From NOT A LOT OF PEOPLE KNOW THAT
By Paul Homewood
OFGEM claim that their £80 billion electricity grid upgrade will end up actually reducing bills, by reducing constraint payments.
NESO’s latest review below of balancing costs show this to be an outright lie:
https://www.neso.energy/industry-information/balancing-costs
In 2024/25, total balancing costs hit £2.7 billion, of which £1.7 billion arose from constraint payments. Prior to the Climate Change Act, these balancing costs would have been inconsequential.
Grid upgrades will add about £9 billion a year to bills by 2031. Self evidently, this cost will far outweigh any potential savings. What they might do, of course, is reduce the cost of future constraint bills, which are projected to massively increase:
NESO project that constraint payments could rise to £7.2 billion in 2030, before OFGEM’s £80 billion grid upgrades kick in, dropping back to £2.9 billion in 2031.
In other words, after the upgrades, constraint payments will be just as high as now. If we don’t upgrade, constraints will increase. If we do, network charges will increase.
Either way, our bills go up!
Significantly, NESO state that constraint payments will resume their upward increase after 2031, as more renewables come on stream. This will require yet more grid upgrades, a never ending roundabout it seems!
In fact, NESO have underestimated long term constraint costs.
This is how they define them:
So, for example, there is a lot of surplus wind power in Scotland at times, but not enough transmission capacity to take it south to markets. In large part, OFGEM’s upgrades are intended to solve this problem.
But there is a much bigger problem looming, that no amount of grid upgrades will cure – soon, there will be far more power on the grid on windy/sunny days than there is demand for.
In their Clean Power 2030 Report, NESO reckoned we would have to throw away 83 TWh of excess wind and solar power in 2030 – 22 TWh curtailed and 61 TWh exported at a loss (they hope!).
Last year, the figure was 9 TWh.
NESO stressed in their report that their projections assumed full implementation of OFGEM’s network upgrades, so existing bottlenecks are not to blame for the 83 TWh of wasted power.
Indeed, the Counterfactual scenario, which assumes no accelerated progress, is virtually constraint free – the £80 billion upgrades will do their job.
The extra constraint costs are the direct consequence of building out more and more renewables.
So, let’s recap:
- OFGEM want to spend £80 billion on upgrading the grid in the next five years, adding £9 billion to electricity bills.
- Expansion of intermittent renewable capacity to meet Net Zero targets will necessitate wasting billions of pounds worth of power, when it is too windy or sunny.
- Post 2030, tens of billions more will need to be spent to cope with increasing renewable capacity.
- Far from reducing bills, this never ending cycle of increasing renewable capacity/upgrading the grid will inevitably increase them.
Nobody in their right mind would have designed such a system. Unfortunately by the time of the next election, most of the damage will be irreversible.
