UK power grid’s £28bn upgrade approved to drive energy transition – business live

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Greenpeace is urging Ofgem to ensure energy customers are not hit with unnecessary bill increases.

Greenpeace UK’s senior climate advisor, Charlie Kronick, said:

“Britain’s energy grid is no longer fit for purpose. And without vital upgrades now our electricity system risks suffering a similar fate as our water network – much higher costs and underperformance further down the line.

“This money must be spent effectively, however, with robust safeguards and strong regulation to protect bill-payers, and ensure these upgrades deliver genuine value for money, offering fair but not excessive returns. We hope Ofgem have, and will continue to, strain every sinew in ensuring that new technologies of storage and flexible demand are adopted to minimise costly upgrades.

“Energy costs are a major pressure on households and businesses and, as we move to a cleaner energy system, prices must eventually come down. The government should be prepared to step in to ensure our energy system works for billpayers, not profits.”

DESNZ: essential to upgrade gas and electricity networks

The UK government has welcomed Ofgem’s decision to approve £28bn of new investment in the energy grid.

It says the spending is vital, after years of underinvestment in the energy system.

A Department for Energy Security and Net Zero spokesperson said:

“This government is taking action to bring down energy bills for families, with the Budget taking an average £150 of costs off bills in April, and expanding our £150 Warm Home Discount to over six million families.

“Upgrading our gas and electricity networks after years of underinvestment is essential to keep the lights on and ensure energy security for our country. Without these plans, which were first set out under the previous government, costs would spiral and our security would be compromised.

“The only way to bring down bills for good and get off the fossil fuel rollercoaster is with this government’s mission to deliver clean homegrown [energy] that we control.”

Introduction: £28bn energy upgrade gets green light

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Plans to spend £28bn to upgrade Great Britain’s electricity grid have been signed off, in a move that should improve the energy networks, speed the transition to new forms of energy…and increase household bills.

Energy regulator Ofgem has just announced that energy companies have been given approval to “strengthen the stability, security and resilience of our energy networks”. by upgrading the energy grid.

The majority of the spending – £17.8bn - announced today is to maintain Britain’s gas networks.

There’s also £10.3bn to improve the nation’s high-voltage electricity network – the biggest expansion of the grid since the 1960s.

In total, it’s around £24bn more than was provisionally signed off in the summer.

Ofgem says the investment is the most cost-effective way to harness clean power, support economic growth and protect the country from a repeat of the 2022 gas price shock.

Customers will see the impact on their bills, which will rise to cover the cost of the investment. The regulator says £108 will be added to bills by 2031; £48 for gas and £60 for electricity.

But it claims, the investing will actually save customers £80 each compared to a word where the grid is not expanded.

So overall, the net increase in bills to cover all costs by 2031 works out at £30.

Jonathan Brearley, Ofgem CEO, insists the regulator isn’t allowing “investment at any price”, adding:

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.”