Climate Economics Intermittent Wind and Solar Net-Zero The Grid

Grid Balancing Costs Forecast To Hit £10 Billion By 2030

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From NOT A LOT OF PEOPLE KNOW THAT

By Paul Homewood

NESO have just published this year’s Balancing Costs Report:

NESO chart of outturn balancing costs and volumes 2018/19 to 2025/26, stacked bars by cost category (constraints, energy imbalance, reserve, response and others) with a line for absolute volume

https://www.neso.energy/industry-information/balancing-costs

Total balancing costs amounted to £3.1bn in 2025/26. Despite NESO’s attempts to brush these costs away as just a few quid a month on energy bills, the real cost to households is £114 a year. Some of this appears on household electricity bills, but the public ultimately pays for the higher electricity costs imposed on public sector and industry through higher taxes, prices, lower wages and so on.

Before the surge of wind farms, system balancing costs were insignificant. By contrast, 13% of wind output had to be constrained last year.

Of even more concern are the projected costs, expected to hit £7.7 billion by 2030 for Thermal Constraints alone:

NESO Figure 1: thermal constraint cost pathways under current assumptions, 2027-2037, showing costs peaking at up to £7.7 billion in 2030 across the HT, EE, HE and FB scenarios

Thermal constraints cost £2.0 billion in 2025/26. It is certain that costs will also rocket for the other balancing costs listed in the first table, as they all largely arise to address the issues of intermittency.

Taking these other costs into consideration, balancing costs by 2030 could be close to £10 billion.

(The four scenarios listed by NESO come from their Future Energy Scenarios. The cheapest option, you will note, is FB (Falling Behind!). EE, or Electrical Engagement, is generally regarded as the most likely).

Balancing costs fall sharply after 2030, as the massive network upgrades, currently under way, come into operation. Nearly all thermal constraints arise because of the lack of transmission capacity between Scotland and England.

However, the grid soon starts to get overwhelmed again, as yet more renewable generation comes on stream.

NESO explain in their Thermal Constraints Report that their modelling is not only based on the current network upgrade programmes, but also ones needed by the mid-2030s, which still await approval by OFGEM and which are detailed in their Beyond 2030 Report:

Extract from NESO's thermal constraints report on long-term pathway modelling (2028 onwards) listing the model's inputs
Extract from NESO's report on network assumptions based on the Beyond 2030 Electricity Transmission Update (TCSNP2 Refresh)

The Beyond 2030 Report, originally published in 2024, in turn notes that by 2030 the first tranche of grid upgrades costing £64 billion would be required.

This has since been authorised by OFGEM and work is already in hand.

Extract from NESO's Beyond 2030 report noting that by 2030 almost £64 billion of investment across onshore and offshore transmission infrastructure is needed

https://www.neso.energy/publications/beyond-2030

In June this year, NESO published an update:

Cover of NESO's Beyond 2030 Electricity Transmission Update, June 2025
Executive summary page of NESO's Beyond 2030 Electricity Transmission Update

https://www.neso.energy/publications/beyond-2030

It identified the need for an additional spend of £89 billion beyond 2030, without which constraint costs could triple between 2031 and 2035:

Extract from NESO recommending a total of £89 billion of network investment beyond 2030
NESO Figure 12: map of Great Britain showing the recommended network reinforcement options in the Beyond 2030 Update

Together with the current £64 billion programme, the total grid transformation by 2035 would cost £153 billion – and, knowing infrastructure projects, likely a hell of a lot more, as OFGEM have already conceded.

And there will be much more to come after the mid-2030s:

Extract from NESO: for recommendations of longer-term options where delivery is required after the mid-2030s, further development is still needed

Even after spending £153 billion, balancing costs will, according to NESO, still be around £4 to 5 billion a year.

But if you are thinking that is all, just think again!

When NESO talk of thermal constraint, they mean when electricity supply exceeds network limits, as, for instance, when Scotland is generating more wind power than the interconnectors can physically handle:

NESO explainer box: What are thermal constraint costs?

This the main problem at the moment. But in future, when we have perhaps tripled or quadrupled wind and solar capacity, there will be many days when there is more generation than there is demand.

In their Clean Power 2030 report a couple of years ago, NESO estimated by 2030 that 22 TWh would have to be curtailed for market reasons, not because of lack of network capacity:

NESO Clean Power 2030 table comparing counterfactual and Further Flex and Renewables scenarios in TWh, including 22 TWh of renewable curtailment and 14 TWh of electrolysis load

https://www.neso.energy/publications/clean-power-2030

Even that figure assumed that 14 TWh of surplus power could be diverted to electrolysis, which seems extremely unlikely. A further 61 TWh would have to be exported at huge losses, another highly unlikely scenario:

NESO Clean Power 2030 table of net exchange, imports and exports in TWh, showing net exports of 41 TWh and exports of 61 TWh under Further Flex and Renewables

In total then, a total of 97 TWh would be surplus to requirements in 2030, more than a third of generation from wind and solar.

Remember too that these are just the projections for 2030. Costs will steadily increase as more and more renewable capacity is added after 2030.

The cost of these actions is not included in NESO’s latest projections, but will certainly dwarf the cost of thermal constraints. Losses on exports alone will exceed £2 billion, based on NESO price assumptions.

We have, of course, been warned. NESO themselves told us in their Clean Power 2030 report that grid balancing and expansion would add £25/MWh by 2030 alone, about £8 billion a year:

NESO Table 4: costs in 2030 in the New Dispatch pathway compared to today's system, with curtailment, low-cost exports, storage and grid expansion adding a net £10/MWh
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2 Comments
strativarius
November 14, 2026 5:02 am

There is little point in adding more capacity. Adding n GW in more wind turbines when there is no wind still yields absolutely nothing at all.

But the real problem is the state of the public finances and the nosediving (0.7% growth is margin of error stuff) and deindustrialising economy. We’ve had 7 close calls this year compared to one last year. And winter is just beginning. Energy bills will go up ~27% in January just as the cold really bites.

But until the (ie other peoples’) money runs out they will do whatever it takes to stay true to the ideology…

On Friday 6 November, Britain’s electricity system operator spent consumers’ money like a gold digger who just got her hands on a billionaire’s Amex, paying very high prices for additional electricity imports, with interconnector auctions recording clearing prices above £2,500 /MWh. NESO also accepted offers in the Balancing Mechanism at prices approaching £1,000 /MWh. So why was NESO buying so much expensive electricity when there was apparently plenty of domestic generating capacity available? – Kathryn Porter (Watt Logic)

Similarly whatever needs to be spent on balancing will be spent. Using gas in the way they do is it any wonder gas is not as cheap as it, er, could be…

Gas power station paid £1.4m an hour to keep lights on as wind slumps
The alert comes amid a drop in the UK’s renewable energy supplies. – Telegraph

With net zero ideology all rhyme and reason go out of the triple glazed eco window.

the most reliable route to reducing the use of fossil fuels lies not with curtailing supply – blocking production – but with slashing demand. Or as Michael Jacobs, who served as the climate and energy adviser to Gordon Brown in Downing Street, told me this week: “We need to destroy the demand for oil and gas.” – Guardian

This is why energy is becoming a luxury item in Labour’s socialist dystopia – they are destroying demand through pricing and taxation.

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strativarius
November 14, 2026 5:11 am

Story tip: Old (Met Office) Habits Die Hard

Human-caused climate change could increase flood damage to commercial property in parts of Europe by as much as 800% over the next 30 years compared to the period 1990-2016, according to a recent paper published by the UK Met Office. The paper’s findings are aimed at pension fund investors so they can “better understand” the risks in a changing climate. In fact, the findings belong in clown land since they are all based on the assumptions fed into climate computer models known as RCP8.5. Earlier this year, RCP8.5 was declared “implausible” by a sub-committee of the Intergovernmental Panel on Climate Change (IPCC) that was preparing groundwork for a major new assessment report. – Daily Sceptic

This is no surprise to me as when I asked the Met Office how they would announce the demise of RCP8.5 they told me this in their answer….

Whilst SSP5-8.5 is now considered implausible, it is important to note that higher levels of warming still might be reached if some feedbacks in the climate system turn out to be stronger than current estimates, or there are additional feedbacks not included in typical climate model simulations. The plausibility of future scenarios also changes over time. We cannot rule out that scenarios currently considered implausible could become more likely again in the future. For instance, a widespread return to investment in very high fossil fuel use and back-tracking on current climate policies could increase the likelihood of higher emissions.

They haven’t and will not discard RCP8.5

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