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What are constraints payments?
It’s our job to keep the cost of running the system as low as possible, so we can keep energy bills down. One of the ways we do this is with constraint payments. 

When there are physical constraints on the network (ie the network cannot physically transfer the power from one region to another), we ask generators to reduce their output to maintain system stability and manage the flows on the network. 

Generators are then compensated via a constraint payment. The alternative is building more infrastructure at a significant cost, meaning higher bills for consumers. 

If we use the analogy of motorways, it’s like paying road users to temporarily stay put, instead of building more motorways which will rarely be used. 

Why do constraints happen? 

We also have a physical limit to the amount of power that can be transmitted through any piece of equipment. 

These limits are for safety reasons, to make sure that equipment doesn’t overheat or become overloaded. 

If a piece of equipment is reaching that safe capacity to carry energy, it can act like a bottleneck – we call it a ‘constraint’ – and we’ll need to take action. 

The generators which are the most economical to be running are often not in the same place as where the electricity is being consumed. For example, when it is very windy it would be cheaper to use that power than to run a gas power station. However, if all of that power is in the same place it might not be possible to actually move it all to where it is needed due to these constraints. 

In that case, either we need more infrastructure to move the power, or we need to change where the power is generated. In the example above, that would mean asking some wind generators in the north to turn down, and turning up gas generation in the south. As we are moving away from what the market has dispatched the ESO will incur costs to balance the location of the generation so that the system can be operated safely. 

It could happen, for example, if a high volume of wind power being generated in the north is trying to meet demand in the south of the country. The transmission system needs to be capable of handling the high flow throughout the route that power would take across the country – but in some cases it might meet a constraint. 

To alleviate any congested parts of the network, we might pay generators to vary their output and optimise the flow of electricity in that area of the grid. 

To date, these constraint payments have been the most cost-effective option to operate the electricity system securely. 

Managing future constraints 

As more onshore and offshore zero carbon generation connects to the system in the north and east of Britain, constraint costs (particularly for the movement of power from north to south) are likely to increase. 

Our recently published Network Options Assessment (NOA) identifies the network reinforcements that would be needed in the future to manage major constraint boundaries – but we’re already working together with industry on solutions to address the challenge. 

One way we’re doing this is through our constraint management pathfinder – one of a suite of pathfinder projects aiming to address key electricity system challenges. 

The constraint management pathfinder is collaborating with industry on solutions to reduce the impact of network constraints, minimise actions to reduce renewable generation and lower costs for the end consumer. 

Our plans are evolving, but we’re committed to working closely with colleagues across the energy industry to explore and develop options for managing constraints in the most effective way possible – both now and in the future.