Annual household energy bills are set to rise by more than £100 after Britain’s energy watchdog, Ofgem, approved an initial £24 billion investment to upgrade the UK’s energy infrastructure.
The announcement was made as the energy price cap dropped 7 per cent on Tuesday.
Ofgem’s draft verdict on price controls for energy network firms green lights over £15 billion for gas transmission and distribution networks in the five years to 2031.
A further £8.9 billion is earmarked for the nation’s high-voltage electricity network, which the regulator states will power the largest grid expansion since the 1960s, with an additional £1.3 billion also set aside.
This funding aims to facilitate the completion of 80 major energy infrastructure projects by 2030.
The move aligns with the government’s push to bolster the UK’s renewables sector, a critical step towards enhancing national energy security.
But Ofgem revealed households are set to see bills surge by £104 by 2031 to cover the cost of the extra investment.
The regulator said this will include £30 for gas networks and £74 for the electricity grid.
It said that bills would be even higher – around £30 more – without the investment.
The funding will allow the UK to make “better use of our clean renewable energy so we are not having to pay for expensive gas plants to serve demand”, Ofgem said.
Ofgem chief executive Jonathan Brearley said major investment in the energy networks is vital to “ensure the system has greater resilience against shocks from volatile gas prices we don’t control”.
He said: “Doing nothing is not an option and will cost consumers more – this is critical national infrastructure.
“The sooner we build the network we need and invest to strengthen our resilience, the lower the cost for billpayers will be in the future.
“However, this can’t be done at any price, which is why we have built in cost controls and negotiated a fair deal for both investors and consumers.
“And we won’t hesitate to intervene if network companies don’t deliver on time and on budget.”
