Delays to £70bn of electricity grid upgrades risk raising consumer bills, the National Audit Office (NAO) has warned in a new report.
The watchdog said upgrades to the transmission network are necessary to accommodate rising renewable energy generation, but need to accelerate to avoid costs being passed onto consumers.
When the grid cannot carry enough electricity from where it is generated to where it is needed, the National Energy System Operator (NESO) intervenes to balance supply and demand – typically by paying wind farms to turn off and gas plants to turn on.
The NAO said these so-called constraint costs, which are ultimately recovered through consumers’ bills, totalled £1.9bn in 2025-26 and could rise to £7.8bn by 2030 without concerted action.
Ofgem has said £70bn of investment is required in the grid between 2025 and 2031. The regulator estimates this will add £60 to network charges paid by consumers by 2030, but save £30 overall compared with the constraint costs that would otherwise accrue if projects are not accelerated.
The NAO described the upgrade timetable as “very challenging”. Of 80 projects identified by NESO as necessary in its 2024 Clean Power advice, 64 are ongoing – most at an early stage of development and not on track to connect by the dates NESO said would be optimal for controlling constraint costs before 2030. Many also face significant risks to their forecast delivery dates.
NESO identified three projects requiring acceleration to meet the Clean Power 2030 target and a further eight where speeding up delivery would also reduce constraint costs. The NAO found no significant acceleration had taken place on any of these projects.
The report also raised concerns over how projects were selected, noting that most upgrades recommended by NESO were chosen because they were already in development, rather than through an integrated plan or whole-system appraisal. As a result, the NAO said, the government has not demonstrated that the projects represent the best way of meeting its objectives.
Three public bodies oversee the upgrades: the Department for Energy Security & Net Zero (DESNZ) sets energy policy, NESO recommends grid upgrades and Ofgem regulates investment, largely with a focus on reducing constraint costs. Three private companies, known as Transmission Owners, own and manage the grid and are responsible for delivering the upgrade projects.
The NAO also warned that the wider economy would suffer if grid capacity fails to meet growing demand for new connections. The proportion of projects offered a connection at the time requested 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 begun tackling blockages including planning, access, skills shortages and supply chains, and recommends the three organisations strengthen their oversight of the upgrades, improve transparency over cost and progress, and review options for new generation projects due to connect before the grid is ready.
Gareth Davies, 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.”
Image credit: Lisa-S/Shutterstock
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