Ofgem unlocks £28 billion investment to maintain a safe, secure and resilient energy grid and to upgrade and expand capacity to meet growing demands

• An initial £28 billion investment over the next five years has been confirmed today to ensure Britain's gas and electricity networks remain stable, secure and resilient, while boosting critical grid capacity ensuring power can get from where it's generated to where it's needed
• This forms part of an estimated £90bn to be invested in these networks in total by 2031
• Adaptive funding arrangements ensures total 5-year investment can shift in line with system needs, expanding and modernising the grid to meet rising electricity demand and maximise low carbon renewable power
• Settlement includes new arrangements to protect against inflation shocks and avoid excessive returns, ensuring these are linked closely to delivering strong value for consumers

Energy network companies have been given the green light for multi-billion-pound funding to strengthen the stability security and resilience of our energy networks. This investment will upgrade power and gas grids, creating a future-ready system that better shields customers from volatile energy bills.

Most of the funding (£17.8bn) announced today will go towards maintaining Britain's gas networks, keeping them among the safest, most secure and resilient in the world.

This essential investment ensures a safe and reliable energy system for years to come.

The remaining initial investment (£10.3bn) will strengthen our electricity transmission network, improve reliability and expand capacity to support the electrification of the economy and drive growth.

Together this £28bn commitment will rise to an estimated £90bn by 2031 across both gas and electricity networks.

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.  

As investment for ongoing operations, asset replacement and maintenance filters through to bills more quickly than investment in network expansion, these costs will add more to bills despite representing a smaller share of the overall £90bn investment programme.

In total £108 will be added to bills by 2031. £48 for gas and £60 for electricity. Alongside maintaining grid resilience this investment will deliver significant savings of around £80 compared to not expanding the grid.

Electricity grid expansion alone is expected to reduce bills by £50 by 2031, thanks to lower reliance on imported gas and the halting of constraint costs ensuring power flows efficiently from where it's generated to where it's needed, even at peak demand. In short, investing now is cheaper for consumers than delaying, and electricity grid investment more than pays for itself.

Overall the net increase in bills to cover all costs by 2031 will be around £30 or less than £3 per month with costs expected to fall further over time.

Jonathan Brearley, Ofgem CEO, 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.”

Through 2025, the energy regulator has rigorously reviewed spending proposals from electricity transmission owners, National Gas, and the gas distribution companies, to ensure the best value for billpayers. We've set strict delivery targets, pushed companies to maximise efficiency, and rejected bids that do not serve consumers' interests.

This scrutiny has delivered potential savings of over £4.5bn (15%) against the initial £33bn proposals.

The approved investment will fund 80 transmission projects and associated works nationwide over the next five years. This will significantly increase grid capacity through new power lines, substations and other technologies, to power millions of households with clean, secure, domestic energy and meet growing demand economic growth. 

Contact Information

Ofgem Media Team
020 3263 9996
press@ofgem.gov.uk

Notes to editors

Notes to editors

1. RIIO-3 Final Determinations policy document
2. Ofgem's Final Determinations of the cost control period from 2026-2031, known as RIIO-3, considers the responses from electricity transmission owners, gas transmission and gas distribution companies following publication of Ofgem's Draft Determinations in July, 2025.
3. Significant changes include the allowed investment now reduced by 15% from the previous RIIO-2 cost control mechanism, rather than the 25% reduction proposed in the Draft Determinations. This concession – based on robust evidence from network companies justifying the need for additional investment in the long-term interests of consumers – is mainly to account for additional project development in electricity transmission, asset health and resilience related investment in the maintenance of the gas transmission and distribution networks.
4. Other elements reflected in the forecasted increase in network charges on bills reflect factors external to RIIO-3 decisions, including a revaluation of business rates set by Government which were not known at the time of the Draft Determinations publication.
5. Crucially, Ofgem has taken steps to limit the impact of high inflation on network company balance sheets. This effect – subject to external reports by Citizens Advice – arose due to very high levels of inflation since the early 2020s, unseen for 30 years. The redefined terms under the RIIO-3 price control are designed to ensure this inflation impact is never repeated.
6. Ensuring stability and predictability in future network charges is essential to protecting market stability, specifically in the retail sector for suppliers with large non-domestic customer bases on fixed contracts. Ofgem has listened carefully to industry responses to the Draft Determinations. In order to minimise the impacts on the retail market and on consumers we will work to smooth the path of increases in charges so that the initial impact on network charges for April 2026 is lower with a smoother transition to higher charges over the following five years as investment in the electricity network steps up.
7. The bills figures included are based on a dual fuel household with typical consumption levels as reflected in the energy price cap, set out here: Average gas and electricity usage | Ofgem
8. For businesses, the RIIO-3 investments will also help strengthen productivity and resilience across the economy. The investments will help energy-intensive industries, such as steelworks, cut their bills, potentially by 10-15% lower than they would have been without RIIO-3 action, thanks to offsetting cost reductions from wholesale prices and government's supercharger mechanism.
9. Smaller business will see increase in network charges. For example, by 2031, indicative network charge increases range from around £60 a year for a small holiday let or retail kiosk to £1,700 for small offices or hotels and £9,760 for a medium factory, reflecting differences in size and energy use. This is between 5% and 10% on electricity bills for a typical business before savings are taken into account. Crucially, as with households, the RIIO grid investments should deliver net benefits - through avoided constraint costs and lower wholesale prices.
10. Additionally, improved network capacity will enable faster connections for new industrial projects, supporting the need for electrification to meet government targets and supporting regional economic development.
11. In relation to redefined terms to limit the impact of high inflation on network company returns, the decision to not apply these changes before now was based on the risk that reopening the price control could lead to other costs to consumers that outweigh the potential benefits from recovering any increase in regulatory asset values. This was recognised by Citizens Advice in their original report.