Key Moments:
- Ofgem approved £28bn of energy network investment over the next five years, as part of an estimated £90bn to be deployed by 2031.
- The regulator expects the program to add £108 to household bills by 2031, partially offset by around £80 of efficiency-driven savings.
- Most of the new funding is earmarked for gas network maintenance while renewable capacity is expanded, with consumer protections tied to how funds are released and used.
Ofgem Confirms Large-Scale Network Investment Plan
The UK energy regulator Ofgem has signed off on a sweeping upgrade of the country’s energy networks that it said will add £108 to customer bills by 2031. The package centers on £28bn of spending over the next five years. This funding aims to reinforce the gas and electricity grids as the system shifts toward greater use of renewable energy.
Ofgem stated that the £28bn commitment sits within a broader estimate of £90bn to be invested across energy networks by 2031. The regulator said it is using “adaptive” funding structures designed to protect consumers from swings in market conditions.
Bill Impact: Headline Increase and Efficiency Offset
According to Ofgem, the planned investments are expected to raise bills by £108 by 2031. However, the regulator noted that efficiency gains will offset much of the increase.Furthermore, efficiency gains from improvements to gas and power infrastructure are forecast to deliver savings of about £80 per household. On that basis, Ofgem anticipates a net additional contribution of £28 for consumers.
| Item | Amount | Timing / Scope |
|---|---|---|
| Total new grid investment approved | £28bn | Next five years |
| Part of wider network investment | £90bn | By 2031 |
| Gross impact on household bills | £108 | By 2031 |
| Estimated efficiency savings | £80 | Linked to gas and power infrastructure upgrades |
| Net additional contribution | £28 | After expected savings |
Focus on Gas Infrastructure Amid Renewables Transition
Ofgem indicated that most of the newly announced funding will be directed toward maintaining gas networks. It said gas will remain a central energy source while the build-out of green generation capacity continues. The regulator framed the investment as critical to resilience and affordability as the system evolves.
“Investing now to maintain world class resilience and expand grid capacity is the most cost-effective way to harness clean power, support economic growth and protect the country from gas price shocks like the one seen in 2022”, Ofgem said.
The regulator linked its approach to lessons from the period when Russia’s invasion of Ukraine, combined with Europe’s decision to stop buying Russian gas, drove energy costs to “unprecedented levels” and helped trigger a broader cost of living crisis as higher energy prices flowed through the economy.
Consumer Protections and Efficiency Requirements
Ofgem announced the funding package against a backdrop in which costs tied to government energy policies and other system upgrades are among the largest upward drivers of household bills. It noted that the recent budget moves to strip out some costs from April next year.
Ofgem boss Jonathan Brearley said: “The funding announced today will keep Britain’s energy network among the safest, most secure and resilient in the world. The investment will support the transition to new forms of energy and support new industrial customers to help drive economic growth and insulate us from volatile gas prices.
“But this is not investment at any price. 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.”
Government Position on Bills and Energy Security
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 that we control.”
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