Initial 2026-27 BSUoS forecast published; tariffs show summer peak costs
The National Energy System Operator (NESO) published its initial Balancing Services Use of System (BSUoS) forecasts for 2026 on 27 June:
- £14.55/MWh for summer 2026 - 35.5% higher than the equivalent tariff in 2025
- £11.03/MWh for winter 2026/27 - 29.7% lower than the tariff for this coming winter
Background
The BSUoS charge reflects the costs incurred by the National Grid in maintaining real-time system balance. They include the costs of asking generators or consumers to turn their consumption up or down in the Balancing Mechanism, plus the costs of a swathe of ancillary services. These services help to manage the system and offer a restart solution in the worst case scenario.
BSUoS costs are highly volatile and influenced by external factors such as wholesale electricity prices, weather conditions, and network outages and constraints. To reduce this volatility, a fixed BSUoS tariff mechanism was introduced in 2023 alongside a major structural change under code modification CMP308 Removal of BSUoS charges from generation. This meant that the responsibility for paying BSUoS charges shifted from both generation and demand to the demand-side only.
The 2026-27 tariff forecasts are the first published under two new code modifications: CMP408 and CMP415. The first significantly reduced the BSUoS notice period — the time between tariff publication and implementation — from nine months to three months, allowing more up-to-date data to be used in forecasts.
CMP415 was a consequential modification that extended the fixed price period from six months to one year, enabling longer fixed terms and greater predictability in cost recovery.
BSUoS tariff costs
The tariffs for 2026 are:
- Tariff 7 (April 2026 –September 2026), with an initial forecast of £14.55/MWh
- Tariff 8 (October 2026 – March 2027), currently forecast at £11.03/MWh
Forecast balancing costs are expected to be £1.38bn for Tariff 7 and £1.24bn for Tariff 8, which is unusual in that summer balancing costs are typically lower than those in the winter. The forecast is based on forward curves between 3 and 9 June.
Readers should note balancing costs remain the largest and most uncertain component. They’re driven by increased renewable penetration, the changing nature of the generation mix, geopolitical events (e.g. the war in Ukraine) and evolving market behaviours.
NESO internal costs are forecast at circa £420mn for both years. However, NESO expects – by the end of Tariff 6 – to have over-recovered £157mn and this will be used to offset costs. Demand forecasts are also slightly lower than those used in setting Tariffs 5 and 6.
Next steps
NESO will issue draft tariffs in September, and publish final tariffs in December; Tariff 7 will take effect from 1 April 2026. NESO is running a webinar on 10 July to explore its forecasts in more detail.
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