Ofgem proposes £25bn investment programme

Ofgem want suppliers delivering better value for customers and more clean energy.

By Matt Maynard · 9th July 2020

Ofgem has proposed a £25 billion 5 year investment programme to transform Britain's energy networks. 

The two major areas Ofgem wants improved are suppliers delivering emission-free green energy, along with world-class customer service and reliability, which can be a major flaw in some energy suppliers on the UK energy market. When these proposals are implemented, customers will see a direct benefit, not only in vastly-improved customer support, but in more affordable green energy, too. 

The networks that transport our energy around Great Britain are likely to receive increased funding, ensuring they can meet Government targets for Net Zero (carbon-emission free 2050) by more effectively carrying clean energy around the country. Ofgem hopes this investment will generate more green energy growth and employment, helping environmentally-conscious customers do their part for the planet's welfare by opting for emission-free energy. 

Ofgem aims to keep energy costs as low as possible for consumers, by proposing the lowest rate of return for network companies and telling companies to be much more efficient with how they operate. 

Ofgem's chief executive, Jonathan Brearley, said: 

“Ofgem is working to deliver a greener, fairer energy system for consumers. This is why we are striking a fair deal for consumers, cutting returns to the network companies to an unprecedented low level while making room for around £25 billion of investment needed to drive a clean, green and resilient recovery."

“Now more than ever, we need to make sure that every pound on consumers’ bills goes further. Less of your money will go towards company shareholders, and more into improving the network to power the economy and to fight climate change."

“Ofgem’s stable and predictable regulatory regime will continue to attract the investment Britain needs to go further and faster on decarbonisation.”

Ofgem will unlock additional funding to drive green energy that companies can unlock over the next five years, but Ofgem have been very clear that they will only grant access to these funds if the investment will deliver decarbonisation at the lowest cost to consumers.

Ofgem's proposal also nearly halves the allowed rate of return of network companies, meaning the extra profit they would have made will go towards network improvements. Ofgem reckons this will save £3.3 billion over the next five years for the gas and transmission sectors. 

Source: Ofgem

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