Navigating the uncertainty of Non-Energy Costs for Energy Consultants

In today’s complex energy industry the uncertainty surrounding non-energy costs such as Transmission Network Use of System (TNUoS) and Balancing Services Use of System (BSUoS) can be a challenge for businesses to manage.

These charges, while essential to maintaining a reliable and efficient electricity system, can cause uncertainty due to a variety of factors, leaving many unsure of how to plan and manage their energy budgets. 

Where does that leave you, the energy consultant?

In this latest TalkPower blog, we’ll break down the key insights and information you need to know, so you can best advise your customers. 

Looking Ahead to Non-Energy Costs in 2025: Understanding BSUoS and TNUoS

As we look ahead to 2025, your businesses are facing a crucial turning point when it comes to understanding and managing non-energy costs. 

Energy Consultants will have an advantage over others when they are equipped with the knowledge of what BSUoS and TNUoS mean for businesses, and how we can expect these charges to evolve by the end of 2025.

Balancing Services Use of System (BSUoS) and the Transmission Network Use of System (TNUoS) charges are levied to ensure the stability, reliability and efficiency of the national grid have become an area of increasing attention due to their potential fluctuations and the uncertainties of the future. 

BSUoS: Balancing Services Use of System Charges – What an Energy Consultant should know:

BSUoS charges are designed to cover the cost of balancing supply and demand on the electricity grid in real time. These charges reflect the cost of managing the system’s reliability and ensuring that the supply of electricity remains constant, even when there are sudden fluctuations in demand or generation. These fluctuations can occur due to unexpected changes in renewable energy generation, weather events, or other factors that affect the grid's stability.

Over the past few years, BSUoS costs have been relatively volatile, driven by factors such as the growing share of intermittent renewable energy sources (like wind and solar) and the increasing need for more frequent balancing actions. Looking ahead to 2025, there is a growing expectation that BSUoS charges may remain uncertain or even rise.

BSUoS and NESO – How you can advise your customers 

In December 2024, NESO published the final Winter 2025 tariff (for October 2025 to March 2026) at £15.69/MWh. This is a significant increase from the draft tariff of £11.99/MWh published in June 2024, although it aligns closely with the pricing of our Peace of Mind (PoM) product.

Several factors contributed to the £550 million increase in NESO’s total cost forecast for Winter 2025, from the draft to the final tariff:

• £200 million rise in balancing costs, mainly due to higher expected constraint costs and increased wholesale prices.
• £100 million increase in internal costs, driven by funding for new projects and a larger workforce.
• £250 million change in over/under-recovery treatment, with NESO initially forecasting an £86 million over-recovery from previous seasons in the draft tariff. However, the final tariff now reflects an under-recovery of £164 million.

NESO forecasts they will have over-recovered £224 million by the end of Winter 2024. But by the end of Summer 2025, they now expect a cumulative under-recovery of £164 million, signalling an increased risk of reopening the S25 tariff, which was previously set at £10.74/MWh.

Although NESO has around £300 million in working capital to manage any under-recovery, they can reopen tariffs if there’s a risk of exceeding this amount.

TNUoS: Transmission Network Use of System Charges – What an energy consultant should know:

TNUoS charges, on the other hand, are designed to recover the costs associated with the transmission network infrastructure. These costs include the maintenance, upgrade, and expansion of the high-voltage transmission system that delivers electricity across the UK. TNUoS charges are typically higher in regions that are further from major power stations or that have a less developed transmission network.

New Price Control – RIIO-T3 

The new TNUoS price control period will begin from April 2026, running for five years. The initial view of required expenditure is significantly higher than for the current price control, however this is still subject to various approvals and changes. 

This expenditure will be recovered over the lifetime of related grid asset investments, with a lot of uncertainty over how much will be within the new price control period.

April 2026 and beyond 

TNUoS tariffs are expected to keep rising, but there is a lot of uncertainty about how much and how quickly. The draft investment plans from grid transmission system operators for the next five-year price control period are much higher than those for the current period. However, not all of this funding may be approved.

Even if the funding is approved, it might not impact bills as much in April 2026 as in later years. The cost will be spread out over time and include debt financing charges. The phasing of costs over the five years of the RIIO-T3 price control is uncertain, but it’s expected to lead to increases in bills. The transmission operators predict that, by the end of the next price control period, TNUoS tariffs could potentially double in real terms compared to current levels.

Conclusion

The future of non-energy costs, particularly BSUoS and TNUoS charges, is marked by uncertainty. While the transition to a greener, more sustainable energy system presents incredible opportunities, it also introduces challenges that businesses must be prepared to face. 

As an energy consultant, you are trusted with the knowledge and expertise to best advise your businesses and by understanding the factors that influence these costs and adopting proactive strategies, you can help the businesses you work with to better navigate the complex landscape ahead and ensure that their energy expenditures remain manageable in 2025 and beyond.

Energy Consultants - What to look out for next

NESO’s forecast in April, followed by OfGem’s draft decision in June / July. Following this NESO will publish their annual update of the 5-year tariff forecast by the end of August. 

EDF Business Solutions recently ran a webinar on Navigating Non-Energy Costs for Channel Partners, taking a deep dive into current non-energy costs, TNUoS rate updates and more. You can catch up on the webinar here. 

You can also sign up to our Monitor Report, a quarterly report produced by experts at EDF, keeping you informed on non-energy costs. Visit our Talk Power page for more information.