Today Ofgem announced the Final Determinations for the
Electricity Transmission, Gas Distribution and Gas Transmission
sectors. These determine how much money can be spent from
2026-2031 by the companies who run these services.
The Ofgem analysis shows an overall increase in bills due to gas
and electricity grid upgrades of £108. Taking into account
efficiency savings of new electricity grid infrastructure they
are projecting a net cost on energy bills of £30.
However, these figures mask the fact
that most of this overall increase in cost is due to gas grid
upgrades. The additional investment in the
electricity transmission network will cost £64 and it will save
households £80 by increasing the amount of low-cost
renewable electricity which can flow from Scotland to England and
Wales. This means the electricity grid upgrades will produce a
net saving to households of £16.
There has been major underinvestment in the power network for
decades and this investment is needed to keep the network
running, make it more secure and ultimately reduce
costs.
65% of the announced new investment is in the gas network. 35% of
the new investment is in the electricity network. A lot of this
investment is business as usual spend. Some of this investment
will enable us to use more of our homegrown cheap renewable power
and to better harness our domestic wind resources in the
future.
The spike in fossil fuel
prices following the Russian invasion of Ukraine has cost the UK
£183billion. History shows us that this was not a one-off
event, and that the shocks caused by fossil fuels leave lasting
damage on households and the economy.
This crisis would have been much worse without investment in
renewables. Renewables have lowered the wholesale cost of
electricity by 25% and saved the UK over £100bn since
2010.
This new investment in the electricity network will instantly
allow us to use more of the renewable electricity we already
generate and allow us to generate more low-cost renewable energy
moving forward.
Quotes
Susanna Elks, Senior Policy Advisor at E3G, said:
“Dependence on fossil fuels has devastated the UK economy and
cost UK households and business an extra £183 billion in the last
4 years. To protect them from future fossil fuel price spikes and
support energy independence the UK must modernise its grid
infrastructure. The electricity upgrades announced today will
help unleash renewables andcreate a net saving of £16 on
electricity bills. The power grid investment will save households
money.”
