UK rings in giant £20.9bn package to boost grid capacity

Revealing its much-anticipated RII0-ED2 draft determinations, Ofgem has proposed to slash returns for power distribution companies

Big Zero Report 2022

Ofgem has today proposed a massive £20.9 billion package as part of an initial five-year vision for building sustainable and affordable regional grids.

The investment will be split across six companies – Electricity North West, UK Power Networks, Western Power Distribution, Northern Powergrid, SP Energy Networks and Scottish and Southern Electricity Networks.

The regulator’s draft plans for the 2023-2028 electricity distribution price control, known as RIIO-ED2, aim to boost grid capacity and improve customer service and resilience to prevent power outages.

In effect, the price controls regulate how much each network company can spend and on what.

This ensures companies invest in things such as innovative technologies and customer service.

Ofgem has said energy customers will not see additional costs on top of their energy bills as a result of this investment.

It has also proposed to reduce investor return allowances for electricity distribution companies.

Jonathan Brearley, Ofgem’s Chief Executive, said: “These are challenging times and this is the path out of relying on expensive and polluting imported fossil fuels and moving to a homegrown energy system, that exploits the best of modern technology to level out demand and reduce costs for consumers.

“We are determined to get the best possible deal for consumers and the proposals we have published today will mean that substantial additional investment can be made to deliver net zero without placing any further pressure on bills.

“We are confident that the five-year vision we have outlined will help build the world-class energy infrastructure needed to connect consumers to reliable, cleaner energy at an affordable price.”

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