Six electricity distribution network companies, covering fourteen local networks in the UK, will have $26.6 billion (£22.2 billion) to invest by 2028 to make the local grids more resilient and host growing shares of renewable electricity.
The distribution network operators had asked for $30.2 billion (£25.2 billion) in funding for the five-year period between 2023 and 2028, but the UK's energy regulator Ofgem announced on Wednesday the five-year investment package for the electricity distribution network companies, which is 11.8% lower than firms asked, at the equivalent of $26.6 billion.
The companies will invest the funding "to help deliver cheaper, cleaner, more reliable local grids at no extra cost to consumers," Ofgem said.
"A key requirement of the plan will be for networks to focus the investment on supporting the move away from a high dependence on imported fossil fuels, towards using more homegrown, cleaner, cheaper, and secure sources of energy," the regulator noted.
Ofgem expects major changes in the UK's energy system over the next few years related to the rise in renewable electricity sources, higher demand for electric vehicles (EVs), increased use of smart technologies, and the potential for consumers to sell electricity back to the grid when energy demand is low, from sources such as EV batteries
The investment in the grids will not cost UK customers any more than they are paying already, with the average network costs for local electricity grids remaining at around $120 (£100) per billpayer.
"The economics of energy have shifted with home-grown cleaner renewables like wind and solar energy proving cheaper than costly imported gas," said Akshay Kaul, Ofgem Interim Director, Infrastructure and Security of Supply Group.
"These new low carbon sources of generation will also need to be connected to an expanded electricity network to meet the growing demand for electricity with millions more electric heat pumps in homes and electric vehicles (EVs) on the road expected over the coming years," Kaul added.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More