The Electricity System Operator (ESO) outlined its Beyond 2030 report in March 2024, setting out network recommendations for investment in the electricity transmission network into the 2030s1. The report was described in the ESO's first Annual Balancing Cost Report, published in May 2024, which covers the financial year 2023/241.
The ESO said the recommendations are intended to support a fully net zero carbon grid by 2035, and that network optimisation is the most impactful lever available to minimise balancing costs as the energy transition progresses1. It noted that new network can take up to 14 years to build, far longer than connecting a new renewable generation source, resulting in a lag between new generation connecting and the infrastructure to transmit that energy coming online1.
"in March this year, we outlined our Beyond 2030 report, setting out network recommendations for network investment into the 2030s."
The report also set out the scale of current balancing costs. Overall balancing costs were £2.4 bn in 2023/24, down from £4.1 bn in 2022/23, while net balancing volumes fell to 10.8 TWh from a 2020/21 peak of 21.4 TWh1. Thermal constraint costs were the most significant component, contributing 40% of balancing costs in 2023/24 compared with 36% in 2022/231. Reserve costs fell, with reserve volumes down from 5.7 TWh in 2022/23 to 4.8 TWh in 2023/241.
The ESO said balancing costs are projected to rise out to 2030, with constraints the main driver as up to 80 GW of generation connects by 2030 in its most ambitious decarbonisation scenario1. It said its initiatives create savings worth around £18 bn before 20301. In 2023/24, Balancing Services Use of System (BSUoS) charges contributed to about 4% of electricity bills for an average domestic consumer, which the ESO put at about £4 a month on a typical domestic electricity bill1.
| Measure | 2022/23 | 2023/24 |
|---|---|---|
| Total balancing costs | £4.1 bn | £2.4 bn |
| Net balancing volumes | not given | 10.8 TWh |
| Thermal constraint share of balancing costs | 36% | 40% |
| Reserve volumes | 5.7 TWh | 4.8 TWh |
Why it matters for households
Balancing costs are recovered through BSUoS charges, which the ESO said made up roughly 4% of an average domestic electricity bill in 2023/24, about £4 a month1. The report states that balancing costs are projected to rise out to 2030, driven mainly by thermal constraints as the generation mix changes and more capacity connects ahead of the network needed to carry it1. The Beyond 2030 recommendations are aimed at the transmission build that would relieve those constraints, but the ESO notes new network can take up to 14 years to construct1. The report also states that balancing costs are one of many components making up energy bills, and that integrating more renewables is often linked to reductions in the wholesale cost of energy1. It focuses only on costs related to balancing the electricity system1.
What happens next
The ESO said it will continue to work with Ofgem, Government and industry to realise savings and identify further opportunities to minimise balancing costs1. It cited the Government's Transmission Acceleration Action Plan and the Review of Electricity Market Arrangements, with the second REMA consultation published on 12 March 2024, as containing measures that could bring balancing costs down further1. The report states that balancing costs are predicted to rise until 20301. No further dated milestones for the Beyond 2030 report itself are given in the material.
Sources1 cited
- PowerPoint Presentation, neso.energy