NESO warns cost of managing grid bottlenecks could double in 2027

The cost of managing bottlenecks on Britain’s electricity transmission network could be about to get much worse, according to new projections from the National Energy System Operator (NESO). 

In its 2026 Thermal Constraints Update, NESO estimates that these costs could reach £3.9 billion in 2027, up from approximately £2 billion in the 2025/26 financial year. That means the cost will almost double in just one year. 

It’s not entirely surprising either. That’s because NESO is having to increasingly turn to gas power stations to plug gaps in the network, at a time when gas prices have hit record highs due to the conflict in Iran and the ongoing war in Ukraine. 

So, what’s happening? Well, NESO is forced to pay these costs when the transmission network is unable to carry all the electricity being generated from one part of the country to another. For example, wind farms in Scotland may be able to generate more than enough electricity to plug shortfalls, but there might not be enough network capacity to transport it elsewhere in the network that actually needs it. 

That means NESO has to source that shortfall from other generators – such as gas-fired power stations, and with rising gas prices, that isn’t exactly cheap. 

But it’s not just the cost of gas that could lead to the doubling of costs next year. In fact, the work needed to remove these bottlenecks is itself temporarily making them more expensive to manage. That’s because when transmission operators upgrade existing infrastructure, they may need to take parts of the network out of service. This reduces the amount of electricity the remaining network can carry, potentially forcing NESO to intervene more frequently.

NESO estimates that 2027 constraint costs would be 16% lower without planned network outages, although many of those outages are necessary to deliver the upgrades intended to reduce costs in the longer term.

That’s why it’s more important than ever for network operators to deliver new transmission infrastructure on time. Major projects, including National Grid's planned reinforcement between South Yorkshire and the East Midlands, are intended to increase network capacity and reduce congestion.

Making better use of existing power lines

While new transmission infrastructure remains the main long-term solution, NESO believes more can be done with the network already in place.

One option is dynamic line rating, which uses actual or forecast conditions, including the weather, to determine how much electricity an overhead line can safely carry.

For example, cooler temperatures and stronger winds can allow a line to carry more electricity without overheating, potentially increasing capacity without installing additional infrastructure.

NESO estimates that wider use of this technology could save £800 million-£1 billion cumulatively between 2026 and 2030, depending on how much additional capacity can be made available.

The system operator says it has already saved around £430 million in constraint costs during 2025/26 through operational improvements and other measures to make better use of existing infrastructure.

Nevertheless, NESO maintains that delivering new transmission capacity remains the most important way to reduce constraint costs over the longer term.

It is now working with Ofgem on further analysis that will take account of updated generation connection plans and transmission project delivery schedules, with new findings expected in early 2027.