The UK’s energy network companies have been given the green light for multi-billion-pound funding to strengthen the stability, security and resilience of the UK’s energy networks. This investment will upgrade power and gas grids, with the aim of creating a future-ready system and a better shield for customers against volatile energy bills.
Most of the funding (£17.8 billion) will go towards maintaining Britain’s gas networks, while the remaining initial investment (£10.3 billion) will strengthen its electricity transmission network, improve reliability and expand capacity to support the electrification of the economy and helping to drive growth. This commitment will rise to an estimated £90 billion by 2031 across both gas and electricity networks.
The investments (2026-2031) under regulator Ofgem’s RIIO-3 mechanism for controlling investments, will be provided mainly by National Grid (England & Wales transmission), ScottishPower Energy Networks, and Scottish and Southern Electricity Networks (SSEN), with the funding set by Ofgem to upgrade and expand energy networks for Net Zero, totalling around £28 billion across the sector for this period.
It is considered that investing now to maintain ’world class resilience’ and expand grid capacity is the most cost-effective way to harness clean power, support economic growth and protect the country from gas price shocks like the one seen in 2022.
Increasing bills
As investment for ongoing operations, asset replacement and maintenance filters through to bills more quickly than investment in network expansion, these costs will add more to bills despite representing a smaller share of the overall £90 billion investment programme. In total £108 will be added to bills by 2031. £48 for gas and £60 for electricity. Alongside maintaining grid resilience this investment will deliver significant savings of around £80 compared to not expanding the grid.
Electricity grid expansion alone is expected to reduce bills by £50 by 2031, thanks to lower reliance on imported gas and the halting of constraint costs ensuring power flows efficiently from where it’s generated to where it’s needed, even at peak demand. The logic of it, in short, is that investing now is cheaper for consumers than delaying, and electricity grid investment more than pays for itself.
Overall the net increase in bills to cover all costs by 2031 will be around £30 or less than £3 per month with costs expected to fall further over time.
Jonathan Brearley, Ofgem CEO, said: “This is not investment at any price. Every pound must deliver value for consumers. Ofgem will hold network companies accountable for delivering on time and on budget. We have built strong consumer protections into these contracts, meaning funds will only be released when needed and clawed back if not used. Households and businesses must get value for money, and we will ensure they do.”
Spending proposals
Through 2025, the energy regulator has reviewed spending proposals from electricity transmission owners, National Gas, and the gas distribution companies, to ensure the best value for bill payers. It has set strict delivery targets, pushed companies to maximise efficiency, and rejected bids that do not serve consumers’ interests. This scrutiny has delivered potential savings of over £4.5 billion (15%) against the initial £33 billion proposals.
The approved investment will fund 80 transmission projects and associated works nationwide over the next five years. This is intended to significantly increase grid capacity through new power lines, substations and other technologies, and meet growing demand.
