Ofgem approves £24bn Investment plan to Modernize UK’s Energy Networks
Ofgem, Britain’s energy regulator, has given the go-ahead for a major £24 billion investment programme across gas and electricity networks. The move marks the largest upgrade since the 1960s, aiming to boost both energy security and the integration of renewable power across the UK.
What Did Ofgem Approve?
Ofgem has greenlit a £24 billion investment package for gas and electricity networks between 2026 and 2031. This includes £15 billion for gas safety and maintenance, and nearly £9 billion to upgrade the high-voltage electricity grid, along with an extra £1.3 billion that can be unlocked if needed.
“Doing nothing is not an option. These decisions protect Britain from energy shocks and future price spikes,” said Jonathan Brearley, CEO of Ofgem, in a public statement on the announcement.
Why Is Ofgem Taking Action Now?
Ofgem’s move comes in response to the growing risk of energy market volatility, especially since the 2021 global gas crisis. With electricity demand expected to double by 2035 and the UK pushing toward Net Zero, the regulator believes delayed upgrades could cost more in the long run.
What Is the RIIO-3 Period?
You might wonder what RIIO-3 means.
RIIO stands for Revenue = Incentives + Innovation + Outputs.
It’s Ofgem’s regulatory framework that guides how much energy network companies can charge, how they should perform, and what upgrades are expected.
RIIO-3 runs from April 2026 to 2031, and it’s designed to make sure these network companies invest efficiently while keeping consumer bills fair. This new £24 billion plan falls within that phase.
How Will the Money Be Spent?
The breakdown of the £24 billion package includes:
- £15 billion on gas networks to keep supplies stable and safe
- £8.9 billion for electricity transmission upgrades
- £1.3 billion earmarked as flexible funds ready to deploy when needed
These upgrades will strengthen 4,400 km of overhead lines and install 3,500 km of new circuits, including offshore lines, allowing for millions more homes to be powered by clean energy.
What About the Cost to Consumers?
Ofgem emphasises that rigorous cost controls keep the programme fair for households.
Despite £104 added to annual bills by 2031, split into £30 for gas and £74 for electricity grid costs, billpayers will save an estimated £30 annually due to reduced constraint payments and more efficient clean energy use.
The regulator also slashed over £8 billion from the initial proposals and set a 6% limit on returns for private investors, down from industry requests of up to 6.9 percent.
Ofgem also highlighted via its official channel that building the network now is “better than doing nothing, which could cost consumers more in the long run.”
What Does 126 GW Actually Mean for Homes?
The upgrades will enable the grid to handle up to 126 gigawatts of clean energy, which is a huge step toward decarbonisation. To put that into perspective: 1 gigawatt can power nearly 750,000 UK homes. So 126 GW would be enough to power over 94 million homes, far more than the number of households in the UK, ensuring flexibility and exports.
What Are the Key Benefits?
This upgrade will offer several long-term advantages:
- Energy independence: Reducing reliance on imported fossil fuels
- Clean energy integration: Connecting 126 GW of renewables to the grid by 2030
- Grid resilience: Protecting consumers from price shocks and blackouts
- Efficient investment: Delivering maximum value while controlling costs
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What Happens Next?
Here’s how the plan will move forward:
- Consultation period: Until later this year, updated proposals will be reviewed
- Final decisions: Publication expected by the end of 2025
- Implementation: Construction and upgrades start early in the RIIO‑3 period (2026–2031)
Ofgem will hold network companies to strict delivery deadlines, promising to intervene if timelines or budgets are missed
Final Thoughts
Ofgem’s approval of this £24 billion energy upgrade sends a clear message: Britain is serious about building a resilient, clean energy future. In an era of global uncertainty and high gas prices, these upgrades will help stabilize consumer bills, support renewables, and ensure a reliable energy supply.
Ofgem has struck a balance, pushing for ambitious grid transformation while holding costs in check. With robust planning and fair funding, this investment marks an important step toward a decarbonised and secure UK energy system.
Disclaimer
This content is for informational purposes only and not financial advice. Always conduct your research.