UK reveals plans to reduce costs associated with power constraints.

The UK government has released its updated national pricing (RNP) delivery plan, outlining measures to reduce network constraint costs and adjust signals that influence where new energy generation connects to the grid.

Constraint costs reached £1.34 billion ($1.8 billion) in 2024-25, as the grid operator Neso compensated generators for altering their output to alleviate grid congestion. Approximately two-thirds of this amount — about £910 million — was paid to gas-fired plants that increased output to compensate for curtailed wind generation. Neso warned that, without new interventions, these costs could peak around £7 billion in 2030-31 before declining as network capacity improves.

The government aims to reduce peak costs by up to £1 billion through the strategies outlined in the plan. Accelerating three major transmission projects — the Norwich to Tilbury connections and Sea-Link — from 2031 to 2030 could potentially save an additional £4 billion that year, according to Neso.

In the short term, all three transmission asset owners — SSE, SP, and National Grid — have committed to implementing dynamic line rating (DLR), which utilizes real-time weather and temperature data to assess actual line capacity. Neso projects that DLR could yield consumer savings of up to £400 million in 2030. The upgrades to Neso's control room for DLR will be completed in phases by 2027-28.

The RNP plan also proposes additional immediate measures to manage constraint costs before 2030. These include improved coordination of system access for maintenance and upgrades and exploring tools that enable Neso to operate proactively before gate closure to lessen the need for real-time balancing actions. The government is looking into better incentivizing battery storage assets to support the grid during constrained times, as some current practices contribute to worsening constraints.

A large-scale trial will provide consumers in constrained regions of Scotland and eastern England with access to cheaper or free electricity during surplus wind power generation, temporarily removing final consumption levies to make increasing demand more attractive than other balancing alternatives.

Regarding locational signals, the plan seeks consultation on reforms to the country's connections framework and transmission network use of system (TNUoS) charges to direct generation toward areas identified in the forthcoming strategic spatial energy plan. The government favors options that involve directive connections — which limit the number of projects that can connect based on technology and zone — either combined with stronger locational charging or on their own.

One proposal under examination would adjust TNUoS charges to reflect the future planned network instead of the current one, providing investors with earlier indicators on available grid capacity — although the government acknowledged this could complicate modeling significantly.

The government does not plan to alter existing connection offers or retroactively change contracts for difference or capacity market agreements that have already been issued. Final decisions on integrating the siting levers are expected later this year, with the consultation closing on June 2.