Ofgem Approves Initial $32.72 Billion Investment Program to Upgrade Britain's Electricity Grid
Ofgem has approved an initial $32.72 billion investment program to enhance energy security while enabling the transmission of more clean energy from renewable sources.
An initial $12.14 billion investment is committed to Britain’s high-voltage electricity network, with a further $1.77 billion to power an expansion of the electricity grid. The draft settlement is the first step in an estimated $109.07 billion investment program boosting electricity network capacity, protecting UK households from the international gas markets causing deviations in energy bills in recent years.
The investment in the grid, expected to increase to around four times the current spending levels, will allow for 80 transmission projects and all associated works right across the country to be completed within five years. This will increase the grid’s capacity, through new power lines, substations and other technologies, to handle the flow of electricity from new renewable sources.
The projects will upgrade over 4,400 km of overhead lines and deliver 3,500 km of new circuits, including investments offshore, doubling the total build in the last 10 years. About 126 GW of clean power generation will be connected to the grid by 2030 with additional flexible storage and technologies, enough to power millions of households with clean energy.
The energy regulator has examined spending proposals from the electricity transmission owners to ensure they represent the best value for billpayers. The scrutiny has resulted in potential reductions of more than $10.91 billion, equivalent to around 26% of the initial proposals put forward.
This critical investment covering upgrade and expansion of the electricity grid, maintenance and also gas depreciation in its entirety is estimated to increase network charges on bills by $141.80 by 2031. This includes $100.88 for the electricity grid. Around $70.89, will be used to expand the capacity of the electricity grid to deal with the rising demands of a more electrified energy system.
The investment (100.88) is expected to lead to around $109.05 of savings for consumers by 2031 as compared to not investing by reducing constraint costs (money paid to wind farms to switch off because the grid is unable to transmit their power output) and making better use of clean renewable energy to not pay for gas plants to serve demand. Bills are expected to be around $40.90 lower than they would have been had this investment in upgrading and expanding the electricity network not been made.
The net cost of these investments on bills amounts to around $32.72 a year, or less than 40p per week, by March 2031, although this does not consider the overall benefits of reaching clean power that can reduce bills. The draft determinations are published for consultation with final decisions made by the end of 2025.