Over summer 2026, a team at the National Audit Office conducted a review called Value for Money: Upgrading the Electricity Transmission Network. The review only looked at plans to spend over £70 billion up to 2030 and not the additional £89 billion proposed spend after 2030.
The team work closely with Department for Energy Security and Net Zero (DESNZ). The accompanying press release put a positive spin on the publication but, read in full, the report is scathing. It says:
DESNZ lacks a clear policy on how decisions about the scale, pace and location of generation should account for network capacity or constraint costs.
DESNZ produced a business case for the 10 ENP workstreams but not for the grid upgrades themselves. Few of its internal submissions it provided for our review acknowledged the scale of network investment required and none presented or evaluated alternative options for expanding capacity.
No options appraisal for alternatives to spending tens, or by some estimates, hundreds of billions of bill payers money.
Grid upgrades are funded through electricity bills rather than public expenditure and are not supported by a full business case, options appraisal, or assessment of overall value for money.
Instead, DESNZ has supported new renewable generation, NESO has recommended the grid upgrades needed to support it, and Ofgem has approved investment largely by reference to reducing constraint costs.
Most of the recommended grid upgrades were chosen because they were already in development. In the absence of an integrated spatial plan or whole-system appraisal, the government has not demonstrated that these projects represent the best way of achieving its objectives.
NAO found that current transmission capacity could be managed better:
UK Energy Research Centre found that system access on key Scotland-to-England routes meant lines operated at around 60% capacity on average in 2024.
Ofgem is supposed to represent consumer interests, but instead:
Ofgem has adapted its regulatory approach to support rapid expansion of the grid, reducing its emphasis on detailed scrutiny of construction costs. Ofgem’s historical approach was designed for a relatively stable asset base. It is now being applied to a period of unprecedented growth in network investment.
To try and save on constraint payments, Ofgem plans to let Transmission Owners like SP Energy Networks run amok with capital costs.
Focus on faster approvals over detailed scrutiny: The phased approach still requires Ofgem to scrutinise project costs and risks over time. Volatile prices and the bespoke nature of many projects reduce Ofgem’s ability to rely on benchmarks, requiring it to make broader judgements about whether Transmission Owners are managing and procuring projects efficiently.
This places greater demands on Ofgem’s capacity. However, any delays could increase constraint costs for consumers. It has therefore changed its risk appetite to prioritise faster funding decisions, where possible, over more detailed scrutiny of project costs and risks.
By 2028 there might possibly be a coherent plan for moving electricity around the country. But that would come behind Clean Power 2030/RIIO3 uncontrolled spending splurge.
The Strategic Spatial Energy Plan (SSEP): NESO will set out a long-term plan for the type, location and timing of energy infrastructure between 2030 and 2050. This is intended to differ from the current regime, where network upgrades respond to generation decisions by planning the whole energy system together. NESO plans to publish its plan in 2027, subject to approval by the Secretary of State for Energy Security and Net Zero. It then intends to publish a Centralised Strategic Network Plan (CSNP) in 2028 to set out the required grid infrastructure investment required to support the SSEP.
Having handed out contracts to hundreds of windfarms in Scotland, the Westminster government only now wonders how to get that intermittent electricity to consumers.
DESNZ views upgrading the electricity transmission network as necessary to support Clean Power 2030, longer-term net zero objectives, and economic growth. Its case for action arises largely from the need for the grid to catch up with the growth in renewable generation and limit rising constraint costs borne by consumers.
There’s already more intermittent energy capacity built and consented than the grid can handle. Responsible governments must not dole out any more contracts or planning consents to windfarms in Scotland.
Value for money now depends on delivery. Delivering all the grid upgrades by 2030 will be very challenging [& expensive]. There remain significant planning, supply chain and system access risks and some of the projects are already forecast for delivery after 2030. This means some new generation is likely to connect before necessary grid upgrades are complete. It is important to minimise this gap, as delays will increase project and constraint costs and postpone the benefit of achieving clean power.
[DESNZ, Ofgem and NESO should] review options for Clean Power 2030 generation projects expected to connect to the grid before sufficient network capacity is available. Connecting these projects may result in substantial constraint costs.
So far, Ofgem’s predictions for both constraint payments and transmission expansion costs have been not just wide of the mark, but inverse to reality:
‘Connect and Manage’ was designed to unblock new generation, but it also increased constraint costs in the short term. Ofgem expected these to be managed down with spatial planning and investment in the grid. In 2015, Ofgem found that ‘Connect and Manage’ had increased constraint costs from £69.4 million in the year to September 2014 to £121.7 million in the year to September 2015.
However, it forecast these costs would fall to zero by 2023-24, on the basis that planned reinforcement projects, including an East Coast subsea link, would be completed by then
The Clean Power 2030 plan to drive extra pylons through Lauderdale and the Borders to serve England won’t solve the problem of constraints costs. There is another secret plan coming for more of the same.
NESO estimates that constraint costs will then fall significantly between 2030 and 2035 if the upgrade to the grid is successful. However, further investment beyond 2031 is likely to be needed to reduce future constraint costs and accommodate increasing demand for electricity and further increases in renewable generation. DESNZ expects electricity demand to more than double as more of the economy electrifies, including transport, heating and industry. NESO recommended a total of £89 billion of network investment beyond 2030.
The expansion of pylons and substations could more than triple SP Energy Networks Regulated Asset Base, from which they cream off a tidy annual mark-up.
At the end of the RIIO-1 period in 2020-21, the Transmission Owners were managing assets with a regulatory value of £20.3 billion. This increased to £22.8 billion at the end of the RIIO-2 period in 2024-25. It is now expected to grow to £76.7 billion by the end of the RIIO-3 period in 2030-31 (all values in 2025-26 prices).
Net Zero provides a cover for rampant profiteering by companies like SP Energy Networks, at great cost to consumers and nature. The vast majority of constraint payments are caused by windfarms in Scotland. The solution is to stop consenting or building any more windfarms here.
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