Skip to main contentThe UK’s energy regulator Ofgem has this morning approved over £28bn worth of investment in the country’s energy infrastructure.
The aim is to harness more renewable electricity generation, supporting economic growth and providing greater protection from any future gas price shocks, such as occurred in 2022 following Russia’s invasion of Ukraine. £17.8bn of the investment is planned to be spent on upgrades to the gas transmission and distribution networks over five years from 2026. An additional £10.3bn is to be spent rewiring the country’s high-voltage electricity network, marking the biggest expansion of the grid since the 1960s.
The first phase of the planned £80bn upgrade will see more than 80 projects funded, which include new high-voltage power cables, upgrades to the existing overhead wire network, and an upgrade of the power grid to meet the increasing demands from AI data centres and electric vehicle charging points. By promoting new renewable generation sources, the transmission upgrade plan is designed to meet the government’s aims to become a green energy superpower by the end of the decade.
Household bills are expected to rise
The overall cost of the investment plans will be funded through additional levies on household energy bills and is expected to add approximately £108 to network charges by 2031. £48 of this will support upgrades to the gas network, and £60 will be invested in the electricity grid.
However, as part of their announcement, Ofgem has stated that the impact on customers will be mitigated by a saving of £80 each. This is compared to the scenario where the grid is not expanded, as a more robust and interconnected power grid will lead to significant reductions in constraint payments. As such, the regulator calculates the net overall increase in bills to cover all costs by 2031 as £30 per household.
Ofgem comments
Jonathan Brearley, the chief executive of Ofgem, said: “The funding announced today will keep Britain’s energy network among the safest, most secure and resilient in the world.
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.”
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