UK Law and Practice Contributed by: Tom Sprange KC, Andrea Stauber, Martina Antosova and Lucy Pearson, King & Spalding International LLP
On 19 June 2025, the government published the UK Infrastructure: A 10 Year Strategy, in which it com- mits to provide GBP725 billion of government fund- ing for infrastructure over the next decade, including in offshore wind, Sizewell C nuclear plant, hydrogen transport network, energy storage, strategic electricity transmission network, and CCUS. The government intends to secure 43–50 GW of offshore wind, 27–29 GW of onshore wind, and 45–47 GW of solar gen- eration by 2030 through the Contracts for Difference scheme. Locational Pricing Scheme In April 2025, the Energy Secretary, Ed Miliband, said that he was considering plans to introduce regional pricing for power, which could lead to lower bills in parts of the country that generate more energy, as power costs would match local supply and demand. He did not set out details of the “locational pricing” scheme, which is intended to make the national ener- gy grid more efficient and encourage investment. In May 2025, engineering and consultancy firm AFRY completed a review of electricity market arrangements in Great Britain, in response to the electricity transmis- sion operators programme for net zero reform and to the Review of Electricity Market Arrangements (REMA) process. AFRY found moving to locational pricing in the UK electricity market would be “high risk for little reward”. However, others – such as Octopus Energy’s CEO and technology companies that are high-load consumers of electricity through their operation of data centres – have called for locational pricing in order to make bills cheaper and give areas of the UK with plenty of renewable generation (such as Scot- land) some of the cheapest electricity in Europe. However, in July 2025, Ed Miliband said that the UK would not introduce locational pricing. 1.8 Unique Aspects of the Power Industry The UK benefits from a geographical advantage in respect of long coastline, shallow water and consist- ent strong winds, meaning that it is one of the world’s leaders in both offshore and onshore wind power.
Further, the UK has often led the way in terms of innovation in energy technology and related markets. Among its other contributions, the UK was: • the first to build a coal-fired power station (the Edison Electric Light Station was built in London in 1882); • the first to build a full-scale nuclear power station in the Western world; and • the first major economy to put into law that it would reach net zero carbon emissions by 2050.
2. Market Structure, Supply and Pricing 2.1 The Wholesale Electricity Market
Great Britain currently uses national pricing. As men- tioned in 1.7 Announcements Regarding New Poli- cies , the Energy Secretary did evaluate the potential benefits of a locational pricing model but confirmed in July 2025 that the UK would not introduce locational pricing. In 2005, the British Electricity Transmission and Trad- ing Arrangements (BETTA) introduced a GB-wide electricity market, setting one price for electricity in each trading period. The following wholesale markets operate within BET- TA to allow electricity market participants to buy and sell power. • Forwards and futures market – contracts between generators and supply companies for the delivery of electricity are entered into from between several years to 24 hours in advance. These markets allow generators and suppliers to enter into contracts for the purchase of electricity at an agreed price on an agreed date. The majority of electricity trading in Great Britain takes place in either the forwards market or the futures market. • Short-term market (also known as the “spot market”) – this market operates two days ahead of the relevant half-hour settlement period. This means that contracts for electricity can be bought between 48 hours prior to the relevant settlement periods and the submission deadline.
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