(Bloomberg) -- British consumers are set to spend over £1.8 billion on payments to help manage the power grid in 2025 as maintenance limits how much renewable electricity can move from Scotland to cities in England this year.
The rising cost to balance the supply and demand of power represents a challenge to the British government as it seeks to rapidly ramp up the supply of wind energy and also bring down electricity bills for consumers. Even as the share of wind in the UK’s power mix rises, limits of the grid and the structure of Britain’s electricity market mean there are increasing costs to keep the lights on.
As the UK builds up more wind farms to help cut carbon emissions, there are are increasingly times when the power grid can’t handle all the generation. When that happens, the country’s grid operator often pays some wind farms to turn off and pays other power stations that are closer to demand centers, frequently ones that burn fossil fuels, to turn on.
Those so-called constraint payments are set to rise to more than £1.8 billion ($2.3 billion) in 2025, according to data from the National Energy System Operator. That’s up from some £1.5 billion in 2024, according to an estimate from FTI Consulting.
A spokesperson for NESO said the grid operator takes its role to deliver a safe, secure and reliable national electricity network at least cost to consumers, extremely seriously is and constantly looking for new ways to reduce costs.
Choke Points
This year will see some extra stress on the system due to maintenance and upgrades that are set to be carried out on parts of the power grid in Scotland. There will be outages across all three of the main choke points for “significant parts of 2025,” according to a presentation the grid operator made in December.
“If you have increasing wind generation in Scotland and there’s no one to consume it nor extra transmission to convey it elsewhere, then there will be more and more times with surplus generation,” said Jason Mann, senior managing director at FTI Consulting. “It means, as a country, that we pay an overall higher cost for electricity.”
Scotland boasts some of the windiest conditions in Europe. Along with relatively cheap land and low population compared to England, it’s a popular place to construct turbines to generate renewable electricity. But to be useful, that power must often be transported south. Outages on the Scottish grid exacerbate the already insufficient capacity of the power grid to transport green electricity when the wind is strongest.
The UK plans to build new power links from Scotland to England to help reduce the amount of green power that’s wasted every year. But under the government’s plans to decarbonize the grid by 2030, curtailment could quadruple as generation increases faster than grid expansion.
Another option under consideration to reduce the amount of wasted wind and cut costs is to move the market from a national system to a zonal one, with different power prices in different parts of the country that would better reflect physical limitations of the network. The government has said it’s actively considering that option and will make a decision later this year.
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