Ofgem has confirmed a five-year investment package for the electricity distribution network companies, which it says will help deliver cheaper, cleaner, more reliable local grids at no extra cost to consumers.
A key requirement of the plan will be for networks to focus the investment on supporting the move away from a high dependence on imported fossil fuels, towards using more homegrown, cleaner, cheaper, and secure sources of energy.
The potential of renewable energy sources require changes in the way energy is used and stored to gain their benefits.
The price control set out by Ofgem will allow for the scale of investment required without adding to customers’ bills, it said.
Akshay Kaul, Ofgem interim director, infrastructure and security of supply group, said: “The investment set out today delivers value for consumers, safeguards security of supply and helps ensure Britain is no longer at the mercy of international energy prices or geopolitical events.
“We’ve set the initial amount of investment that local electricity distribution network operators can make in the 2023 to 2028 period, with every pound representing value for money for consumers and no increase in bills.
“The economics of energy have shifted with home-grown cleaner renewables like wind and solar energy proving cheaper than costly imported gas.
“Together with more nuclear and potentially hydrogen fuelled power, these renewables will contribute to a lower carbon energy mix, better protected from geopolitical events and energy price shocks.”
Known as RIIO-ED2 (Revenue = Incentives + Innovation + Outputs for electricity distribution), the package sets the level of investment Ofgem allows local electricity distribution networks (DNOs) to make in the 2023-28 period.
The cost of the work is recouped through the network charges on consumer bills and by limiting network profits and increasing efficiencies.
Ofgem said it has ensured that this major investment can be delivered without any increase in network charges on bills, which will remain at an average of £100 per year per bill-payer, despite the increased investment.