Ofgem has sealed a green deal on a five-year funding boost for the UK’s electricity distribution network companies.
The 2023 to 2028 plan aims to boost grid capacity, improve customer service and resilience to prevent power outages.
It also aims to prepare the way for increases in the generation of cheaper, greener, home-grown energy to bring down bills in the long-term, rather than relying on imported fossil fuels.
The watchdog’s aim is to boost green energy by helping six companies covering the country’s 14 local networks.
The RIIO-ED2 package (Revenue = Incentives + Innovation + Outputs for electricity distribution) will set the investment levels that electricity distribution networks can make during the planned period.
Ofgem says the cost of the work is recouped through network charges without adding to consumer bills – this will remain at £100 (on average) per year per bill-payer.
Over the next five years, customers can expect to see:
- A more secure and reliable electricity network less at risk of power cuts
- A grid that allows for new innovations to give more control to consumers through better data and more regularly updated prices for peak and off-peak demand creating efficiencies and saving money
- Support and guidance for vulnerable and low-income households ensuring no one misses out on the benefits of a net zero energy system
The UK unveiled its energy security strategy earlier this year, committing to more efforts in solar and wind power, which are proving cheaper than imported gas.
Together with more nuclear and hydrogen fuelled power, these renewables could contribute to a lower carbon energy mix.
However these sources would need to be connected to an expanded electricity network to meet growing demand for electricity.
This includes millions more electric heat pumps in homes.
There will now be a statutory consultation on the licence modifications required to implement the RIIO-ED2 settlement in December.
Price controls for RIIO-ED2 begin in April 2023.