At a recent panel discussion at CI Live 2025 this week on Generation Policy and Locational Investment Signals, energy sector leaders warned that without coherent and timely reform, the UK risks entrenching inefficiencies that deter investors, inflate costs, and slow the transition to net zero.
The debate, chaired by Tim Dixon, Senior Consultant, Cornwall Insight with panellists: Alun Rees, Director of Regulation, Public Affairs, CSR and ESG, ENGIE UK Josh Roebuck, Head of Energy Policy, Scottish Power, Georgina Morris-Rowbottom, Policy & Public Affairs Lead, Zenobe Harriet Murray Jones, Partner, Bevan Brittan, explored the persistent barriers created by outdated charging mechanisms, inconsistent policy signals, and fragmented regulation.
Confused policy signals
The debate opened reflecting on the broader meaning of “market arrangements,” arguing that they extend beyond wholesale trading to encompass capital, land, and supply chain markets. “We’re seeing mixed signals politically, economically, and geographically.”
Politically, participants pointed to the gulf between party positions on renewables. “We’ve got parties who openly question net zero, and others who champion it,” one speaker noted. “Even within supportive governments, there’s tension — one department is chasing green investment while another talks about renegotiating legacy contracts. That undermines investor confidence.”
Economically, panellists highlighted distortions in the cost base. “We’re trying to electrify everything while loading all the levies onto electricity,” said one contributor. “That includes new costs — community benefit mandates, trade union rules, local content requirements — all on the technologies we’re meant to incentivise.”
The UK has done well to attract climate investment, speakers noted, “but it’s hard-won and easily lost.” Without clearer, more consistent direction, that success could quickly unravel.
The battery developer’s dilemma
Battery storage developers described an equally uncertain landscape. “Every project starts with three questions,” said one developer. “Can I build there? What does it cost to build there? And what revenues can I make there?”
Grid connection policy remains a major obstacle. “National Grid ESO and distribution operators haven’t worked out what they need batteries for — stability, balancing, or both. Flexibility isn’t being properly valued in connection planning.”
Developers also face growing public resistance. “There’s a lot of noise around battery fires, safety, and planning opposition,” one said. “We haven’t communicated the benefits clearly enough — that these assets are essential to making renewables work.”
Meanwhile, network charges continue to distort investment. “We’re told to co-locate with renewables to help balance the system, then penalised through TNUoS charges for doing exactly that,” said another. “The market is being undermined by skipped dispatch and spiralling constraint costs.”
A system built for yesterday
From an investor’s perspective, the UK’s locational charging regime is now a fundamental barrier. “We’ve underinvested in the grid for 20 years,” one participant said. “We’re excellent at building renewables, but not the infrastructure to connect them. Now we’re paying huge constraint costs.”
Transmission Network Use of System (TNUoS) charges no longer provide effective investment signals. “They change after you’ve chosen your site,” one speaker said. “That might make sense in a fossil-fuel market, but not for renewables operating under CFDs. We need to rip it up and start again.”
They called for an “effective, predictable locational investment signal” and protection against “unexpected gains or losses” for existing assets. “You need to know what your locational cost will be for the life of your project — otherwise you’re flying blind.”
Danger of tinkering
Several panellists warned that the government risks squandering a rare window of political focus on energy reform. “If we tinker and layer on more uncertainty, we’ll lose the investment we desperately need,” one said. “These are long-term, capital-intensive assets competing with low-risk financial returns. If risk modelling becomes impossible, capital will flow elsewhere.”
They urged joined-up policymaking across seabed leasing, CFD allocation, capacity markets, and planning. The Netherlands’ integrated approach to offshore wind leasing and grid connection was cited as an example to follow.
At the same time, short-term fixes to reduce constraint costs are vital. “We can’t wait until 2029 for TNUoS reform,” one panellist warned. “We need immediate local balancing and constraint markets to capture the energy we’re currently paying to curtail.”
Breaking the silos
The discussion closed with a call for better cross-departmental coordination. “Too many policies are designed in silos,” said one former civil servant. “Capacity market teams don’t consider wholesale impacts, and vice versa. We’re piling costs onto clean generation while paying gas to build more capacity. Unless we break that mindset, we’ll end up with a market that continues not to serve investors or consumers.”
