The British energy regulator gives the green light to the budgets of transmission network operators for a period of five years. Initial budget of GBP 10.3 billion ($13.7 billion) approved with a cap of GBP 70 billion in transmission investments by 2031. At least GBP 44 billion in transmission spending has already been committed, according to the regulator.
Ofgem has approved budgets for a multi-billion pound investment in Britain’s electricity and gas networks, as part of the next revenue framework for transmission network operators (TNO). The regulator predicts that spending on transmission upgrades could reach £70 billion between April 1, 2026 and March 31, 2031.
The UK transmission network is owned by three private companies that are regulated to ensure that monopolistic companies deliver value to consumers. This means Ofgem is tasked with ensuring that spending on grid upgrades does not unfairly impact households and businesses.
The regulator has approved a five-year investment budget of GBP 28 billion ($37.4 billion) for upgrades to gas and electricity networks, consisting of an initial investment of GBP 10.3 billion 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 if necessary. This process involves transmission companies submitting the technical specifications and cost estimates of the Ofgem project to the regulator for assessment. The base investment allowance of GBP 10.3 billion, combined with costs for projects already in progress, means that at least GBP 44 billion in transmission investment has already been committed for the period, according to Ofgem.
For consumers, Ofgem expects that by 2031, GBP 108 per year will be added to network charges on bills – GBP 48 for gas and GBP 60 for electricity. However, the regulator claims this will save £80 compared to not expanding the electricity grid. According to Ofgem, the expansion of the electricity grid alone will reduce bills by GBP50 per year by 2031, by supporting greater deployment of renewables, reducing dependence on imported gas and keeping costs down.
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 energy generation and energy storage deployment.
In a press release, Ofgem chief executive Jonathan Brearley said the funding will support the transition to renewables, but added that “every pound” must deliver value to consumers.
“Ofgem will hold network companies accountable for delivering on time and on budget, and we make no apology for the efficiency challenge we are posing as the industry ramps up investment,” he said.
The full price controls “Revenue = Incentives + Innovation + Outputs (RIIO-3)” overview document is available from Ofgem.
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