With April 2026 potentially delivering a substantial increase in 3rd party Transmission Network Use of System (TNUoS) charges, what exactly are UK consumers going to be getting for their money? We delve into the current limitations of the UK’s electricity transmission infrastructure/network, and what ‘The Great Grid Upgrade’ project will be delivering as a solution.
What are Transmission Network Use of System (TNUoS) Charges?
Transmission Network Use of System charges - are collected to cover the operation of the high-voltage electricity transmission grid in Great Britain, and are recovered by both electricity suppliers and generators. The Transmission Network carries electricity from power stations to local distribution networks operated by various Distribution Network Operators (DNOs) - please also see NUS Consulting Group’s latest update on Distribution Use of System (DUoS) charges. TNUoS funds the costs incurred by National Grid, SSEN Transmission and SP Energy Networks – the transmission network owners for England & Wales, Northern Scotland and Southern Scotland respectively – in relation to installation, maintenance, and upgrades of their systems.
TNUoS charges are a component of most commercial/I&C electricity invoices, and vary by geographical region. A large proportion of the overall charge is recovered via a Fixed Standing Charges, but Demand-based charges – or kWh unit-based rates for non-half-hourly supplies - are also applicable (mainly in the Southern half of the UK).
Electricity suppliers are charged by the National Energy System Operator (NESO), and these costs are then passed through to the end consumer. In the case of generators, they will either be charged on the basis of the load they put on the network or paid a credit to encourage them to supply more power.
Whilst the charge/credit make-up can vary widely, generators located in regions with low demand usually face charges. This increased generation cost is naturally passed on to the end consumer.
TNUoS charges form a significant part of a consumer’s electricity bill, and like most 3rd party non-commodity costs, there have been substantial increases in recent years. For further information, see our previously published articles: Rising Transmission Network Use of System (TNUoS) Charges and Ofgem RIIO-3 Draft Determinations Overview.
Is the existing Transmission Network still ‘fit for purpose’?
The simple answer to this question is undoubtedly ‘no’. The current network was never designed for the level of decentralised renewable generation sources the UK Government are looking to connect over the short-to-medium term. Not only is the connection of these facilities an issue, but the lack of ‘inertia’ from these assets – given that they’re not stable baseload generators – makes maintaining a 50 Hz supply problematic.
As such, ‘smoothing’ technologies such as battery storage are going to play a major role moving forward.
Furthermore, the UK’s electrical demands are increasing substantially, with Artificial Intelligence (AI) services, the ‘electrification’ of heat sources and the ever-increasing adoption of Electric Vehicles (EVs) providing a strain on existing infrastructure. In many places, the grid simply cannot cope with this required increase in volume, and the transmission of power from often remote generation regions such as Scotland to areas of high load, such as the Midlands and the South, just exacerbates these issues.
Even if we ignore the dramatic changes in both UK demand and the way electricity is now being generated, there’s no getting away from the fact that many of the existing lines, pylons and sub-stations are now decades old, highly inefficient and becoming ever more costly to maintain.
The Great Grid Upgrade
The upcoming dramatic increase in TNUoS charges is paving the way for The Great Grid Upgrade (GGU). This is a monumental infrastructure project led by National Grid Electricity Transmission and incorporating a number of other network owners. The National Grid themselves are referring to it as ‘the largest overhaul of the network in generations’, and those who listen to commercial radio in the UK will have possibly heard the ‘public service’ announcements over the past couple of weeks raising awareness – presumably for the residential consumers who represent almost 30% of the total grid offtake – of these imminent developments.
The backbone of the GGU comprises of 17 different infrastructure projects covering the upgrade of onshore power lines, offshore & undersea links, converter stations and local sub-stations. Over the next five (5) years, it is planned that some 4,400 km of overhead power lines will be upgraded/replaced, along with the installation of around 3,500 km of new/additional underground cabling. Shaping the GGU strategy is the desire by the UK Government to connect an additional 50 GW of offshore wind generation to the grid by 2030.
Studies also suggest that, as a by-product, this modernisation of the transmission network will contribute around £14.5 billion annually to Gross Domestic Product (GDP) and support circa 55,000 UK jobs between now and 2035.
But at what cost?
Some sources estimate that the total cost of the programme could eventually outturn somewhere in the region of £80 billion. Whilst OFGEM having recently earmarked an initial investment fund of £24.2 billion over the next six (6) years, around 60% of this amount is actually being ring-fenced for the updating of gas transportation & distribution infrastructure as opposed to the electricity network.
National Grid themselves are looking to fund £35 billion over the same six (6) year period. Of this, around £11 billion will cover the renewal/upgrade of existing infrastructure, whilst the remaining will finance ‘new projects’. Naturally, these costs will be recovered from consumers – both residential as well as Industrial & Commercial (I&C) – via the Transmission Network Use of System Charge. Depending upon geographical region and connection type, TNUoS currently accounts for around 10% of overall delivered cost to I&C energy users.
Industry estimates of a possible 80% uplift in TUoS vs 2025/2026 rates are a very distinct possibility, and for this reason, we await publication of the April 2026 charges – expected by 31 January 2026 latest – with bated breath. Over the longer term, it is hoped that security of supply and cheaper renewables (vs generation via imported gas) will result in lower wholesale electricity costs, partially offsetting the increase in non-commodities required to fund this truly monumental network modernisation plan.
If you’re a client and would like to understand how NUS can support in optimising your non-commodity charges, please contact your Consultant. If you’re an Organisation looking for support and would like to speak to NUS Consulting Group, please contact us.