Clean Energy Regulation
REMA 2.0 Highlights Flexibility
REMA 2.0 Highlights Flexibility
A second consultation on GB electricity market arrangements sees some original suggestions ruled out. Despite a well spun stated need for new unabated gas generation in the short term, the commitment to a decarbonised electricity system by 2035 remains. It is acknowledged that this target will require significant new flexible capacity which we see as a potential major investment opportunity. Otherwise much of the proposed reforms look like sensible incremental improvement.
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Key Takeaways:
- Massive Flexibility Demand Signals Opportunity: The consultation estimates up to 50GW of long duration and 55GW of short duration flexibility needed by 2035—offering significant potential for investment in LDES, H₂-to-power, and CCS.
- No Radical Market Redesign: REMA 2.0 discards more disruptive ideas like green power pools or marginal price splitting, instead choosing to evolve existing CfD-based mechanisms, providing continuity and reducing regulatory risk for investors.
- Zonal Pricing Still in Play: While nodal pricing and local markets are off the table, zonal pricing remains under consultation, signalling potential future locational market signals—particularly relevant for storage, flexible assets and developers.
- Decarbonisation Goal Holds Firm Despite Gas Additions:
The proposal includes short-term reliance on new and extended unabated gas generation, but this is framed within a firm 2035 decarbonisation goal—with transition pathways laid out for gas assets.
- Implementation Timeline Reflects Policy Stability: Final responses are expected summer 2024, with implementation from 2025. Despite the upcoming UK election, the broad direction is expected to persist—reinforcing the UK’s status as a stable destination for clean energy investment.
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GB's second electricity market consultation reaffirms the 2035 decarbonisation goal despite emphasizing short-term gas generation, highlighting the need for significant new flexible capacity as a major investment opportunity amidst sensible incremental reforms