Ofgem has approved budgets for a multi-billion-pound investment in Great Britain’s electricity and gas grids, as part of the next revenue framework for transmission network operators (TNO). The regulator forecasts that spending on transmission upgrades between April 1, 2026, and March 31, 2031, could reach GBP 70 billion.
Great Britain’s transmission network is owned by three private companies that are regulated to ensure monopoly companies deliver value to consumers – meaning Ofgem is tasked with ensuring spending on grid upgrades does not unfairly impact households and businesses.
The regulator has approved a five-year GBP 28 billion ($37.4 billion) investment budget for gas and electricity network upgrades, comprising an initial GBP 10.3 billion investment in the electricity transmission network and GBP 17.8 billion for gas networks.
There are mechanisms in Ofgem’s framework to increase the budget for transmission upgrades as needed. This process involves transmission companies bringing Ofgem project engineering specifications and cost estimates for the regulator to assess. The baseline GBP 10.3 billion investment allowance, combined with costs for projects already in progress, means at least GBP 44 billion of transmission investment is already committed for the period, according to Ofgem.
For consumers, Ofgem has projected GBP 108 per year will be added to network charges on bills by 2031 – GBP 48 from gas and GBP 60 from electricity. However, the regulator claims this will represent a GBP 80 saving compared to not expanding the grid. Electricity grid expansion alone is expected to reduce bills by GBP 50 per year by 2031, according to Ofgem, by supporting greater renewables deployment, reducing reliance on imported gas, and cutting constraints costs.
The announcement was described by the head of the UK government’s Mission for Clean Power Taskforce, Chris Stark, as a “once-in-a-generation” program to build a resilient transmission system, supporting renewable generation and energy storage deployment.
In a press release, Ofgem CEO Jonathan Brearley said the funding will support the transition to renewables, but added “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,” he said.
The full price controls “Revenue = Incentives + Innovation + Outputs (RIIO-3)” overview document is available from Ofgem.
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