The regulator also said the investment will also remove inefficiencies in the system such as offshore wind farms being paid billions a year to switch off as the grid cannot take their power.
Speaking ahead of Ofgem’s announcement, Keith Anderson, the chief executive of Scottish Power told the BBC’s Today programme the removal of those constraints in the system was important.
“This will be the biggest wave of investment in our electricity infrastructure since it was built by our grandfathers back in the 1950s and it will give us a system that is fit for purpose for the country for the 21st Century,” he said.
National Gas owns and operates Britain’s gas transmission network, and will receive funding through the Ofgem plan.
Its chief executive Jon Butterworth welcomed the investment, saying it confirmed “the critical role that the gas transmission system plays in Britain’s energy security now and for decades to come”.
“In the coming weeks, we will undertake a more detailed review of Ofgem’s decision to ensure it enables us to deliver a safe, resilient network that secures Britain’s energy, maintains our industrial competitiveness and supports the country’s clean energy ambitions.”
Greenpeace UK’s senior climate adviser, Charlie Kronick, said the energy grid was “no longer fit for purpose” and needed immediate, vital upgrades.
“This money must be spent effectively, however, with robust safeguards and strong regulation to protect bill-payers, and ensure these upgrades deliver genuine value for money, offering fair but not excessive returns,” he said.
Ofgem’s announcement comes after a government pledge in the Budget to remove certain costs, the equivalent to about £150 from a typical annual energy bill.
