Energy and Climate
Intelligence Unit
Commenting on Ofgem's confirmation of an initial £28bn investment
in the electricity and gas grids under RIIO-3 [1], rising to
£90bn by 2031, which will mean a net increase of around £30 in
typical bills by 2031, Jess Ralston, Head of
Energy at the Energy and Climate Intelligence Unit
(ECIU) said:
“Upgrading our electricity grid after decades of
under-investment, like many would say we've seen in schools and
hospitals, is important for shielding households from any future
energy crises. Ensuring more British wind and solar can come
online will boost the UK's energy independence and reduce the
risk of bill shocks by making the UK less dependent on gas from
abroad. North Sea gas output will inevitably continue to decline
so there is a burning platform to upgrade.”
ENDS
Notes to editors:
1. https://www.ofgem.gov.uk/press-release/ofgem-unlocks-ps28-billion-investment-maintain-safe-secure-and-resilient-energy-grid-and-upgrade-and-expand-capacity-meet-growing-demands
2. Ofgem has confirmed that 'most of the funding (£17.8 billion)
announced today will go towards maintaining Britain's gas
networks', while the 'remaining initial investment (£10.3
billion) will strengthen our electricity transmission network,
improve reliability and expand capacity to support the
electrification of the economy and drive growth.'
3. The initial £28bn investment is expected to rise to £90bn by
2031. In total, £108 will be added to bills by 2031 to fund
the investment; £48 for gas and £60 for electricity. However, it
is expected to deliver significant savings of around £80
compared to not expanding the grid, with £50 saved by electricity
grid expansion alone, meaning a net increase of around £30 or
less than £3 per month in 2031. Ofgem also confirmed
that 'investment for ongoing operations, asset replacement
and maintenance filters' will add more to bills despite
accounting for a smaller proportion of the overall £90 billion
investment.
Greenpeace
Commenting on Ofgem's decision on RIIO-3,
which will unlock £28bn of funding for energy grid and network
upgrades, Greenpeace UK's senior climate advisor, Charlie
Kronick, said:
“Britain's energy grid is no longer fit for purpose. And without
vital upgrades now our electricity system risks suffering a
similar fate as our water network – much higher costs and
underperformance further down the line.
“This money must be spent effectively, however, with robust
safeguards and strong regulation to protect bill-payers, and
ensure these upgrades deliver genuine value for money, offering
fair but not excessive returns. We hope Ofgem have, and will
continue to, strain every sinew in ensuring that new technologies
of storage and flexible demand are adopted to minimise costly
upgrades.
“Energy costs are a major pressure on households and businesses
and, as we move to a cleaner energy system, prices must
eventually come down. The government should be prepared to step
in to ensure our energy system works for billpayers, not
profits.”
National Grid
Ofgem has today published its Final Determination for the RIIO-T3
framework covering our National Grid Electricity Transmission
business for the period April 2026 to March 2031. The proposals
include a real allowed cost of equity of 6.12% at 60% gearing.
We welcome Ofgem's recognition of the need for significant
investment into the electricity transmission sector to continue
to deliver world leading reliability whilst nearly doubling the
amount of power we can transfer around the country.
We will now review in detail the full package contained within
the Final Determination, to assess how Ofgem have addressed the
critical points we raised in our Draft Determination response,
and therefore whether it delivers an overall framework that is
both investable and workable. This includes an incentive
framework that allows high performing networks to achieve a
globally competitive overall return and totex mechanisms that
enable transmission owners to recover the efficient cost of their
investments whilst progressing projects at the pace expected by
our stakeholders.
We expect Ofgem to publish the proposed licence modifications for
consultation soon. These important documents will inform our
assessment of the incentive opportunities and overall workability
of the framework. Throughout this period we will continue to work
closely with Ofgem ahead of publication of its decision on the
licence in February. Relevant parties will then have 20 working
days to assess the licence modifications. We anticipate
announcing our response in early March 2026.
