Households face higher energy bills as Ofgem launches £28bn grid upgrade

Ofgem has announced that household energy bills will rise to help fund a £28 billion investment to upgrade the UK’s energy network.

The energy regulator said that it has approved more than £17.8 billion of spending plans to upgrade gas transmission and distribution networks in the five years from April 2026.

The remaining initial investment (£10.3 billion) will strengthen the electricity transmission network, aimed to improve reliability and expand capacity to support the electrification of the economy and drive growth. The £28 billion commitment will rise to an estimated £90 billion by 2031 across both gas and electricity networks.

Ofgem says that Investing now to maintain world class resilience and expand grid capacity is the most cost-effective way to harness clean power, support economic growth and protect the country from gas price shocks like the one seen in 2022.

As investment for ongoing operations, asset replacement and maintenance filters through to bills more quickly than investment in network expansion, these costs will add more to bills despite representing a smaller share of the overall £90 billion investment programme.

Ofgem says that £108 will be added to bills by 2031. £48 for gas and £60 for electricity. Alongside maintaining grid resilience this investment will deliver significant savings of around £80 compared to not expanding the grid.

Electricity grid expansion alone is expected to reduce bills by £50 by 2031, thanks to lower reliance on imported gas and the halting of constraint costs ensuring power flows efficiently from where it’s generated to where it’s needed, even at peak demand. In short, investing now is cheaper for consumers than delaying, and electricity grid investment more than pays for itself.

Overall the net increase in bills to cover all costs by 2031 will be around £30 or less than £3 per month with costs expected to fall further over time.

Jonathan Brearley, Ofgem CEO, said “The funding announced today will keep Britain’s energy network among the safest, most secure and resilient in the world. 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.

“But this is not investment at any price. Every pound must deliver value for consumers. Ofgem will hold network companies accountable for delivering on time and on budget, and we make no apologies for the efficiency challenge we’re setting as the industry scales up investment. We’ve built strong consumer protections into these contracts, meaning funds will only be released when needed and clawed back if not used. Households and businesses must get value for money, and we will ensure they do.”

Gillian Cooper, Director of Energy at Citizens Advice, said “This announcement confirms energy bills will rise by around £40 from April 2026, with further increases in years to come. This is to pay for essential electricity grid upgrades, which will bring down people’s bills in the long term, and to ensure the safety of the gas grid.

“After the current agreement between Ofgem and network companies allowed firms to make £4bn in windfall profits, we think this new deal is very generous to the networks. The regulator must now push firms to make sure this investment makes a real difference to people’s lives.

“The government’s decision in the Budget to reduce bills by an average of £150 is welcome, but with more rises coming, it must now strengthen targeted bill support like the Warm Home Discount to protect those struggling most.”