The Balancing Act (Part 3: Projections)

This is the third and final blog in our mini-series on balancing costs, looking at our latest projections for thermal constraint costs.

Costs are expected to remain high and rise towards 2030, before falling as major new network capacity comes online. That’s a similar story to our previous analyses. But there is considerable uncertainty around both the level and the timing. That’s why we’ve deliberately published a range of projections rather than a single number.

Crucially, there are things that can be done to limit the increase, in both the short-run and the long-run.

As a reminder, thermal constraints occur when the electricity grid can’t safely carry all the available power because the transmission lines are full. These costs make up around two-thirds of total balancing costs and have been growing (see blog 1). In 2025/26 thermal constraints were £2.0bn, though they’d have been higher without actions by NESO and our partners to contain them (see blog 2).

If you follow NESO’s regular data updates, you’ll know that balancing costs so far in 2026 are up on 2025. That partly reflects a higher volume of constraints, and particularly in recent months, higher gas prices making the replacement energy needed to manage them more expensive.

Our short-term forecast is for thermal constraint costs of £3.9bn in 2027, reflecting an expectation of continued high gas prices alongside significant network constraints. Network outages also continue to play an important role – these are needed to reinforce the network but we estimate 2027 thermal constraint costs would be 16% lower without them. That illustrates a tension in the transition: work to reduce constraints tomorrow can temporarily increase them today.

Further out uncertainty increases, so we consider a range based on our Future Energy Scenarios 2025. Importantly, these are scenarios, not predictions.

• The net zero pathways see costs rise sharply in 2030. The pathways assume generation is delivered broadly in line with the Clean Power 2030 goal, but that planned network reinforcements aren’t accelerated. They also assume high gas and carbon prices. Together, those assumptions produce 2030 thermal constraint costs of £6.8–7.7bn.
• That range is in line with NESO’s previous advice on the Government’s clean power target, where we anticipated thermal constraint costs of £6.6-7.8bn in a world where clean generation was delivered but the network was not accelerated alongside it.
• The slower progress pathway (‘Falling Behind’) sees a lower 2030 figure of £4.2bn. But note the assumptions! That lower peak isn’t just because there’s less wind, it also assumes lower gas and carbon prices, which mean the actions to manage the constraints are significantly cheaper.

Across all the pathways, constraint costs fall sharply in the early 2030s as significant new network capacity is delivered. If network capacity could be delivered earlier, this could reduce 2030 costs, as we highlighted in our Clean Power 2030 advice

In later years, costs could remain relatively flat or begin rising again. That depends on whether further changes in generation and demand are matched by sufficient network capacity, and on location as much as quantity.

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Accelerating network delivery remains the single biggest structural lever for reducing future thermal constraint costs. But it isn’t the only lever.

Our new report identifies 26 initiatives across strategic planning, markets, network utilisation and system operation. These are being developed by NESO, Govt and industry partners, including:

• Planning more strategically. The Strategic Spatial Energy Plan (SSEP) and Centralised Strategic Network Plan (CSNP) will help coordinate where generation, demand and network are developed, rather than planning each independently.
• Improving market and operational signals. Reformed National Pricing can provide more cost-reflective signals, influencing both where investment takes place and how the system responds to constraints in real time.
• Getting more from the network we already have. Dynamic Line Rating, Constraint Intertrip Services and better outage planning can increase effective network capacity before new transmission routes are delivered. Expanded Dynamic Line Rating alone is projected to save £0.8–1bn between 2026 and 2030.
• Unlocking more flexibility. The Demand Flexibility Service, Demand for Constraints and new Constraint Management Markets can give NESO more options for managing constraints and increase competition in providing those services.

Across all these actions, the target isn’t constraint costs alone. Our decisions aim to minimise overall system costs and, ultimately, energy bills for consumers.

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