Ofgem Approves £28bn Energy Network Upgrade Project Impacting Household Bills
Ofgem has approved a £28 billion investment plan in the UK's energy networks to be implemented over the next five years. This upgrade is expected to add £108 to household energy bills by 2031. However, the investment is projected to deliver around £80 in household savings, resulting in a net increase of £28 in bills.
The £28 billion is part of an estimated £90 billion total investment planned for the energy networks by 2031. The funding includes adaptive mechanisms designed to protect consumers from market volatility, such as volatile gas prices experienced in 2022. Most of the investment will focus on maintaining gas networks, which remain crucial as the UK expands its green power capacity.
The plan aims to strengthen the resilience of the energy supply during the transition to renewable energy sources and shield households from potential gas price shocks. Consumer protections are integrated into the funding, with money released only when necessary and clawback provisions in place if funds are unused, ensuring value for money for households and businesses.
Jonathan Brearley, Ofgem's chief executive, highlighted the importance of maintaining the safety, security, and resilience of the energy network. He emphasized Ofgem's role in supporting the transition to new energy forms while insulating consumers from fluctuations in gas prices.
The Department for Energy Security and Net Zero noted that while government energy policies and network upgrades contribute to higher costs, the overall package will reduce costs starting in April. This includes a reduction of about £150 from the average energy bill and the expansion of the Warm Home Discount to over six million families.
