Reformed National Pricing (RNP): NESO calls for input on proposed electricity market reforms

What this is about

NESO has launched a call for input on Reformed National Pricing (RNP) — the first concrete proposals for restructuring GB's electricity market following REMA's decision to retain a single national wholesale market. The consultation focuses on reforming dispatch arrangements and market design to strengthen investment signals, improve operational efficiency, and reduce constraint costs. Government will provide legislation as needed for implementation.

This consultation marks the start of practical market reform after years of REMA deliberation. With Clean Power 2030 driving unprecedented renewable capacity additions, the current market design increasingly struggles with constraint costs and investment signals. RNP represents the compromise position: keeping national pricing while introducing reforms that better reflect location and scarcity within that framework.

Options on the table

The source material does not detail specific reform options — this call for input appears designed to gather initial views on problem definition and potential solutions rather than evaluate concrete proposals. NESO is seeking input on "potential reforms to dispatch arrangements" but has not yet specified what these might entail.

Based on the stated objectives of strengthening investment signals, improving operational efficiency, and reducing constraint costs within a retained single national market, likely options will emerge around:

- Locational investment signals: Mechanisms to reflect geographic value differences without full nodal pricing - Dispatch reform: Changes to how the system operator schedules generation and manages constraints - Constraint cost allocation: New approaches to charging for transmission bottlenecks and system management

The consultation appears to be gathering input to shape these options rather than presenting them for evaluation.

Questions being asked

This call for input does not include specific consultation questions. Instead, NESO is seeking broad input on potential dispatch reforms and the RNP programme's decision-making process and timelines. Respondents are invited to share views on how to achieve the stated objectives within the retained single national market framework.

The consultation also includes a separate Expression of Interest process for joining an Expert Group with NESO, Ofgem, and DESNZ to shape reforms and implementation.

How to respond

Deadline: 14 April 2026

Submission method: The source material references NESO's Call for Input but does not specify submission details. Interested parties should check NESO's website for submission instructions.

Expression of Interest: A separate EoI process is open for joining the Expert Group with NESO, Ofgem, and DESNZ.

Contact: Not specified in the source material.

Assessment

This consultation represents a critical juncture for GB electricity market design. The RNP programme must solve the fundamental tension between maintaining national pricing (which REMA confirmed) while addressing the growing inefficiencies that national pricing creates in a renewable-heavy system.

The constraint cost problem is acute. National pricing means generators receive the same price regardless of location, but the system operator pays different amounts to manage local bottlenecks and maintain security. These constraint costs — paid for by consumers through BSUoS charges — disconnect the cost of system management from those causing it. As renewable capacity grows in transmission-constrained areas, particularly Scotland, these costs will escalate further.

Investment signals present an equally complex challenge. National pricing provides no locational signal for where new generation or storage is most valuable to the system. The result is capacity being built where land is cheap or consents are easier, not necessarily where it provides most system value. This misallocation drives up overall system costs.

The dispatch reform element suggests NESO may be considering changes to how it schedules generation and manages the system in real-time. Current arrangements prioritise merit order dispatch but often require expensive constraint actions to maintain system security. Reformed dispatch could better integrate locational considerations into operational decisions.

The involvement of an Expert Group signals recognition that these reforms require deep technical expertise and stakeholder input. The complexity of electricity market design means unintended consequences are common, and getting the details wrong could undermine both competition and security of supply.

Timing is significant. Clean Power 2030 will drive massive capacity additions over the next four years, much of it renewable generation in locations that may not align with system needs. RNP reforms need to be designed and implemented quickly enough to influence these investment decisions, but carefully enough to avoid market disruption.

The political economy is also important. RNP must deliver efficiency improvements while remaining politically sustainable. Full nodal pricing was rejected partly due to distributional concerns — Scottish generators would face lower prices, potentially undermining investment in renewable capacity that the government wants to encourage. RNP must find mechanisms that improve efficiency without creating unacceptable distributional outcomes.

For market participants, this consultation opens a critical window to shape the future market design. The call for input stage suggests fundamental questions remain open about how to achieve the stated objectives. Early engagement will be essential to ensure reforms support rather than undermine business models and investment plans.

The success of RNP will ultimately be measured by its ability to deliver the Clean Power 2030 objectives at lowest cost to consumers. This requires reforms sophisticated enough to provide efficient signals while remaining simple enough to implement effectively within the existing regulatory and commercial framework.