Flexibility roadmap set out by the Government
The Government has set out its vision for a more flexible electricity system, which makes the best use of energy infrastructure to minimise costs for consumers.
Unveiling its Flexibility Roadmap, the Government said action was essential to reduce reliance on international fossil fuel markets and for delivering its mission to achieve clean power by 2030 and net zero by 2050.
Developed by the government, Ofgem, and Network Energy System Operator (NESO), alongside energy industry stakeholders and consumer groups, the roadmap commits named organisations to specific actions.
It also establishes a governance framework to facilitate implementation and enable further measures to be taken where required.
Energy Minister Michael Shanks said: “This roadmap gives households and businesses the choice and control over when and how they use their energy.” “The flexible electricity system we are working to build will help make that a reality for tariffs and technologies.”
CCC recommendation for the fourth Welsh carbon budget
On 25 July 2025, the Committee on Climate Change (CCC) wrote to the Welsh Government regarding its carbon targets, the use of offsets, and carbon accounting.
What does this mean to the end user?
- The CCC recommends that the fourth carbon budget for 2031-2035 should be an average annual reduction of 73% on 1990 levels
- It recommends that most of this reduction come from action in Wales, rather than purchasing international carbon credits
- End users with operations in Wales may want to take these recommendations into account in their carbon targets and strategies
Review of Energy System Costs Announced
On 30 July 2025, Ofgem launched a review into how the costs of the energy system are allocated across its users.
What does this mean to the end user?
- The review reflects the changing use of, and extensive capital investment in, the electricity and gas networks
- It asks stakeholders for their views on how costs can be recovered fairly, across different network users
- It asks which options for non-domestic cost allocation should be considered in further detail, or ruled out
- End users wishing to submit a response should do so by the deadline of 24 September 2025
Biggest-ever clean power auction launched
The application window has opened for what is set to be a record-breaking Contracts for Difference (CfD) auction for renewable energy.
The seventh CfD allocation round, AR7, is seen as a crucial step in achieving the UK Government’s ambition to reach its clean energy targets.
Changes introduced for the latest round include longer 20-year contracts that provide greater financial certainty for developers and investors.
Last month, maximum strike prices for wind energy in AR7 were raised to £113 per MWh for offshore wind - up from £102 in 2024 - and for floating wind, the cap is £271/MWh, based on 2024 prices.
Onshore and remote island wind have been set at £92/MWh in 2024 prices, while solar is £75/MWh, lower than in the previous round.
According to the latest timeline, developers have until 27 August to enter eligible projects ahead of a window to make sealed bids. Successful applicants are expected to be announced between December and February.
In our July Industry News Report (UK Industry News Update: Issue 7), we reported that United Nations research showed that renewable energy is now cheaper than fossil fuels. This report on the CfD demonstrates that investment in renewable energy is getting stronger.
Drive to harness technology to cut energy costs
A major project has been launched to harness AI and digital technology to reduce energy bills and boost the security of supply.
The Government has challenged businesses and researchers to cut peak demand for grid electricity by 2 gigawatts - equivalent to powering over 1.5 million homes
The project is part of the Government’s new R&D Missions Accelerator Programme to deliver on core missions with clear and ambitious targets.
An initial £4m for the first year of a five-year challenge will support researchers to come up with solutions that help shift electricity demand in evenings and weekends by 2 gigawatts.
Examples could include getting AI to predict how much energy the nation use days ahead of time by plugging in data from things like smart meters, weather forecasts, and consumption trends.
This could reduce the need to build network infrastructure and new power plants.
Electricity Regulation - RIIO-3
1 July 2025 - UK Regulator, Ofgem, announced its draft determination for Electricity Transmission Owners (TOs) for the period 1 April 2026 to 31 March 2031. This is known as RIIO-3 (Revenue=Incentives+Innovation+Outputs).
The RIIO is a regulatory framework used by the energy regulator, Ofgem, to set price controls to ensure consumers pay a fair price for vital investment to ensure network companies provide a safe, reliable, and efficient service, whilst encouraging innovation and setting out how much network companies are allowed to collect from consumers. Ofgem is now consulting on the Draft Determinations for RIIO-3, which will come into effect on 1 April 2026.
Ofgem has recently proposed a total allowed revenue of £24.2 billion over the RIIO-3 period; this money will have to cover operational costs, investment in infrastructure upgrades and expansions, as well as other expenses.
The TOs operate a monopoly on their networks, and to avoid the risk of inflated transmission costs, Ofgem places an upper limit on the total revenue the TOs can generate.
The TOs have submitted plans which have been summarized by Ofgem as amounting to £32.7 billion. Reasons given by the TOs are: Reinforcement of the network, Capacity upgrades, Replacing old infrastructure, and Meeting Government Net Zero targets Ofgem has largely accepted to TOs’ reasoning but has only increased the limit to £24.2 billion, from its previous level of £13 billion, stating that there was insufficient reasoning for the increase to the full sum.
The TOs would naturally prefer a higher limit, and they have several means to be able to request that the limit be raised.
The effect on electricity costs higher electricity transmission revenue limit compared to the last period, will, naturally, have a similarly significant effect on a given consumer’s Transmission Network Use of System (TNUoS) charges. The level of impact of the non-Locational demand residual (Fixed £/Site/Day) charges and Half-Hourly Demand Tariffs (TRIAD Charges) is yet to be announced, but is expected to be felt disproportionately, with a larger financial impact expected to impact energy-intensive sites with High Voltage meters.
The exact impact remains to be seen as the charges for the period starting April 2026 are to be published by the National Energy System Operator (NESO) by 31 January 2026 latest. NUS will issue further updates when available.
For more information on this, please refer to the recent article on our website at Ofgem RIIO-3 Draft Determinations Overview.
Electricity Regulation - Nuclear RAB
The Nuclear Regulated Asset Base (RAB) scheme is being introduced to fund future nuclear projects, starting with the Sizewell C nuclear site planned for construction in Suffolk The Final Investment Decision (FID) for Sizewell C has been made, with a current expected construction cost of circa. £38bn. The UK Government has an initial 44.9% share.
The scheme is designed to support costs for the design, construction, commissioning, and operation of new nuclear projects. It follows a similar structure to the Contracts for Difference (CfD) scheme, which could see the scheme being a benefit as well as a cost once a nuclear site is generating energy.
Rates will consist of an Interim Levy Rate, published 30 days in advance of each quarter, and a Total Reserve Amount, to help cover unexpected increases in costs.
Rates are only indicative at this time, at an estimated £4/MWh. We also know that it will be treated similarly to the CfD and Capacity Mechanism (CM) pricing structure, so all suppliers will be charging this cost in the same manner.
These new Government costs will begin to be seen on energy bills from October 2025.
For more information on this, please refer to our recent article on our website: Nuclear RAB (Regulated Asset Base) Levy
Northern Ireland consults on oversight of TPIs
On 14 August 2025, the Utility Regulator for Northern Ireland launched a consultation on the regulation of Third-Party Intermediaries (TPIs) in the energy market.
What does this mean to the end user?
- The consultation aims to improve outcomes for large and small non-domestic customers
- It proposes regularly collecting information from suppliers to help monitor the TPI market
- It also asks for views on whether publishing TPI commissions would be helpful to energy users and other stakeholders
- End users wishing to submit a response should do so by the deadline of 6 November 2025
NUS Consulting is a member of the RECC Code of Practice applies to Third Party Intermediaries (London Office | TPI Code of Practice). Although this is a United Kingdom scheme, clients in the Republic of Ireland can be assured that NUS operates within the parameters of the UK scheme, and this extends to Northern Ireland and the Republic of Ireland.
Major milestone reached on half-hourly metering
A significant milestone has been reached on the journey towards Market-wide Half-Hourly Settlement (MHHS).
Systems Integration Testing (SIT) to ensure systems can integrate seamlessly and perform under real-world conditions has now been successfully completed.
“Over the course of this phase, participants have collaborated closely with the Programme to validate functionality, resolve defects, and build confidence in the robustness of the end-to-end solution.”
MHHS aims to contribute to a more cost-effective electricity system, encouraging more flexible use of energy and helping consumers lower their bills. For more information, please see our previously published articles: Market-wide Half Hourly Settlement Update and UK Market-Wide Half Hourly Settlement.
That concludes this issue of the UK Energy Industry News Update, highlighting key developments shaping the energy sector. For further details or to discuss how these changes may impact you, please contact us.