UK households face rising energy bills as Ofgem approves £4bn power grid investment

Ofgem has approved a £4 billion investment to secure the future of Britain’s electricity infrastructure and help meet the nation’s ambitious 2030 green energy targets. This move will allow companies such as National Grid, SSE, and Scottish Power to order key equipment long before securing final planning approval, aiming to alleviate bottlenecks in the global supply chain.

This forward-thinking funding approach responds to supply chain constraints stemming from an international rush towards decarbonisation. Countries worldwide are ramping up investments in low-carbon energy systems, increasing competition for crucial materials like power cables and steel. To address these challenges, electricity network providers can now order equipment years ahead of construction approvals, ensuring projects are ready to commence and avoiding unnecessary delays.

Projections suggest the UK must install approximately 600 miles of onshore power lines and 2,800 miles of offshore networks by 2030. These expansions would be more than double those of the previous decade. Without accelerated development, the nation risks incurring significant costs from so-called “constraint payments” to wind farms, which are currently being paid to reduce output when power cannot be transported efficiently from Scotland to England. Such expenses could potentially rise from £1.5 billion annually to as high as £8 billion by the decade’s end.

Critically, early procurement enabled by the £4 billion allocation provides manufacturers with secure orders, boosting their confidence to invest in the UK. Companies like Sumitomo and XLCC are already eyeing opportunities to establish domestic cable factories. XLCC, for example, plans to construct its facility at Hunterston with backing from the UK’s National Wealth Fund, aiming to start operations next year.

Industry leaders concur that early planning and resource acquisition will mitigate future price rises and ensure the UK maintains its green energy momentum. Akshay Kaul, Ofgem’s director-general for infrastructure, stated that purchasing materials at scale demonstrates Britain’s commitment to clean energy, while stabilising supply chains for the years ahead.

Had the funds not been authorised, the UK risked higher costs in the long term as supply shortages would have delayed critical energy transmission infrastructure. Now, businesses and consumers alike may benefit from a more structured and cost-efficient transition to a green energy system.