UK Regulator Approves £40 Billion Green Energy Investment
Energy networks will be allowed to bolster key infrastructure, increasing efficiency and lowering harmful emissions.
Ofgem, the UK’s energy industry regulator, will allow energy networks to go ahead with a green energy investment programme into the country’s energy infrastructure worth over £40 billion, which will run from 2021 to 2026.
The programme is aimed at improving services, reducing the impact of UK energy networks on the environment, and setting a fairer price for customers.
In addition to a £30 billion initial payment to network companies running the country’s energy grid, Ofgem said it would make “unprecedented additional funding” available for green energy projects to arrive in the future, which will be aimed at reducing emissions from the energy system and eventually hitting net zero targets.
Companies have indicated that £10 billion of such projects could be in the works, though Ofgem added that there is no limit on the additional funding that it could provide, subject to good business cases being presented.
“Our £40 billion package massively boosts clean energy investment,” said Jonathan Brearley, chief executive of Ofgem. “This will ensure that our network companies can deliver on the climate change ambitions laid out by the prime minister last week, while maintaining world-leading levels of reliability.”
Brearley added that the costs incurred by the new investment “must fall fairly for consumers”, adding that the regulator would reduce the returns paid to shareholders by 40% to bring them closer to current market levels.
Last month, Ofgem said that it is considering lifting its cap on household tariffs by £21 annually to help companies that have been struck by an increase in unpaid bills – meaning that millions of UK customers may pay more for their utility bills from April 2021 to help energy suppliers cover the cost of those unable to pay for energy due to the COVID-19 pandemic.