Power Generation | Infrastructure and Distribution

UK energy regulator Ofgem yesterday unveiled a £22 billion investment plan to upgrade the country’s electricity and gas networks.

The plans, which are part of Ofgem’s wider £200 billion effort to secure the country’s energy supplies, will ensure that high voltage electricity and gas networks are among the most reliable in the world.

The majority of the investment, some £15 billion, would be used to upgrade and renew the high voltage network in England and Wales and the high-pressure gas network across Britain, which are operated by National Grid.

The investment would back projects like new sub-sea electricity cables linking England, Wales and Scotland.

Ofgem says the investment would also create some 7000 mainly construction jobs during the upgrade work.

A further £7 billion would be devoted to low-pressure gas networks, which deliver gas to homes and businesses.

“Britain faces an unprecedented need to invest to replace ageing infrastructure, meet environmental targets and deliver secure supplies,” commented Ofgem chair Lord Mogg. “This needs to be carried out at a time of global financial uncertainty, which makes attracting investment difficult but possible.”

Initially, Ofgem says £17 billion would be ploughed into the projects with a further £5 billion added only if there is a “demonstrable” need for the infrastructure.

The regulator says that this means that the investment package will only cost an extra £7 per household in 2013, increasing to around £15 by 2021. Ofgem says it has also reduced companies’ requested funding by 20%.

“Through Ofgem’s RIIO price controls we are driving improvements in company performance to ensure costs are kept as low as possible for consumers by incentivising efficient investment and penalising poor performance,” says Lord Mogg.

But according to media reports, the proposals fall well short of what grid operator National Grid was expecting over the next eight years.

For further information:
www.ofgem.gov.uk

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