Britain’s energy regulator, Ofgem, has approved a $37.4 billion (£28 billion) investment program for energy network companies to upgrade the UK’s power and gas grids to boost their stability and security.
“This investment will upgrade power and gas grids, creating a future-ready system that better shields customers from volatile energy bills,” Ofgem said on Thursday.
The?approved?investment will?fund?80 transmission projects and associated works?nationwide?over the next?five years.
Most of the funding, $23.8 billion (£17.8 billion), will go towards maintaining Britain’s gas networks, keeping them among the safest, most secure, and resilient in the world, the regulator added.
The remaining initial investment of $13.7 billion (£10.3 billion) is aimed at strengthening the UK’s electricity transmission network, improve reliability, and expand capacity to support the electrification of the economy.
The funding will raise UK energy bills by 2031, but would generate savings compared to not expanding the grids at all. Overall? net increase in bills to cover all costs by 2031 will be less than $4 (£3) per month?with costs expected to?fall?further over time, according to Ofgem.
“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,” Ofgem CEO Jonathan Brearley said.
“We've?built strong?consumer?protections?into?these contracts, meaning funds will only be released when needed and clawed back?if not?used.?”
National Grid welcomed “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.”
Earlier this year, Ofgem said a new set of rules are granting early access to nearly $6.1 billion (£4 billion) of investment for crucial transmission equipment and services, which is expected to connect renewable energy projects to the grid quicker.
By Tsvetana Paraskova for Oilprice.com
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