UK Regulator Clears $53bn Energy Grid Plan
UK regulator Ofgem has cleared a £40bn ($53.4bn) investment plan for the country's energy infrastructure in 2021-2026, it said on December 8.
UK gas and power network companies, including SSE, National Grid and Iberdrola's Scottish Power, present long-term investment programmes to Ofgem which the regulator then assess. Expenditure is covered with consumers' bills, via five-year price controls set by Ofgem.
The approved plans cover £30bn in general spending, representing a 20% increase from the amount the regulator proposed in July. Energy network companies successfully challenged this previous decision after providing better evidence to justify their expenditure, Ofgem said. It did not provide a breakdown of projects that the sum would cover.
The regulator has also cleared a further £10bn for funding green energy projects, which it said was an unprecedented amount, in order to help the UK reach its 2050 net-zero target. These projects aim to prepare energy grids to handle 40 GW of North Sea wind power capacity. The UK's current offshore wind capacity is only 10 GW. Ofgem added that there would be "no limit" on funding for this cause, as long as companies made good business cases.
Ofgem added that customers could expect a £2.3bn saving thanks to price controls in 2021-2026, after the regulator demanded greater efficiency from companies and lowered returns to shareholders by 40%, bringing them in line with current market levels. Some £132mn of funding will also be made available to vulnerable consumers.
"Our £40bn package massively boosts clean energy investment," Ofgem CEO Jonathan Brearley said. "This will ensure that our network companies can deliver on the climate change ambitions laid out by the prime minister last week, whilst maintaining world-leading levels of reliability."