) scheme and the Capacity Market (CM).
In July 2022, the government launched its first consultation into potential REMA reforms with the responses being published in March 2023. It has now launched its second consultation, noting that following on from the responses to the first, the ‘current electricity market framework will not deliver the secure, clean, low-cost electricity system we need in the future’. The government states that a significant acceleration in low carbon capacity and some limited investment in short-term gas generation will be required to maintain energy security. REMA aims to ‘establish the enduring market arrangements needed to enable the transition to, and operation of, our future renewables-dominated electricity system.
The second consultation is structured around four challenges facing the electricity markets:
- Passing through the value of a renewable-based system to consumers.
- Investing to create a renewables-based system at pace.
- Transitioning away from an unabated gas-based system to a flexible, resilient, decarbonised electricity system.
- Operating and optimising a renewables-based system, cost effectively.
Each of these four challenges will be assessed against five criteria: value for money, deliverability, investor confidence, whole-system flexibility and adaptability.
The consultation seeks to reaffirm that markets will be at the heart of our future electricity system and that markets will need to work alongside a range of wider policy actions to create a fully decarbonised electricity network by 2035. Responses to the consultation are open until 7th May 2024 and the link can be found here: Review of Electricity Market Arrangements: second consultation (publishing.service.gov.uk).