Transmission costs: the need for greater transparency and strategic review

The new Government has expressed their commitment to focus on the cost of living. This comes at a time when we know many customers are already struggling to pay their bills, with prices potentially going up further ahead of the winter given continued geopolitical events impacting the wholesale price of energy. 

At EDF, we agree that it’s essential that we do all we can to keep bills as low as possible, as well as reducing the price gap between electricity and gas to encourage electrification. The Government's decision to remove VAT from electricity bills is a welcome step in that direction that will offer some immediate help to households this winter. 

But there is clearly a need to take further steps to reduce the cost of electricity more widely, and avoid locking in future price rises for households and businesses across the country. GB has amongst the highest electricity costs in the developed world, impacting households and businesses and acting as a drag on the economy.

In this blog we set out the issues, why we are calling for a radical increase in transparency, and the case for a strategic review of upcoming large transmission projects.  

We agree with the need to invest in the network to connect new generation, address existing bottlenecks, and thereby minimise overall system costs. Part of this is also making up for investment that should have been done in previous decades to modernise the grid. The key is to ensure we are getting the balance right between minimising constraint costs and avoid building a transmission network that comes at a higher cost to the consumer than the savings it will generate by making the whole system more efficient. 

While striving to deliver value for money in all investments across the sector is always important, this is particularly difficult to do at a point where the costs of that investment are changing. As the pace of network build increases, we are now seeing costs for individual projects rise significantly. There is currently very limited information available publicly to assess whether the programme of investment that is being pursued remains the right one in this context.  

In 2026 alone, Ofgem has already approved funding for at least 21³ different projects, with several more under consultation at the time of this blog. We are unable to assess the total funding allowed in these decisions as the actual costs have not been published. 

Recent publications by NESO, such as the ‘Beyond 2030’ and ‘Beyond 2030 refresh’, suggest further network expansion will be required to account for additional renewables growth, particularly for remote offshore wind in the North Sea. NESO has provided an estimate of £89bn for these further works.  

All of this represents an unprecedented level of investment and activity for the TOs, recovered ultimately through consumer bills. Despite this, there is very little information available publicly on project costs and progress. 

In combination, rising costs and slower than expected generation deployment may be changing the case for some of the investment already funded or due to be funded in the coming years by Ofgem.  

If we want to change direction, now is the last moment where this is possible without creating significant sunk costs, or delaying projects that are much-needed within the system. For example, only 3 of the 26 large transmission projects under Ofgem’s Accelerated Strategic Transmission Investment (ASTI) scheme⁶ have received full funding to-date. But decisions will be coming thick-and-fast, and more funding is due to be awarded over the coming months.

EDF strongly supports transmission investment where there is a well-evidenced benefit to consumers. There are clearly big opportunities to reduce the current and forecast high levels of constraint costs and to connect valuable new sources of well-placed low carbon generation, including to support our own nuclear and renewable projects. But getting the right balance is critical to ensure we minimise both the overall constraint cost and the build costs to consumers – and evidence suggests that the right balance may have shifted. 

It is impossible for any individual or company to make a proper assessment based on the limited amount of information available. There is no analysis or public data available to authoritatively understand:

• How the costs of individual transmission projects have changed over time;
• How the underlying need for transmission investment has changed; and
• Consequently, whether the ‘Pathway to 2030’ network remains the best approach.

NESO’s recent ‘Beyond 2030’ publications identified a further £89bn of transmission projects that could complete from 2031 onwards to support further new generation connections and network transfer capabilities. In the absence of an agreed SSEP, the drivers for this are clearly uncertain. 

Locking in a programme of further investment now, with the SSEP still due would be hard to justify to consumers who will pay the costs through their bills. 

We want to work with Ofgem and NESO to ensure consumer money is being spent well. Radically increasing transparency at this stage can pay dividends in providing reassurance that the right projects are being efficiently funded at the right time.