The UK Grid is changing - how it will affect Scotland?
Gordon Morgan of the Common Weal Energy Working Group looks at upcoming changes to the way the UK is managing the electrical grid and how the UK Government’s choices will affect Scotland.
Labour were elected 20 months ago with the goal to decarbonise electricity by 2030 and to cut £300 off household energy bills. This was later refined to 95% decarbonisation by 2030, much like the previous government, and the energy bill cut became vaguer.
Even this modified goal seemed ambitious, as increasingly Scottish Wind has to stop producing due to transmission constraints and a creaking National Grid unable to cope with the energy volumes going from Scotland to England. Switching off turbines cost £343M in 2025 with additional costs of over £1,000M to supply the equivalent electricity from mainly gas in South England.
The measures taken to resolve this dilemma and get a workable plan for 2030 and then 2035 have been complex and had serious, often unanticipated, consequences for Scottish wind developers, communities and potentially the Scottish Government.
I outline below the events to date and what could be done.
Background
Electricity along with Gas, Rail and in England Water were privatised in the 1980s. Under the Scotland Act, the regulation and ownership of the Electricity supply is a reserved power and cannot be changed by the Scottish Parliament.
Labour have never committed to full renationalisation, instead relying on market mechanisms combined with regulation to keep the lights on. They have created one publicly owned company GB Energy which seems designed to help fund schemes rather than invest.
As wind became cheaper than coal, Scotland quickly shifted to mainly wind power and started exporting electricity to England. This accelerated when Cameron banned onshore windfarms in England.
The high price of gas triggered by the Ukraine war and a “legal” commitment to decarbonisation drove Labour’s general election commitment and a new team led by Ed Milliband took over DESNZ [i].
The composition of the energy market was fairly complex and was made more complicated under the Tories.[ii] One of Labour’s first tasks was to rationalise the Energy Agencies making NESO a government owned body tasked with mapping a route to decarbonise as quickly as possible.
Drawing up a Plan
NESO held meetings with the National Governments and energy companies throughout 2024 to identify the Grid enhancements required and to start to develop a Regional Strategic Energy Plan (RESP)[iii] This also involved altering the Planning process for strategic developments.
In December 2024 a full 2030 plan[iv] was drawn up to meet 2035 demand across GB when more electricity was required due to EV cars and “greener” industries.
Most of 2025 was spent agreeing how to develop the RESP, with it being agreed by the Scottish Government in May 2025 that there should be one RESP area in Scotland[v]. As far as we are aware this Scottish Strategic Planning body has not met so far.
The electricity transmission companies consulted the public on the routes required for expanding the grid and drew up a business plan. Their plans were agreed by the Government in the last few weeks[vi]. Scottish Power plan to spend £10.6B and SSE £22B between now and 2031. Overall around £70B will be spent across GB. Other than at the margins, these plans and associated pylons and substations cannot be objected to further.
The Planning and Infrastructure Act 2025 - 18th December ‘25
This gave the Government, and NESO the powers to coordinate the RESP, which covers planning of energy, housing and strategic industry. It also gives benefits to people living within 500 metres of cables and allows the prioritisation of grid connection amongst other things.
These powers have been taken from local authorities and the Scottish Government.
Market Reform Decision = Status Quo
In July 2025 came the decision on market reform. The choice after 2 years of debate, came down to between Zonal Pricing and All UK Pricing.
Zonal pricing would set the half hourly electricity price separately in each of 14 zones every half hour, with Scotland split into 2 zones reflecting transmission companies. Scotland could have expected cheaper electricity for 10 years from zonal pricing, London slightly higher prices. It would also have encouraged the use of batteries and reduced energy wastage. The Scottish Government could have used this time to encourage new industries to locate in Scotland.
Common Weal backed that zonal pricing scheme. Ed Milliband decided on 10th July 2025 to continue using a single GB price, claiming not to want “a postcode lottery” i.e. Zonal Pricing, which he had said in April he was considering. This followed intense lobbying from the London media and London Labour MPs.
Scottish electricity users particularly in Northern Scotland however, continue to pay more than London as distribution charges vary across the country – 9p a day plus 1.35p per kWh more. If a postcode lottery were truly to end the same rate would be charged.
There is meant to be a further review of “Market Reform”, however, no dates are set.
Consumer and Company Bills
It was also decided that network costs should be charged in full, to all households across GB at the same daily or unit rate. This means bills will rise to pay for new network cables before the benefits from reduced grid bottlenecks.
Although this charge remains for households, large companies objected that they were paying too much for electricity, so the largest 400 companies had their bills modified to reduce them. High Bills were causing a revolt from constituents and were exploited by Reform who blamed the high costs on renewables. Rachel Reeves had to take measures in her budget[vii] to take some costs onto the central government account in order to save £150 off bills.
Common Weal continues to argue that the core grid infrastructure costs should be added to National Debt and only charged to consumers, if at all, once the grid expansions have been made. Warm home discounts should not be added to other people’s bills and thus impoverish them. They should be added to general taxation as they are a welfare payment.
Similarly the Nuclear RAB levy which will be charged to bills for at least 10 years during construction, should be added to national debt and removed from bills. Electricity bills should only contain charges for the supply of electricity. Many people will be dead before new nuclear plants are operational.
Scotland has almost Enough Generation with Planning Approval for 2035
Throughout 2025 NESO reviewed its database of projects wanting connection to the grid. In December 2025, it came up with proposals for prioritising these according to local demand[viii].
The queue contained over 700GW of generation requests, more than 4 times the generation and storage capacity required across GB in 2030[ix].
Following a cull of those without planning permission, 16,129MW of new onshore generation or storage remain in the Scottish portion of the queue. A further 49,631MW were rejected (pending appeal).
Even after the cull, there are far more battery projects planned than the grid can handle, about three times too many. South Scotland, due to continuing grid constraints, will have most of its battery developments in the period up to 2030, very few thereafter.
A total of 5,824MW of Scottish onshore wind project remain in the new queue, a further 18,506MW were rejected. Scotland is estimated to already have enough onshore wind in development for 2035, it is unclear when or whether the projects still in the queue will be permitted to join the grid.
There are 3,769MW of Scottish Solar projects in the new queue, 4,355MW were rejected.
Across GB there are enough Nuclear projects in development to 2035. So talk of building more in Scotland is nonsense. Apart from being too expensive even for England, it is not needed in Scotland.
The new tRESP Next Stage in Strategic Planning
On 29th January 2026 NESO indicated[x] a further review of the total energy requirements between 2030 and 2035 would be carried out. This is expected to delay the access to grid dates being provided to projects.
On 30th January the Transitional RESP was released[xi]. This is the first attempt to map Electricity demand and supply across GB. The Scottish Government and Local Authorities need to feed into this plan, and prioritise the location and timing of new industries and generation[xii].
Contract Terms Disadvantage North Scotland
More offshore generation was required by 2030 following the relative failure of the last 2 contract rounds[xiii] under the Tories, CfD AR5 in 2023, which received no offshore bids and AR6 in 2024, where the largest wind contractor withdrew.
Faced with international competition and warnings, Labour delayed the AR7 contract, increased the allowed bid price and modified the rules to try and make it succeed. The contract terms for AR7 were extended to 20 years from 15 years.
There also were several changes to the formula used to calculate how much generators are charged for using the grid.
These rules had to be agreed prior to tenders being submitted. The last significant proposed change, to remove the “Locational Security Factor” which was set at 1.76, made by SSE which covers the North of Scotland. Common Weal supported this proposal however, it was rejected on 7th November[xiv]. This would have reduced the cost of connecting in North Scotland by over £10/KW.
The effect of rejecting this change was to significantly add costs to certain potential bids in effect disadvantaging them in bidding. Overall the formula continues to charge Scottish generators much more than the areas around London and the South East of England.
The transmission lines are being built on the basis of projected and approved generation, they can cope with higher capacity. If there is no generation actually commissioned, this adds to the overall cost of electricity. Yet we are told the wider charging costs will stay in force until 2031!
The contract results are a relief for the DESNZ less so for Scotland
CfD round 7 was split into groups, offshore and onshore with results announced on 14th January and 10th February. Overall 8.4GW of offshore wind and 6.2GW of mainly solar and onshore wind were successful[xv].
Scotland’s share was 1,300MW of offshore wind, 1,093MW of onshore wind and 331MW of Solar, 18.6% of the total. This was made up of 2 offshore and 21 onshore windfarms and 11 solar farms.
The strike price was around £92/MWh for offshore wind, £72.24/MWh for onshore wind and £65.23/MWh for solar. This was much less than had been feared, the bid limit was set at £113/MWh for offshore wind.
Overall the bidding process is being hailed as a success by DESNZ and puts Labour on course for its 2030 targets.
However, the process affected Scottish and English bidders differently particularly for offshore wind bidders.
Comparing Scottish and English Bids
The only successful Scottish bids were Berwick Bank (1300MW) and Pentland Floating Wind Farm (92.4MW).
We are unclear how many other bids were rejected or chose not to bid once the contract terms were finalised however, the press quoted anonymous complaints in December 2025 from rejected Scottish bids.
We calculate Berwick Bank (1300 MW), located in the Lothians and Borders zone and wholly owned by SSE, which was successful in AR7, will incur £12.3M in wider connection charges each year (£8.90/KW), estimated to be 2.5% of its potential revenue.
Two English Windfarms Dogger Bank, (3,000 MW) and Norfolk Vanguard West (3,090 MW) were also successful. They both had negative connection charges in other words they got a subsidy to locate there. Dogger Bank were “charged” minus £1.26/KW (£3.8M per annum) and Norfolk minus £1.07/KW (£3.1M per annum).
Why Orkney Has Paused its Development
West of Orkney Windfarm (2,000MW), in North Scotland, was the first Scotwind project to fully complete its approval and design process in July 2025, at a cost of around £100M.
It did not succeed in AR7 and has paused further applications until the connection charges are revised. Their project director claims transmission costs can in fact reach 30% of the total bid[xvi]. This includes costs of the cabling to the onshore substations. Its annual wider transmission charges would have been £54.3M per annum.
The latest tariffs[xvii] show that the North of Scotland had a wider connection tariff of £27.15/KW (per annum), compared to Lothian and Borders of £8.90/KW and the negative charges for Dogger Bank.
Had Berwick Bank been located in North Scotland its wider connection bills would have been £37.4M per annum, 7.7% of the potential revenue, and its bid would have been £4.64/MWh dearer than their successful bid of £89.49/MWh i.e. it would have bid £94.13/MWh.
Assuming the offshore connections and other networking costs were equal Dogger Bank could have bid £2.58/MWh less than Berwick and £7.22/MWh less than West of Orkney. Instead it was successful with a bid of £91.20/MWh, £1.71/MWh more than Berwick. Had it been located in North Scotland its bid would have been £98.42/MWh.
Although we do not know the precise bid submitted by West of Orkney (in £/MW), it was accepted as compliant which means it was less than the cap of £113/MWh and more than the top accepted bid of Dogger Bank of £91.20/MWh. Given the comments of the director we can presume a bid around £94/MWh entirely down to the difference in the wider connection charges. This also would have been the break even point for reducing bills[xviii]. The “strike price” was set at £91.20.
The pot could have been extended and the price raised to £94/MWh at little or no cost. Could it be that Scottish Wind and Scottish Islands are being deliberately prevented from winning a contract?
Scotwind Projects and GB Requirements
Prior to this CfD round Scotland had approved 10GW of offshore wind or which 4.3GW were operational. Berwick Bank (4.8GW in total) was the largest of the remaining.
Scotwind then issued leasings to 20 projects, including West of Orkney, amounting to a further potential 32.3GW[xix]. The largest floating wind project Campionwind (3,000MW) has now been cancelled by Shell. The fate of the remaining over 29GW is uncertain.
Three projects had completed planning, including West of Orkney. The other two, Berwick Bank and Pentland Floating were successful in the CfD contract.
According to the Clean Power Action Plan, GB had 14.8GW of offshore wind at the end of 2024, 4.3GW in Scotland, a further 16GW were committed or under construction, leaving a minimum of 12.2GW to reach the minimum of 43GW required by 2030, preferably 50GW. The cancellation of Hornsea 4 (2.4GW) increased the shortfall to 14.6GW.
After AR7 and assuming all contracts are delivered, between 6.2GW and 13GW must be contracted in the next round AR8 or by special arrangements.
We would hope the Scottish Parliament or the UK Energy Security and Net Zero Committee can look carefully at the costings of the West of Orkney bid and determine whether the wider connection charge, the arbitrary pot limit and the rejection of the bid can be justified.
It is difficult to see how the remaining Scotwind projects will be built under GB’s CfD schemes and wider connection charge regime! Perhaps Europe is the answer!
The North Sea Summit and New Community Energy Schemes
On 26th January 2026 Milliband signed the Hamburg Agreement to cooperate on Green Energy projects in the North Sea.xxThis built on a previous commitment to build 300GW of Wind Energy in the North Sea but added that 100GW of this should be joint venture and include Cross-border CfDs and strengthening the European Power Purchase Agreement (PPA) market[xxi].
Following this on 29th January Milliband established in Aberdeen a North Sea Future Board of experts[xxii] to implement the North Sea Futures Plan announced in the Budget[xxiii].
On 9th February Milliband announced £1B GB Energy funding for up to 1,000 new community energy schemes over 10 years[xxiv]. These schemes will be chosen with Scottish and Welsh government assistance.
Has Milliband seen the light or is an election imminent?
Lessons to be learned
The fall in solar prices, the opening up of onshore wind in England and a slight increase in cost for offshore wind have altered the cost effectiveness of wind off Scotland.
NESO has clearly decided that the amount of offshore wind required to meet English demands for electricity is best where possible delivered from England. This potentially undermines the future of the Scottish offshore wind sector and jobs.
There must be a wholesale review of network charges to companies and households as part of RESP and the wider market review.
However, Labour has probably already missed the chance to convince Scotland!
Scotland has already suffered the promise of Oil riches, then a just transition being snatched away as industries collapse. Is Cheap Green Energy also to be snatched away??
Clearly Milliband is worried that North Sea workers and indeed Scottish voters will see yet another false dawn being offered by English Labour.
He has missed several opportunities to partially rectify that with Zonal pricing, the Connection pricing changes and the contract limits. Do we need to give him another chance?
The Case for Independence
It is the case that we produce more wind energy than we need yet we have a colder climate and we pay the highest bills.
A proper plan for Scotland could build new industries, deliver cheap green power at home and would require skilled workers for the future.
Common Weal has a plan which could make it happen[xxv].
The SNP has an easy case to make that Scotland CAN build new industries and a wealthier Scotland with independence.
Notes and references
i DESNZ is the Department for Energy and Net Zero. Milliband installed Chris Stark as its Head of Mission for Clean Power. He had previously been the Scottish Government’s Director of Energy and Climate Change then CEO of the Committee on Climate Change.
ii Various Government agencies reporting to DESNZ are: NESO which controls the energy system day to day (formerly known as the National Grid) but now also responsible for Gas; Ofgem the Energy regulator which issues contracts and ensures fair competition; Low Carbon Contracts Company which administers the payments to and from contractors under the CfD schemes; ELEXON which runs the data stream between generators and energy suppliers. In addition, 4 private companies run the electricity transmission grid and 6 main companies sell energy across the country. Large energy companies have separate divisions covering generation, distribution, sales and in some cases transmission. These are ENTIRELY independent of each other albeit in the same group and contributing to group profits!
iii The last Scottish meeting was in August 2024 Local Electricity Network Coordination Group minutes: August 2024 – gov.scot. The Planning changes were agreed subject to consultation in December 2024 Electricity infrastructure consenting in Scotland (accessible webpage) - GOV.UK
iv Dec 2024 Clean Power 2030 Action Plan: A new era of clean electricity – main report - GOV.UK
v A Decision on the Regional Energy Strategic Plan Policy Framework 2nd April 2025 and Strategic Spatial Energy Plan Methodology approved 15th May 2025 by Secretary of State Milliband, with foreword by Gillian Martin MSP for Scottish Government.
vi SSENT ssent-riio-t3-business-plan.pdf and SPEN RIIO-T3 Business Plan Documents - SP Energy Networks
vii Budget 2025 document - GOV.UK
viii Other countries are facing similar problems e.g. Germany rather than prioritising is charging for grid connections New German Law Could Force Green Energy Developers to Fund Grid Links | OilPrice.com
ix Connections Reform Results | National Energy System Operator see also this pdf of results
x Letter 29th Jan ‘26 indicated 2 main reasons for delay. Updated background assumptions needed in some locations where the volume of projects at Gate 2 are higher than forecast. NESO has needed time to set up these new assumptions, and the network companies will now need time to rerun their studies going into the engineering phase of the programme. Offers development in some areas require additional time to ensure that construction planning assumptions are accurate.
xi The tRESP has been designed as a bridge between the current approach to energy distribution network planning and the full RESP approach which will be in place by end of 2028. Transitional Regional Energy Strategic Plan (tRESP) | National Energy System Operator
xii Final tRESP launch and next round of RESP Forums | National Energy System Operator Scottish 14th February 11am
xiii Contract rounds are for Contracts for Difference (CfD) for explanation of what they are meant to do see How Contracts for Difference deliver investment, skills and community benefits - Energy UK
xiv CMP432 papers 7th November 2025
xv Contract results announced 14th January and 10th February Contracts for Difference Allocation Round 7 results and 10th February Contracts for Difference (CfD) Allocation Round 7a: results background analysis Energy-UK-Explains-AR7-and-offshore-wind-results-Jan-2026.pdf
xvi Huge Orkney wind farm plans paused due to 'unfair' UK grid charges | The National “The biggest challenge to us in securing a CfD is the level of transmission charges imposed on projects in the north of Scotland, which tripled in September 2023”. Promise of ‘long-term benefits for Caithness’ fades as massive wind farm hits transmission cost roadblock
xvii Download NESO tariffs January 2026. These show connection tariffs (page 16) and offshore circuit costs for existing windfarms. The formula is outlined on page 11. It states the Locational Onshore Security Factor will remain unchanged at 1.75 until 2031. We argued it should be 1.0. See note VI above.
xviii Offshore wind target deliverable at no extra cost to consumers if AR7 budget is expanded, Aurora report shows
xixS cotWind leasing round sites and developers | Offshore Wind Scotland this list the sites. The largest of these Campionwind, a 3GW floating wind project run by Shell was relinquished in November. It is unclear whether there was any connection to the connection costs. The other contract linked with Shell, Marramwind (3GW), has been taken over by Scottish power which sought planning permission on 26th January. ScottishPower seeks offshore nod for 3-GW MarramWind floater | Offshore Wind News | Renewables Now see also Electricity Grid in Scotland | Offshore Wind Scotland for a map of planned network developments.
xx UK and Europe sign historic pact to drive clean energy future - GOV.UK 26th January 26
xxi Offshore Financing Framework for cross-border wind energy projects
xxii New North Sea board launched to drive a fair and prosperous transition - GOV.UK 29th January
xxiii North Sea Future Plan for fair, managed and prosperous transition - GOV.UK
xxiv Miliband pledges up to £1bn for community green energy schemes | Renewable energy | The Guardian
xxv How To Start a New Country: A Practical Guide for Scotland — Common Weal