The funding will enable network operators to expand and reinforce the high-voltage grid, accommodate rising renewable generation, connect new industrial demand, and maintain system reliability. Ofgem estimates the upgrades will add approximately £108 to the average household energy bill by 2031 through network charges, which currently account for nearly a quarter of typical bills.
"The investment will support the transition to new forms of energy and support new industrial customers to help drive economic growth and insulate us from volatile gas prices," Ofgem Chief Executive Jonathan Brearley said on Thursday.
Under the British regulatory system, transmission companies submit detailed business plans and cost projections, which Ofgem reviews and approves under the RIIO (Revenue = Incentives + Innovation + Outputs) price-control framework. Consumers ultimately fund approved spending via charges added to electricity bills.
The Department for Energy Security and Net Zero described the investments as essential to maintaining secure supplies and keeping the power system operational as electricity demand is expected to grow significantly.
National Grid, which operates the transmission system in England and Wales, welcomed the decision, stating it recognises the necessity of substantial capital to handle a forecast doubling of power flows across the network in the coming years.
SSE, owner of Scottish and Southern Electricity Networks Transmission, also expressed support for the improvements made to Ofgem's earlier draft proposals and said it will examine the final package in detail over the coming weeks.
The End Fuel Poverty Coalition acknowledged the importance of upgrading infrastructure to ensure reliable supplies and to enable more homes to benefit from renewable generation.
"But that shouldn't mean signing a blank cheque for network and transmission companies," the campaign group added.
The approved settlement reflects the need to balance long-term system resilience and the integration of low-carbon technologies with the immediate pressure on consumer energy costs.
