The £70 billion upgrade to the electricity transmission grid is
critical to avoid large rises in consumers' bills as more of the
country's electricity is generated from clean sources
But many grid upgrades are at risk of not being delivered when
needed, which could increase short-term costs for consumers
Accelerating the necessary upgrades while ensuring they are
delivered efficiently will test the way NESO, DESNZ and Ofgem
work together to oversee and regulate the grid
Upgrades to the nation's electricity grid are necessary to
accommodate increasing amounts of renewable energy generation but
need to accelerate to avoid rising costs being passed on to
consumers, a new report from the NAO finds.
When the grid cannot carry enough electricity from where it is
produced to where it is needed, the National Energy System
Operator (NESO) intervenes to keep supply and demand in balance.
This has normally meant paying wind farms to turn off and gas
plants to turn on.
The NAO's latest report says that these payments, known as
constraint costs1 which ultimately go on consumers' bills -
totalled £1.9 billion in 2025-26, and could increase up to £7.8
billion by 2030 without concerted action.
Ofgem estimates that £70 billion of investment is required in the
grid between 2025 and 2031. Ofgem estimated this will increase
the network charges paid by consumers by £60 by 2030, but save
them £30 overall compared to the increased constraint costs if
projects are not accelerated.
But the report finds the upgrade timetable very challenging.
Of the total 80 projects NESO identified as necessary in its 2024
Clean Power advice, 64 are ongoing. Most are at an early stage of
development and are not expected to be connected by the dates
NESO originally said would be optimal for 1keeping constraint
costs down between now and 2030. Many also face significant risks
to the delivery of their current forecast delivery date.
NESO identified three projects that needed to be accelerated to
meet Clean Power 2030 and eight others where acceleration would
also reduce constraint costs. There has not been a significant
acceleration in any of these projects so far.
Most of the grid upgrades NESO recommended were chosen because
they were already in development. In the absence of an integrated
plan or whole-system appraisal, the report finds, the government
has not demonstrated that these projects represent the best way
of achieving its objectives.
Three public bodies are responsible for the grid upgrades: DESNZ
(Department for Energy Security & Net Zero) sets energy
policy, NESO recommends the grid upgrades, while the regulator
Ofgem has approved investment largely by focusing on reducing
constraint costs. Three private companies, known as Transmission
Owners2, own and manage the grid and are responsible for
delivering the upgrade projects.
The wider economy will also suffer if the grid capacity is
insufficient to meet rapidly growing demand for new connections.
The proportion of projects that received an offer of a connection
at the time they wanted fell from around two-thirds (64%) in
2019-20, to around one-sixth (16%) in 2023-24.
The report notes that DESNZ, NESO and Ofgem have started to
tackle blockages in the system such as planning, access, skills
shortages and supply chains.
It recommends that these organisations strengthen their oversight
of the upgrades, improve transparency over the cost and progress
of each project, and review options for what to do with new
generation projects that are due to connect to the grid before it
is ready.
, head of the NAO,
said:
While DESNZ, Ofgem and NESO have started to improve the way
they work together, the planned upgrades of the
electricity grid will test systems not designed for activity
at this pace or scale.
Value for money now depends on delivery. Failure to implement
these necessary grid upgrades will hamper economic
growth as well as increase consumer bills.
ENDS
Notes for Editors
1. Constraint costs occur when electricity generators are paid to
turn up or down their electricity to prevent overloading
transmission wires in some areas.
2. The grid in Great Britain is divided into three geographical
areas, each owned and managed by a separate private company,
known as a Transmission Owner: National Grid Electricity
Transmission (NGET): England and Wales. SP Energy Networks
(SPEN): southern Scotland. Scottish & Southern Electricity
Networks Transmission (SSENT): northern Scotland.
