UK Electricity Grid Constraints and Balancing Costs

Reference file for energy policy analysis. Last updated: 2026-04-04.

Related wiki pages: rema.md, tnuos-reform.md, network-levy-charge.md

All figures relate to Great Britain (England, Scotland, Wales) unless stated otherwise. Northern Ireland operates under a separate system (SONI/EirGrid).

1. Balancing Costs

The cost of keeping supply and demand matched in real time, managed by the National Energy System Operator (NESO).

Annual totals

Source: NESO Annual Balancing Costs Reports (May 2024, June 2025); S&P Global Commodity Insights (Jan 2022); pv magazine (Jun 2025).

Breakdown by cause (2024/25)

• Constraint management (thermal): £1.7bn, by far the largest component. Thermal constraint volumes rose 81% year-on-year to 13.5 TWh, driving a 64% cost increase. This is the cost of paying generators to turn down in congested areas and turn up elsewhere. (Source: NESO Annual Balancing Costs Report, Jun 2025)
• System frequency and reserve: The remainder (~£1bn) covers frequency response, reserve services, and voltage management. (Source: NESO Annual Balancing Costs Report, Jun 2025)

Cost mitigation actions (2024/25)

NESO reported savings of: - £724m through trading actions - £324m through Network Services projects - £122m from reduced system inertia requirements

Source: NESO Annual Balancing Costs Report (Jun 2025).

Projection

On current trends, balancing costs are projected to reach approximately £8bn per year by 2030 without accelerated grid upgrades. (Source: pv magazine, Jun 2025)

2. Renewable Energy Curtailment

Curtailment is when generators, mostly wind farms in Scotland, are paid to switch off because the grid cannot carry their output to where it is needed.

Annual curtailment volumes and costs

Source: Renewable Energy Foundation (REF) analysis (2024, 2025); edie (2025); Tim Harper analysis (2025).

Key facts

• In 2024, more than one tenth of all wind generation was curtailed. (Source: Utility Week, 2024)
• Curtailment rose 22% in volume between 2024 and 2025. (Source: edie, 2025)
• 98% of curtailment in 2025 took place in Scotland, where wind resource is strongest but local demand is low and transmission south is limited. (Source: No2NuclearPower, citing NESO data, 2025)
• Almost all curtailed generation is onshore and offshore wind. Solar curtailment is minimal but growing as capacity increases.

Why the cost is so high

Curtailment has two cost components: 1. Paying the wind farm operator to stop generating (constraint payment) 2. Paying a gas plant further south to generate instead (replacement cost)

The replacement cost is now the larger component: £1.08bn in 2025 vs £380m in constraint payments. (Source: Tim Harper analysis, 2025)

3. Connection Queue

The queue of projects waiting to connect to the transmission and distribution networks.

Scale of the problem

• As of early 2025: approximately 756 GW of projects in the queue (587 GW transmission, 178 GW distribution). (Source: Greenberg Traurig, Apr 2025)
• Over 1,700 new applications were submitted in 2023 and 2024 alone. (Source: Greenberg Traurig, Apr 2025)
• Average wait time had stretched to 10-15 years for many projects under the old first-come-first-served system. (Source: various industry reports, 2024)

Connections Reform (June 2025)

Ofgem approved the TMO4+ reforms on 15 April 2025, which went live on 10 June 2025. The changes:

• Replaced the first-come-first-served model with a gate-based assessment system prioritising viable, construction-ready projects.
• Projects are assessed against alignment with the Clean Power 2030 target.
• 132 GW of projects were identified as aligned with delivery of the government's Clean Power 2030 goal. (Source: NESO, Jun 2025)
• Ofgem expects the reforms to unlock an average of £40bn per year of mainly private investment in clean energy. (Source: Ofgem, Apr 2025; Latham & Watkins, Apr 2025)

New demand from data centres

Since November 2024, 80 GW of new transmission demand connections and 5 GW of distribution connections have been added, driven largely by data centre applications, bringing the total demand queue to 125 GW by June 2025. (Source: The Register, Feb 2026; Slaughter and May, 2025)

4. The Great Grid Upgrade

The largest expansion of the high-voltage transmission network since the supergrid was built in the 1960s.

Overview

• 17 major infrastructure projects: new overhead lines, pylons, substations, and subsea cables. (Source: National Grid, 2025)
• Cost: £19bn for National Grid's share, representing two-thirds of its planned investment to 2030. (Source: Business Energy Deals, 2025; Sustainability Magazine, 2025)
• Part of a wider £80bn investment programme across all transmission owners over the 2026-2031 price control period (RIIO-ET3). Ofgem approved initial funding of £8.9bn for electricity transmission with a further £1.3bn contingency in 2025. (Source: Ofgem, 2025)
• National Grid published plans to invest £35bn in UK transmission from 2026 to 2031. (Source: New Civil Engineer, Dec 2024)

Key projects

Eastern Green Links (subsea HVDC cables, Scotland to England):

Source: Wikipedia (Eastern Green Links); Iberdrola (EGL1); SSEN Transmission (EGL2); Ofgem (Dec 2025, EGL3/4 approval); National Grid (EGL3/4).

Other major projects:

• Sea Link: Suffolk to Kent, carrying power from Sizewell C and offshore wind. (Source: National Grid, 2025)
• Yorkshire Green: New substations and overhead lines in Yorkshire. (Source: National Grid, 2025)
• Chesterfield to Willington: New overhead line and substation. (Source: National Grid, 2025)
• Norwich to Tilbury: Reinforcement of the existing network in East Anglia. (Source: National Grid, 2025)
• Five separate subsea routes connecting Scotland to England along the east coast, planned for 500 kV direct current. (Source: Electric Insights Q3 2025)

Regulatory timeline

Ofgem is due to make final decisions on National Grid's five-year investment proposal (RIIO-ET3) in early 2026. (Source: Ofgem, 2025)

5. Offshore Transmission (OFTO Regime)

Offshore wind farms connect to the onshore grid via offshore transmission assets. These are built by the wind farm developer and then transferred to an Offshore Transmission Owner (OFTO) through a competitive tender process run by Ofgem.

Scale

• 28 OFTO licences awarded to date, to 9 different parties. (Source: Grant Thornton, 2024)
• £6bn invested so far in links connecting 9.5 GW of offshore wind. (Source: Ofgem, 2024)
• Nine tender rounds completed, representing £12bn of total investment. (Source: Grant Thornton, 2024)
• Up to £7bn of additional assets auctioned in tender rounds in 2024-2025. (Source: Ofgem, 2024)
• Further investment of at least £16bn needed in the medium term for future offshore transmission. (Source: DESNZ Call for Evidence, Nov 2023)

Reforms underway

• 132 kV array transmission exemption came into force August 2024, simplifying licencing for lower-voltage offshore cables. (Source: DESNZ, 2024)
• Generator Commissioning Clause extended from 18 to 27 months, giving developers more time. (Source: DESNZ, 2024)
• Government is reforming the OFTO regime through the Planning and Infrastructure Bill to allow more coordinated offshore network design rather than individual point-to-point connections. (Source: DESNZ, 2025)
• Ofgem is exploring an OFTO Build model where the transmission asset is designed and built by the OFTO from the start, rather than transferred after the developer builds it. (Source: Ofgem consultation, Dec 2024)

6. Interconnectors

Subsea cables linking GB's electricity market to neighbouring countries, allowing import and export of power.

Operational interconnectors (as of early 2026)

Source: Elexon (2025); Wikipedia (List of high-voltage transmission links in the UK); Modo Energy (Mar 2024).

Note: Some sources cite 9.2 GW depending on whether Moyle and EWIC are counted as "interconnectors" or internal Irish Sea links.

Import and export flows

• In 2024, GB was a net importer of 33.4 TWh, up 40% from 2023. (Source: Nuclear Industry Association, citing Elexon data, 2024)
• In the year to September 2025, GB imported 43 TWh (13% of gross electricity supply) and exported 12 TWh. (Source: National Grid, 2025)
• Interconnectors have delivered £1.65bn of consumer benefit since 2023 through access to lower-cost imports. (Source: National Grid, 2025)

Under construction and approved

Source: Ofgem (Nov 2024 approvals); New Civil Engineer (Mar 2026); Regen (2025).

LionLink and Nautilus are "offshore hybrid assets". They combine interconnector function with direct connection to offshore wind farms, a first for GB.

Total planned capacity: over 18 GW by 2032, up from 10.3 GW today. (Source: Ofgem, Nov 2024)

7. Network Charges

The non-wholesale costs added to electricity bills to pay for the grid infrastructure and its operation.

The three main charges

TNUoS (Transmission Network Use of System): - Pays for the high-voltage transmission network (National Grid, SSEN, SPT). - Total TNUoS revenue collected: £4.3bn in 2025/26, forecast to rise to £7bn in 2026/27, an increase of over 60%. (Source: NESO TNUoS forecast, 2025; npower Business Solutions, 2025) - Average rate rising from £18.9/MWh to £31/MWh between 2025/26 and 2026/27. (Source: npower Business Solutions, 2025) - The sharp increase reflects the cost of the Great Grid Upgrade flowing through to charges.

BSUoS (Balancing Services Use of System): - Pays for the cost of balancing the system in real time. - From April 2023, BSUoS was shifted entirely onto consumers (previously split roughly 50/50 between generators and consumers). (Source: Indigo Swan, Apr 2023; Corona Energy, 2023) - BSUoS rate for 2025/26 is approximately 15% higher than the previous year. (Source: British Gas business blog, 2025) - BSUoS tariff for Apr-Sep 2024 was £7.63/MWh, down from £14.03/MWh in the prior period. (Source: British Gas business blog, 2024)

DUoS (Distribution Use of System): - Pays for the local distribution network (DNOs like UKPN, WPD, ENWL etc.). - Standing charges increased 12-20% for many business users in 2024/25. (Source: Bionic, 2025; Inspired PLC, 2025)

Overall trend

Non-commodity costs (TNUoS + BSUoS + DUoS + policy levies) now make up 42-52% of a business electricity bill, up from 29-35% in 2021. (Source: British Gas business blog, 2025)

This share will continue to rise as grid investment accelerates. The Great Grid Upgrade and increased balancing costs are the primary drivers.

8. Key Constraints and Bottlenecks

Scotland-England boundary (B6)

The single most important constraint on the GB transmission system.

• Current B6 boundary capacity: 6.3-6.7 GW (limited by the thermal rating of the Harker-Moffat 400 kV circuit). (Source: NESO Scottish boundaries data; Apatura Energy, 2025)
• Scotland has 13 GW of installed wind capacity but peak demand of less than 4 GW. When the wind blows strongly, far more power is generated than can be consumed locally or exported south. (Source: Tim Harper analysis, 2025)
• The B6 boundary was constrained 34% of the time in 2025. The B4 boundary (further north within Scotland) was constrained 42% of the time. (Source: Modo Energy, 2025)
• Constraint costs at B6 accounted for a large portion of the £1.46bn total curtailment cost in 2025. (Source: Apatura Energy, 2025)
• EGL1 and EGL2 (4 GW combined) are specifically designed to relieve B6 congestion from 2029. (Source: National Grid, 2025)

East Anglia export constraints

• The existing network in East Anglia carries around 3.2 GW of generation. Over the next decade, more than 15 GW of new generation and 4.5 GW of new interconnection are expected to connect there (Sizewell C, offshore wind, LionLink, Nautilus). (Source: NESO East Anglia Network Study, Mar 2024; National Grid, 2025)
• The existing transmission lines cannot accommodate this volume. Without reinforcement, wind farms and eventually Sizewell C will face curtailment.
• Sea Link (2 GW HVDC, Suffolk to Kent) and the Norwich to Tilbury reinforcement are the main planned solutions. (Source: National Grid, 2025)
• The Constraint Management Intertrip Service (CMIS) and Local Constraint Market are interim operational measures. (Source: NESO, 2024)

Other notable bottlenecks

• South Wales: Limited export capacity for new offshore wind connecting via Port Talbot and Pembroke.
• Humber estuary: Concentration of new offshore wind connections (Hornsea, Dogger Bank) on a network built for coal-era power stations.
• South-east England: High demand area becoming increasingly dependent on imports from East Anglia and interconnectors, with limited internal reinforcement.

9. NESO's Role

What changed

The National Energy System Operator (NESO) began operating on 1 October 2024 after the UK government acquired the electricity system operator division of National Grid plc for £630m. (Source: Wikipedia; Addleshaw Goddard, 2024; DLA Piper, Oct 2024)

This was the first time in GB that one organisation was given responsibility for planning and operating the whole energy system, covering both electricity and gas.

Key differences from the old National Grid ESO

Source: Institute for Government (2024); Modo Energy (2024); NESO (2024).

Strategic Spatial Energy Plan (SSEP)

NESO's most significant new responsibility is producing the SSEP, a plan for where energy generation, storage, and network infrastructure should be located across GB.

Timeline: - May 2025: SSEP methodology published. (Source: NESO, May 2025) - Summer 2026: NESO submits 4-6 pathway options to the Secretary of State for Energy Security and Net Zero, who will choose one. (Source: NESO, Dec 2025) - Early 2027: Public consultation on the draft SSEP. (Source: NESO, Dec 2025) - Autumn 2027: Final SSEP published. (Source: NESO, Dec 2025)

The timeline was pushed back in December 2025 after NESO decided to re-run its modelling with updated generation cost data. (Source: NESO, Dec 2025; Regen, 2025)

Related plans, the Centralised Strategic Network Plan (CSNP) and Regional Energy Strategic Plans (RESPs), are now expected by end of 2028. (Source: NESO, Dec 2025)

Other NESO responsibilities

• Connections reform (the gate-based queue system described in Section 3)
• Clean Power 2030 action plan advice to government
• Network planning across electricity and gas
• Market design advice (including capacity market, ancillary services)

Key Relationships Between These Issues

1. Curtailment is a symptom of insufficient transmission. Scotland generates far more wind than B6 can carry south. The Great Grid Upgrade (especially EGL1-4) is the long-term fix, but most projects complete 2029-2034.

2. Balancing costs are driven by constraint costs. Of the £2.7bn total in 2024/25, £1.7bn was thermal constraint management, paying generators to turn down in one place and turn up in another.

3. Network charges are rising because of grid investment. TNUoS is forecast to jump 60%+ in 2026/27 as the Great Grid Upgrade costs flow through. This is the price of fixing the constraint problem.

4. The connection queue blocks new projects. Even where grid capacity exists, the queue backlog has meant 10-15 year waits. The June 2025 reforms should accelerate viable projects, but queue management does not create physical capacity.

5. Interconnectors and offshore hybrid assets change the picture. LionLink and Nautilus connect offshore wind directly to both GB and continental markets, potentially reducing onshore congestion in East Anglia.

6. NESO's strategic planning role is new and untested. The SSEP, due autumn 2027, will be the first attempt to plan where generation and transmission should go, rather than reacting to developer applications. This could fundamentally change how grid investment is prioritised.

Sources and Further Reading

• NESO Balancing Costs Reports: https://www.neso.energy/industry-information/balancing-costs
• NESO Connections Reform: https://www.neso.energy/industry-information/connections-reform/connections-reform-results
• NESO SSEP: https://www.neso.energy/what-we-do/strategic-planning/strategic-spatial-energy-planning-ssep
• NESO East Anglia Network Study (Mar 2024): https://www.neso.energy/document/304496/download
• National Grid, Great Grid Upgrade: https://www.nationalgrid.com/the-great-grid-upgrade
• Ofgem, Grid connections reform: https://www.ofgem.gov.uk/press-release/ofgem-sets-out-major-reform-package-next-step-accelerate-grid-connections
• Ofgem, OFTO regime: https://www.ofgem.gov.uk/press-release/offshore-transmission-gives-investors-steady-long-term-returns
• Renewable Energy Foundation, curtailment data: https://www.ref.org.uk/ref-blog
• Electric Insights quarterly reports: https://reports.electricinsights.co.uk
• Elexon, interconnector flows: https://www.elexon.co.uk/bsc/about/interconnectors/elexon-insights-interconnector-flows-in-and-out-of-great-britain/