Around £22 billion could be spent on upgrading the UK’s electricity and gas networks over the next nine years if proposals announced by the regulator go ahead.
The Office of gas and electricity markets (Ofgem) has set out plans for what would be the largest investment in the grids for decades. Overall, some £200 billion needs to be spent in the UK on energy infrastructure in order to ensure future supplies, says Ofgem.
The majority of the proposed investment – some £15 billion – would be allocated to the upgrade and renewal of the high voltage network in England and Wales and the high pressure gas network across Britain. Some £7 billion would be spent on the low pressure gas networks.
However the plan has been criticised by National Grid, which operates these networks and which says that £31 billion should be spent on the gas and electricity networks over the next eight years.
Ofgem’s plans would add an average £11 per year to household energy bills.
In a statement, National Grid said: “We believe that these initial proposals will not appropriately incentivise the essential investments necessary to provide safe, reliable networks for the UK consumer and avoid delays to the achievement of the UK’s environmental targets.”
The investments proposed by Ofgem would fund major projects such as new sub-sea cables linking England and Wales with Scotland and the connection of 80 000 fuel-poor households to the gas network. It says that its new price control formula will help to drive improvements in network company performance in order to keep costs to a minimum.
Ofgem Chairman, Lord Mogg stated: “Britain faces an unprecedented need to invest to replace ageing infrastructure, meet environmental targets and deliver secure supplies. This needs to be carried out at a time of global financial uncertainty, which makes attracting investment difficult but possible.”
