Ofgem has provisionally approved a landmark £24 billion investment package to upgrade Britain's energy infrastructure, strengthen energy security, and accelerate the transition to clean power.

The initial funding, announced on July 1, is part of a wider £80 billion programme that represents the most significant electricity grid expansion since the 1960s.

Over £15 billion of the funding is earmarked for the continued safe operation of the UK’s gas transmission and distribution networks. This will ensure secure and reliable gas supplies for homes and businesses nationwide.

In parallel, an initial £8.9 billion will be invested in the high-voltage electricity network, with an additional £1.3 billion ready to be deployed. These investments aim to support 80 transmission projects across the country, designed to improve capacity and handle the growing flow of renewable energy from wind, solar, and other clean sources.

-- Advertisement --

The planned upgrades will involve work on more than 4,400km of overhead lines and the creation of 3,500km of new circuits, including offshore developments. These upgrades will enable the grid to connect up to 126GW of clean energy by 2030—enough to power millions of homes, while also facilitating flexible storage technologies and reducing reliance on fossil fuel-powered generation.

Ofgem has scrutinised all proposals submitted by electricity transmission owners, National Gas, and gas distribution companies over the past six months. The regulator has made cost efficiency a priority, resulting in a reduction of more than £8 billion from the original spending plans.

The projects are intended to protect UK households from the price shocks seen in recent years due to dependence on volatile international gas markets. In total, the investment will slightly increase average network charges on consumer energy bills by £104 annually by 2031, £30 for gas and £74 for electricity. However, around £52 of the electricity-related investment is expected to deliver savings of up to £80 per household by reducing constraint costs and improving the efficiency of renewable power distribution. This would result in a net benefit of £30 per year to consumers.

Overall, the anticipated net cost to households from the upgrades is around £24 a year, or less than 40p per week, by March 2031, with potential for further reductions as the benefits of the investment become fully realised in the 2030s.

The gas network cost element would be required in all scenarios to maintain operational safety and resilience.

The draft determinations are now open for consultation with Ofgem set to confirm final decisions by the end of 2025.