According to new proposals released by the UK's gas and electricity regulator Ofgem, the UK's energy network infrastructure could see investment totaling GBP4 billion over the next five years.
This level of investment is required to meet consumer energy needs, Ofgem says. It will enable the four companies which run the networks to adapt to change by connecting more renewable energy and new gas import projects including pipelines and terminals. The proposals are being made as part of Ofgem’s review of the prices the four transmission companies are allowed to charge users of their networks between 2007 and 2012.
Britain’s energy networks face huge challenges over the next five years to respond to changes in the sources of our gas and power. A variety of import projects to bring gas from areas across the world are being built and there are also proposals to greatly increase the amount of electricity sourced from renewables, says Ofgem chief executive Alistair Buchanan
However, there is uncertainty about when projects may be completed and where exactly investment is needed. Therefore, Ofgem is proposing price controls which will have significant flexibility to allow the companies to invest efficiently when necessary and in a way that best protects customer interests. The investment will also mean the companies can continue to maintain Britain’s energy networks, which are among the most reliable in the world, Mr Buchanan adds.
The proposals may result in almost double the amount of investment in the networks that was allowed in the previous five-year price controls. Given the challenges facing the energy networks, the price controls will also ensure the companies are able to make additional investments to connect viable gas import or renewable electricity projects when commitments from users demonstrate this need.
The proposals also address the need for companies to replace infrastructure, particularly electricity network equipment, so that current high levels of reliability can be maintained. The impact of the proposals on customer bills is likely to be minimal as transmission costs make up just 3% of a household electricity bill and 2% of a household gas bill.