TNUoS reform
How Britain charges for its transmission network is changing. Here is what is at stake, who it affects, and why it is harder to get right than it sounds.
EnergyPolicy
The way Britain pays for its transmission network is one of the more arcane corners of energy policy — and one of the most consequential. Transmission Network Use of System (TNUoS) charges fund the high-voltage grid that carries electricity from generators to consumers. Get the charging structure right and you nudge investment and despatch in directions that make the system cheaper and cleaner. Get it wrong and you erect invisible barriers to exactly the capacity the country needs.
Right now, Ofgem thinks the current structure is getting it wrong. Reform is underway.
What TNUoS charges are
Every generator and large consumer connected to the transmission system pays a TNUoS charge — or receives a credit. The charges are set annually by National Grid ESO and collected by the Transmission Owners (National Grid ET, SP Transmission, SSEN Transmission). In total, they recover around £3–4 billion a year.
What makes TNUoS unusual is that it is locational. A wind farm in the north of Scotland faces a very different charge to a gas plant in the south of England. The logic is cost-reflectivity: generators that sit far from demand, or in areas where the grid is congested, impose higher infrastructure costs. The charges are meant to signal that.
In practice the system has accumulated layers of complexity — and, critics argue, produces signals that are increasingly misaligned with how the grid actually works.
Why reform is happening now
Several pressures are converging.
The generation mix has changed. TNUoS was designed in a world of large, dispatchable plants clustered near demand centres. The transition to renewables has inverted that geography. The best wind resource is in Scotland and the North Sea; the largest load centres remain in the south. As a result, the locational charges that were once a gentle corrective signal have become a significant cost headwind for exactly the generators the system needs most.
The current methodology is opaque. The transport model that underlies the charges — based on a “tranche sensitivity” approach — is notoriously difficult to interpret. Generators struggle to predict their charges more than a year ahead, which complicates investment cases.
Interconnectors and storage have changed the picture. The original framework was built around generators and demand. It has been patched to accommodate batteries, interconnectors and DSR, but the patches show.
Ofgem’s Access and Forward-Looking Charges Significant Code Review (Access SCR) has been examining these issues since 2017. The Transmission Charging Methodology Review (TCMR) is the current vehicle for change.
The main proposals
[This section to be expanded — outline the key options Ofgem has consulted on, including zonal vs nodal pricing debates, residual charge reforms, changes to demand charges, and transitional arrangements.]
Who it affects and how
[This section to be expanded — generators (especially Scottish wind), industrial consumers, suppliers, Transmission Owners, and the ESO. Include the distributional questions: who wins, who loses, over what timeframe.]
What good reform looks like
[This section to be expanded — the principles that should guide the design: cost-reflectivity, stability and predictability, non-distortion of efficient investment, proportionality of transition costs.]
The politics of getting it done
Transmission charging reform is technically complex and politically charged. Any rebalancing creates winners and losers, and the losers tend to be louder. Several previous reform attempts have stalled. What is different this time — and what are the risks of another delay?
[This section to be expanded.]
This article is in progress. Comments and corrections welcome.