On the 21st of April, the government announced a proposal to change the way that electricity is priced . The trigger was the second major fossil-fuel price shock of the decade: gas prices spiked in February after conflict in the Middle East. UK Gov A recap on how electricity is priced in the UK. UK electricity prices are set every half-hour by the most expensive generator needed to meet demand. That’s almost always a gas plant: though the share of hours in which gas sets the price has fallen from over 90% in 2021 to roughly 60% today, and NESO projects it could fall to as low as 15% by 2030 under the clean power target. So when global gas prices spike, electricity bills spike, even though the majority of our power now comes from renewables and nuclear. David Turner Substack What’s actually changing. The package is a paired carrot and stick, as Karl from Axle writes about here . The carrot is Wholesale Contracts for Difference (WCfDs): older renewables on the legacy Renewables Obligation scheme get an offer to swap volatile wholesale revenues for a fixed 20-year price, keep their existing RO subsidy on top, and get exempted from the windfall tax. The stick is a hike to the Electricity Generator Levy: the windfall tax on excess wholesale revenues rises from 45% to 55% from 1 July 2026. Generators who decline the WCfD get hit harder in profitable years. CommonWealth The two only function as a unit. Together they push almost every rational generator to sign. The eligible pool is roughly 30% of the UK’s power supply (~35 GW of RO-accredited renewables); actual take-up depends on the strike price the government offers, still TBC. Consultation lands later in 2026, with allocation in 2027. What it doesn’t do is change the wholesale market. Gas still sets the marginal price. The government explicitly rejected zonal pricing and splitting the market into green and gas pools: both more radical reforms that have been on the table for years. It also rejected putting gas plants into a strategic reserve: a Stonehaven/Greenpeace proposal modelled at savings of around £6bn a year (~£80 per household). UKERC’s “pot zero” idea , which the announced package partially adapts but stops short of, was modelled at up to £10bn a year (~£120 per household). This isn’t really decoupling. It’s the government taking on more direct ownership of pricing by tuning two dials: 1) the strike price and 2) the EGL rate, to engineer how much generation sits on fixed contracts. As Aurora Energy Research’s Marc Hedin put it , the headlines “suggest a decisive shift” but “the reality is more incremental”. There are a few consequences: Fixed contracts protect consumers from spikes, but they also act as a floor: they lock in today’s elevated prices for 20 years and cap the upside if wholesale falls in the 2030s. Combined with grid costs roughly doubling over the same period, lowering bills gets harder, not easier. Karl Bach’s projection on LinkedIn has fixed-price contracts moving from ~15% of generation today to over 50% by 2030. For consumers, the package limits downside spike risk but doesn’t materially reduce average bills, and arguably constrains how much they can fall in the 2030s. Strike prices set today against today’s elevated wholesale will lock in for 20 years; the RO subsidy continues on top, which is the key structural difference from UKERC’s “pot zero” proposal (where the subsidy would have been folded in, saving more). Combined with household transmission charges nearly doubling between 2026 and 2031 , bills stay sticky-high for the rest of the decade. The £80–£120 per household per year that the more aggressive rejected alternatives could have delivered is gone. For anyone watching the flexibility side of the market: batteries, dynamic tariffs, demand-side response, this is net positive. Sticky high bills sustain demand for flexibility. Wholesale spreads stay wide, which keeps arbitrage and battery economics healthy. Ancillary services markets are unaffected. The caveat is heat pumps: WCfDs alone don’t narrow the spark gap between gas and electricity, so the economic case for ditching a gas boiler doesn’t get the boost this package could have delivered. Three dates to watch: 1 July 2026, when the EGL rises to 55% and the stick activates; later 2026, when the WCfD consultation opens; and 2027, when allocation happens and generators decide whether to sign or stay merchant. One subplot to watch from 2027: the first wave of RO contracts starts aging out, so the addressable WCfD pool shrinks each year (~5 GW exits by 2027 alone). Also worth flagging: plug-in solar arrives A few weeks before the pricing package, on 24 March, the government confirmed that “plug-in” solar will be available in UK shops within months . Solar, coming to a balcony near you! These are exactly what they sound like: typically balcony-mounted panels that plug straight into a standard socket and feed the house directly. The wiring rules change that makes this legal: Amendment 4 to BS 7671 , the UK Wiring Regulations, came into force on 15 April. It permits plug-in generation up to 800W (Germany’s cap, set at the safe ceiling for domestic ring-main wiring) connected via a standard 13A socket. The remaining gate is a separate BSI product standard expected around July, which certifies individual kits as UK-safe: post-Brexit, EU CE marks don’t auto-transfer, so manufacturers need UK-specific certification before retailers can stock product. Germany has had this for years: over 1.1 million households there had registered installations by mid-2025. It’s a small intervention with an interesting shape: the first piece of UK energy policy in a while that puts generation directly in the hands of people who don’t own their roof. Worth keeping an eye on once the BSI standard lands: install economics, eligible inverter sizes, and how DNOs handle notification will determine whether it stays a gimmick or becomes meaningful.