Ofgem £24bn investment plan draws mixed industry response
By Josh White
Date: Tuesday 01 Jul 2025
(Sharecast News) - Ofgem announced the provisional approval of £24bn in funding to upgrade Britain's energy infrastructure on Tuesday, in a major step toward securing energy supply and enabling the transition to cleaner power.
The draft decision covered the 2026-2031 period and marked the first phase of a wider £80bbn investment programme aimed at delivering the largest expansion of the electricity grid since the 1960s.
Its plan allocated over £15bn to maintaining and operating the country's gas transmission and distribution networks, ensuring continued reliability and safety.
A further £8.9bn was earmarked for enhancing the high-voltage electricity network, with an additional £1.3bn set aside for immediate deployment under a "use it or lose it" provision.
The energy sector regulator said the investment would support 80 critical grid projects designed to connect up to 126 gigawatts of renewable power by 2030 - enough to supply millions of homes.
It said the plans included 4,400 kilometres of upgraded overhead lines and 3,500 kilometres of new circuits, including offshore connections, doubling the total grid build seen over the past decade.
Ofgem CEO Jonathan Brearley warned that failing to act would leave Britain vulnerable to the kinds of energy price shocks seen in recent years.
"Britain's reliance on imported gas has left us at the mercy of volatile international gas prices which during the energy crisis would have caused bills to rise as high as £4,000 for an average household without government support," he said.
"Doing nothing is not an option and will cost consumers more - this is critical national infrastructure."
Brearley said the "record investment" would deliver a "homegrown energy system" that was better for Britain and customers.
"It will ensure the system has greater resilience against shocks from volatile gas prices we don't control."
Ofgem's scrutiny led to an £8bn reduction from the initial funding proposals submitted by energy companies, as the regulator imposed tough cost controls to balance affordability with delivery.
Network charges on customer bills were expected to rise by £104 by 2031 - £30 for gas and £74 for electricity.
However, Ofgem argued that the upgrades would save customers around £80 by cutting reliance on expensive gas generation and reducing payments to wind farms forced to curtail output due to grid constraints.
It projected the net impact at around £24 per year, or less than 40p per week, by 2031.
The decision drew mixed reactions from industry players.
National Grid welcomed the recognition of the need for significant investment but indicated it would review the details to determine whether the package was financially viable.
"We note that progress is needed on incentive opportunities which are both good for consumers and support investability," National Grid said in a statement, adding that it expected to invest around £60bn across its operations through March 2029.
SSE Networks (SSEN) Transmission was more critical, warning the draft settlement fell short of what was needed to meet the UK's clean energy targets.
"Ofgem's draft determination does not go far enough to deliver the investible, financeable and ambitious framework required," SSEN said.
The company raised concerns over the regulator's approach to cost allowances, rates of return, and the maturity of the proposed incentive regime.
SSEN added that the current proposals "fail to fund the investment necessary to deliver a clean power system by 2030" and did not reflect the real costs of developing and maintaining a robust electricity network in northern Scotland.
The draft determination was now open for consultation, with final decisions expected by the end of 2025.
Reporting by Josh White for Sharecast.com.
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