UK energy bills to rise as £28 billion grid expansion promises long-term savings

UK households should brace for an increase in their energy bills as regulator Ofgem greenlights a £28 billion investment to modernize the country’s gas and electricity networks. The funding forms part of a five-year plan aimed at maintaining existing infrastructure and expanding capacity to meet future energy demands.

The initiative will see £17.8 billion allocated to upgrading the gas network and £10.3 billion devoted to bolstering the electricity transmission system—the largest expansion since the 1960s. Ofgem estimates that by 2031, this program will add roughly £108 annually to the average household energy bill, split between £48 for gas and £60 for electricity.

However, the regulator highlights that the upgrades are expected to generate around £80 in savings per household. This is because the investment will reduce reliance on imported gas and enable cheaper wholesale electricity, resulting in a net increase of just £30 by 2031. Ofgem CEO Jonathan Brearley emphasized that the plan balances necessary investment with consumer protection.

“Every pound of this investment is aimed at delivering tangible value to households,” Brearley told BBC Breakfast. “We’re ensuring Britain’s energy network remains safe, reliable, and resilient, while preparing the system for cleaner energy alternatives.”

The spending is also designed to address inefficiencies, such as the recurring situation where offshore wind farms are instructed to shut down due to grid limitations. Scottish Power CEO Keith Anderson described the plan as a transformative step, calling it the “biggest wave of investment since the 1950s,” which will prepare the UK grid for the demands of the 21st century.

National Gas, which operates the country’s gas transmission system, welcomed the funding, noting its role in maintaining national energy security. Meanwhile, Greenpeace UK urged strong regulatory oversight to ensure the money is spent efficiently and that upgrades deliver genuine consumer value rather than excessive returns for energy companies.

The regulator also set a framework for how network companies—entities responsible for electricity and gas transmission—will operate over the next five years. These companies, which have regional monopolies, must meet strict cost controls and efficiency requirements, with funds released only when targets are met.

For smaller businesses, the increases in network charges will vary widely. A small holiday let or retail kiosk could see an extra £60 per year by 2031, while small offices or hotels may face increases up to £1,700, and medium-sized factories nearly £9,800.

The government has simultaneously pledged measures to ease household energy costs. The recent Budget included interventions that could reduce typical annual energy bills by approximately £150, helping to offset some of the impacts of the network investment.

With the UK striving to transition away from fossil fuels and towards a more diversified and resilient energy system, this £28 billion investment marks a significant milestone. While it will create short-term cost increases, regulators and energy experts say it will secure long-term savings, enhance energy security, and support the move to cleaner, homegrown energy.

FAQs

Q: Why are energy bills going up in the UK?
A: Energy bills will rise to fund a £28 billion investment in gas and electricity networks, ensuring safer and more resilient infrastructure.

Q: How much will households pay extra by 2031?
A: Bills are expected to increase by £108 per year, though net costs after projected savings will be around £30 annually.

Q: What will the investment achieve?
A: The upgrades will strengthen the gas network, expand electricity transmission, reduce reliance on imported gas, and support renewable energy integration.

Q: Will small businesses be affected?
A: Yes, depending on size and sector. Charges could range from £60 for small retailers to nearly £10,000 for medium-sized factories.

Q: How will this benefit consumers long-term?
A: Improved infrastructure will reduce system inefficiencies, lower reliance on imports, stabilize energy prices, and support cleaner energy sources.