Ofgem £25bn investment programme for energy networks: A new 5 year investment programme has been announced by energy regulator Ofgem, worth £25 billion the investment programme is to transform the UK’s energy network.

The proposals are aimed at delivering emissions-free green energy across the country and meet national net zero targets, while also maintaining high levels of grid reliability and service.

The new investment it notes, will also help generate employment, green growth and emphasises it aims to keep consumers costs as low as possible by proposing the lowest-ever rate of return on capital for network companies and encouraging companies to become more efficient with stretching new efficiency goals and by disallowing ‘unjustified costs’.

The RIIO-2 price control proposals by Ofgem would lead to an expected £20 fall in network charges on bills per household a year at the start of RIIO-2.

Ofgem has also asked network companies to offer any ideas they may have regarding bringing forward investment plans in the current price control, as well as allocating the funds to maintain and operate gas distribution, gas transmission and electricity transmission networks.

Potentially a further £10 billion or more of investment will be supported through the price controls to help pay for emissions-free energy and infrastructure upgrades – such measures will only be approved if they will deliver decarbonisation at the lowest cost to consumers, Ofgem stresses.

£630 million will be provided by a new Strategic Innovation Fund, to drive green research and development to explore “the range of possibilities for decarbonising heat infrastructure, such as hydrogen, with the potential to fund more if needed”.

Nearly halving the network companies’ allowed rate of return, the proposal by Ofgem is designed so that less of consumers’ money goes towards network companies’ profits, and more towards driving network improvements. This would over the next five years save £3.3 billion for the gas and transmission sectors alone.

Ofgem’s CEO, Jonathan Brearley said: “Ofgem is working to deliver a greener, fairer energy system for consumers. This is why we are striking a fair deal for consumers, cutting returns to the network companies to an unprecedented low level while making room for around £25 billion of investment needed to drive a clean, green and resilient recovery.

“Now more than ever, we need to make sure that every pound on consumers’ bills goes further. Less of your money will go towards company shareholders, and more into improving the network to power the economy and to fight climate change.

“Ofgem’s stable and predictable regulatory regime will continue to attract the investment Britain needs to go further and faster on decarbonisation.”

Ofgem £25bn investment programme for energy networks

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