Network charges can be one of the most complex and underestimated aspects of a project’s financial case.
Transmission Network Use of System (TNUoS), Distribution Use of System (DUoS), and Balancing Services Use of System (BSUoS) charges directly affect both operating costs and revenues for developers, investors, and large energy users. With charging methodologies regularly updated through industry modifications, assumptions made at project design stage can quickly become outdated.
At Blake Clough Consulting, we support developers and investors by providing clear, data-driven insight into network charge exposure. Our work helps project teams account for these costs in financial models, identify potential risks, and plan strategies to optimise project siting, timing, and operations.
What Are Network Charges?
- TNUoS applies at the transmission level, with locationally varying tariffs designed to reflect how projects use or reinforce the national grid. These charges can have a major impact on the bankability of transmission-connected generation, storage, or demand projects.
- DUoS applies at the distribution level, recovering the cost of operating local distribution networks. These charges vary by region, voltage, and time of use, affecting both demand customers and distribution-connected generators.
- BSUoS applies across the system, recovering the cost of balancing services that keep supply and demand matched in real time. Unlike TNUoS and DUoS, BSUoS is calculated daily based on actual system balancing costs and charged on a £/MWh basis. Rates can fluctuate significantly depending on system conditions and are now levied only on demand.
- Line Loss Factors (LLFs) and Transmission Loss Modifiers (TLM), the “hidden” network charges:
- LLFs are distribution-level multipliers that adjust metered volumes to reflect electrical losses on the local network between the point of connection and the grid supply point. They vary by DNO region, voltage level, and (for demand) time band, meaning the same physical MWh can be “grossed up” or “discounted” for settlement and charging purposes. For generators, LLFs typically reduce credited volumes (since some energy is lost before reaching the wider system); for demand, they increase charged volumes.
- TLMs are transmission-level multipliers applied in settlement to account for real-time losses on the national transmission system. They are calculated half-hourly and applied to all imports/exports at transmission boundary points. When the system is net importing (transmission losses increase with demand), TLMs are usually >1, scaling up demand volumes and scaling down generation volumes; when net exporting, TLMs can be <1. This affects the final settled MWh and therefore the effective revenue/cost for parties exposed to wholesale or imbalance settlement.
For developers, these charges influence siting, PPAs, and dispatch strategies. For investors, they are a critical part of assessing long-term project viability and risk.
Our Network Charges Services
We provide independent, technically robust assessments of network charge exposure, tailored to your project or portfolio. Our services include:
- Tariff Impact Assessments: Using NESO-published TNUoS forecasts, DNO DUoS tariffs, and ESO BSUoS forecasts, we project charge exposure under different usage and export profiles. We also identify the applicable LLFs and TLM arrangements for your connection point and quantify their impact on settled imports/exports and revenues/costs.
- Scenario Modelling: We evaluate the potential impact of upcoming industry modifications (e.g. CMP changes for TNUoS, banding adjustments for DUoS, reforms to BSUoS charging) on your projects. This includes assessing likely future movements in LLFs (e.g., DNO methodology updates, LV/HV loss boundary changes) and TLM volatility drivers as the system decarbonises.
- Portfolio Reviews: We benchmark network charges across multiple sites to identify relative risks, opportunities, and locational advantages.
- Financial Model Integration: We deliver charge forecasts in formats that can be directly integrated into project financial models, helping to de-risk investment decisions.
Why It Matters
Network charges can materially influence project bankability. For example:
- A battery storage project may face high import DUoS costs during peak bands, but also gain credits for exporting at critical times.
- A transmission-connected data centre may see significant swings in TNUoS liability depending on locational methodology changes, and where BSUoS payments impact the commercial case for the site.
- A Scottish transmission-connected solar farm might see significant variance in commercial viability based on upcoming TNUoS reforms, and have higher TLMs compared to a project in England and Wales.
- A wind farm PPA price may need to reflect avoided DUoS, LLF, and TLM charges in a private wire arrangement.By understanding these dynamics early, developers and investors can avoid costly surprises, unlock additional value, and make more informed siting and design decisions.
By understanding these dynamics early, developers and investors can avoid costly surprises, unlock additional value, and make more informed siting and design decisions.