Most energy industry professionals believe drastic reform is needed

Making up this figure, 96% were either investors, advisors and developers. Those surveyed were made up of attendees at the energy market analyst’s Financing Net Zero forum. 

Given the rise in consumer energy prices, a review of the electricity arrangements (REMA) was announced in the government’s energy security strategy - which was published in April, and with several options being considered. 

A core debate currently underway off the back of this is the potential move away from the GB-wide wholesale electricity prices to costing wholesale prices on a local basis - also known as nodal or local marginal pricing (LMP). 

Despite the belief from some that it would “level out the volatile consumer prices” and help ensure smooth dispatch, more than 60% of those surveyed disagreed this was the best option. 

There have already been studies and position papers from different stakeholders in the energy industry on this reform option, some of which are supportive and some of which are not. 

However, almost all contributions to this model have focused on concerns such reforms may halt investment in the short-term and damage sunk investments if not handled with care.

Some have gone further and argued that LMP could disrupt the energy market as it transitions, and potentially discourage developers to build in places that are suited to their given technology. Cornwall Insight’s survey reveals that more traction is being gained from those who argue that LMP is not the appropriate reform option. 

Responding to the survey’s findings, Dr Dan Atzori - group research partner at Cornwall Insight said: “While the need for reform is certain, and the case for change is widely accepted, it is clear that people do not want rushed change that doesn’t properly account for practical and pragmatic pre-existing factors, or that doesn’t correctly weight and thus attempt to mitigate for, possible negative impacts on investments. REMA was always going to have to walk that tight rope, whichever reform options are taken forward.”