Ofgem has announced £28 billion investment for a secure and resilient energy grid, and to upgrade and expand capacity to meet growing demands.
Energy network companies have been given the green light for multi-billion-pound funding to strengthen the stability, security and resilience of energy networks.
This investment will upgrade power and gas grids, creating a future-ready system that better shields customers from volatile energy bills, Ofgem said.
Most of the funding – £17.8 billion – will go towards maintaining Britain’s gas networks, with the remaining initial investment – £10.3 billion – on the electricity transmission network, improve reliability and expand capacity to support the electrification of the economy and drive growth, it said.
The investment will rise to an estimated £90 billion by 2031 across both gas and electricity networks. In total, £108 will be added to bills by 2031, which, longside maintaining grid resilience, the investment will “deliver significant savings of around £80 compared to not expanding the grid”, it added.
Electricity grid expansion alone is expected to reduce bills by £50 by 2031, through reliance on imported gas and the halting of constraint costs ensuring power flows efficiently from where it’s generated to where it’s needed, even at peak demand.
Overall the net increase in bills to cover all costs by 2031 will be around £30 or less than £3 per month with costs expected to fall further over time.
The approved investment will fund 80 transmission projects and associated works nationwide over the next five years. This will increase grid capacity through new power lines, substations and other technologies.
Jonathan Brearley, Ofgem CEO, said:
“The funding announced today will keep Britain’s energy network among the safest, most secure and resilient in the world. The investment will support the transition to new forms of energy and support new industrial customers to help drive economic growth and insulate us from volatile gas prices.
“But this is not investment at any price. Every pound must deliver value for consumers. Ofgem will hold network companies accountable for delivering on time and on budget, and we make no apologies for the efficiency challenge we’re setting as the industry scales up investment. We’ve built strong consumer protections into these contracts, meaning funds will only be released when needed and clawed back if not used. Households and businesses must get value for money, and we will ensure they do.”
Lawrence Slade, CEO, ENA, which represents the UK’s electricity network operators said:
“Ofgem’s announcements today are a significant point in our plans for delivering an electricity transmission network that will supply the clean, more affordable and secure energy the country needs for future growth. We will be working with Government, the regulator and our partners in the days and weeks ahead to understand the full details and impact of today’s announcements.
“Britain’s electricity transmission networks are now set to invest over £70 billion by 2031 to modernise the grid. Overall, electricity transmission network investment is expected to lead to around £50 of savings for bill payers by 2031.”
