The government ruled out both the "green power pool" and split market options in its review of electricity market arrangements (REMA) autumn update, published in December 20241. Both options would have created a separate market for renewables, breaking the link between wholesale electricity prices and gas1.
REMA began under the then-Conservative government in April 2022, with the first consultation running that July1. A summary of responses followed in March 2023, when the government ruled out a number of options including "pay-as-bid"1. A second consultation ran in March 2024, with results published alongside the December 2024 autumn update1. That update narrowed the options further, ruling out the two separate-market designs1.
The link between gas and power prices is central to the debate. Gas sets the wholesale price of electricity in the UK 98% of the time, according to academic research published in 2023, far more often than in France (7%) or Germany (24%), even though gas accounts for only a third of generation overall1. As of May 2025, gas prices remained three times higher than before the global energy crisis1.
Under the latest Ofgem price cap, the average household faces an electricity bill of £926 per year, up from £603 before the energy crisis, a rise of 54%1. The breakdown of the current cap is set out below.
| Element of the price cap | Share |
|---|---|
| Wholesale costs | 38% |
| Network charges | 22% |
| Green levies | 15% |
| Social policies | 4% |
| Operating costs | 14% |
| Profits | 2% |
| Other items | remainder |
Source: Carbon Brief analysis of Ofgem1.
Why it matters for households
Wholesale costs, which track gas, make up the largest single share of an electricity bill, so the decision to drop the separate-market options leaves the existing pricing method in place1. Under marginal pricing, all generators running in each half-hour period are paid the same price, set by the final unit needed to meet demand, which in the UK is almost always gas1. That is why household electricity bills move with gas prices even when a large share of power comes from other sources1.
For a home's energy independence, the outcome means the wholesale price a supplier pays is still set by gas rather than by the cost of the cheapest low-carbon generation1. Network charges, green levies and social policy costs make up the rest of the bill alongside supplier operating costs and profits1. The government has not reported any replacement mechanism for separating power prices from gas as part of this update1.
What happens next
The government is expected to decide whether to switch to zonal power pricing ahead of the seventh Contracts for Difference allocation round in summer 20251. The industrial strategy is set to be published in June1.