ENERGY bill payers across the UK face an extra £7.8 billion in costs every year by 2030 under the Labour Government's current plans for the electricity grid, according to a major new report.
The National Audit Office (NAO) document, published on Friday, further warns that even if the UK Government successfully accelerates grid upgrades, then bill payers will still face additional charges of up to £3.6bn a year by 2030.
The extra costs stem from constraint, or curtailment, payments. Renewable energy generators (generally in Scotland) are paid to reduce output when the grid lacks the capacity to carry their electricity, while gas-fired power stations (generally in England) are paid to increase generation to make up the shortfall.
In 2025-26, the NAO said, these constraint payments added more than £1.9bn onto UK energy bills.
Even if the currently planned grid upgrades are accelerated and all in place by 2030, the NAO has warned that these costs could rise to between £2.8bn and £3.6bn.
If the UK Government does not deliver any upgrades, the costs could hit £12.7bn per year, and at the current timetable, they are projected to hit £7.8bn.
The lack of UK grid capacity is felt especially acutely in Scotland, where wind farms based away from population centres are regularly paid to turn off because of the inability to transmit the power they are generating to where it is needed.
Last week, a study from the Resolution Foundation think tank found that Scotland’s largest offshore wind farm, the £3bn Seagreen site off the Angus coast, had been paid to shut down instead of generate electricity for almost three-quarters of 2024.
Friday’s NAO report said: “Much of the grid was built between the 1950s and 1970s. It was designed for large fossil fuel stations close to centres of demand. Large parts are now ageing. It is also poorly matched to how electricity is produced today. Renewable electricity is often generated far from where it is used, including offshore.”
It goes on to say that the UK Government’s Department for Energy Security and Net Zero (DESNZ) had “missed” opportunities to upgrade the grid earlier and “allowed renewable electricity generation to expand faster than the grid, which has led to increased constraint costs”.
“Successive governments’ ‘connect and manage’ approach has allowed new generation projects to connect before the network was ready. As a result, thermal constraint costs have risen from £0.6bn in 2018-19 to £1.9bn in 2025-26 (in 2024 prices).
“The majority goes to generators to increase output at short notice. These are mainly gas power stations in England, with costs linked to global gas prices. The remainder goes to generators to reduce output. These are often wind farms in Scotland.”
Energy watchdog Ofgem estimated that £70bn of investment is required in the grid between 2025 and 2031. It said 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 identified as necessary in the National Energy System Operator’s (NESO) 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 keeping constraint costs down between now and 2030, the NAO said.
Further, 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.
Gareth Davies, the 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.”
