Millions of UK households face a new £104-a-year charge on their energy bills to help end the waste of wind power. Billions of pounds will have to be spent on upgrading Britain's electricity grid so that more power generated by wind farms can be transported to homes and businesses. The investment is expected to add around £104 a year to household bills by 2030-31 through higher network charges.
Households expected to be £30 better off
But the National Audit Office (NAO) says households should typically be around £30 a year better off overall, because the upgrades will help prevent huge sums being wasted when the grid cannot cope with renewable electricity. This is because it will avoid having to pay wind farms to shut down, so wasting power, while at the same time paying gas fired power stations closer to homes and businesses in the south to fire up.
The NAO is an independent public spending watchdog which scrutinises how the Government uses taxpayers' money. It is independent of Government and reports directly to Parliament, rather than ministers.
Constraint costs could soar
At present, when there is too much wind power in one part of the country and the grid cannot carry it to where it is needed, the National Energy System Operator (NESO) can pay wind farms to switch off. At the same time, gas-fired power stations may have to be paid to fire up elsewhere to keep the lights on. These payments, known as constraint costs, ultimately feed through to consumers' bills.
The NAO said they reached £1.9billion in 2025-26 and could soar to £7.8billion a year by 2030 without action. The watchdog says around £70billion of investment in the electricity transmission grid is required between 2025 and 2031.
Ofgem estimates that this investment will increase the network charges paid by consumers by around £60 a year by 2030, while saving them around £30 overall compared with allowing constraint costs to rise.
Delays threaten delivery
The figures underpin a crucial point: the £104 is not simply a new charge with no benefit to households. Instead, consumers will pay more towards upgrading the network, but should avoid even bigger costs caused by an electricity system that cannot move cheap renewable power to where it is needed. However, the NAO has warned that the programme faces serious delays.
Of the 80 grid projects identified by NESO as necessary in its advice on achieving clean power by 2030, 64 are currently under way. Most remain at an early stage and are not expected to be connected by the dates originally identified as optimal for reducing constraint costs. The NAO also found that eight projects could be accelerated to reduce constraint costs, while three need to be accelerated to help meet the Government's Clean Power 2030 target. But there has so far been no significant acceleration of any of these projects.
The watchdog warned that failure to deliver the upgrades could leave households facing higher bills while also damaging economic growth. Gareth Davies, head of the NAO, said: “Value for money now depends on delivery. Failure to implement these necessary grid upgrades will hamper economic growth as well as increase consumer bills.”
The report also raises concerns about the ability of the Government, Ofgem and NESO to work together effectively. The Department for Energy Security and Net Zero sets energy policy, NESO recommends grid upgrades and Ofgem regulates and approves investment. Three private transmission companies own and manage the electricity transmission network and are responsible for delivering the projects.
The NAO said the sheer scale and speed of the planned work would test systems that were not designed to handle activity on this scale. It also warned that a lack of grid capacity is already affecting businesses waiting to connect to the network. The proportion of projects receiving a connection offer for the date they wanted fell from 64 per cent in 2019-20 to just 16 per cent in 2023-24.
The Government, Ofgem and NESO have begun tackling problems including planning delays, shortages of skilled workers and supply-chain constraints. But the NAO said they need to strengthen oversight, improve transparency around the costs and progress of individual projects and decide what should happen to new generation projects due to connect before the grid is ready.
