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Investing.com -- Britain’s Ofgem has provisionally approved a £24 billion investment program to enhance Britain’s energy infrastructure and increase renewable energy capacity, the regulator said on Tuesday.
The five-year plan includes over £15 billion to ensure the continued safe operation of Great Britain’s gas transmission and distribution networks, while allocating £8.9 billion for the high-voltage electricity network, with an additional £1.3 billion ready for deployment.
This investment represents the first phase of an estimated £80 billion program to expand electricity network capacity, which aims to protect U.K. households from volatile international gas markets that caused significant energy bill fluctuations in recent years.
The approved funding will support 80 transmission projects across the country, upgrading over 4,400km of overhead lines and delivering 3,500km of new circuits, including offshore investments.
These improvements will double the total build completed in the last decade.
"This record investment will deliver a homegrown energy system that is better for Britain and better for customers," said Ofgem CEO Jonathan Brearley. "It will ensure the system has greater resilience against shocks from volatile gas prices we don’t control."
Ofgem estimates the investment will increase network charges on bills by £104 by 2031, including £30 for gas networks and £74 for electricity grid enhancements.
However, the electricity grid expansion portion is expected to generate approximately £80 in savings by reducing constraint costs and better utilizing renewable energy, resulting in a net cost increase of about £24 annually or less than 40p per week by March 2031.
The regulator has set a provisional cost of equity allowance for private investment at 6% over the five-year period, down from the 6.5% to 6.9% that companies had requested in their business plans.
The draft determinations are now published for consultation, with final decisions expected by the end of 2025.