UK’s Ofgem announces network overhaul for green energy drive
LONDON (UK) – UK energy regulator Ofgem said network operators should pump in 25 billion pounds ($32 billion) from 2021 to 2026 to supply emissions-free energy. It also proposed slashing returns these firms can make in a bid to reduce household bills.
The UK has set a climate target to attain net zero emissions by 2050. This requires a huge increase in renewable energy and investment to enhance the stability of its energy networks.
“Given the scale of green investment likely to be needed in future, Ofgem is keeping costs as low as possible for consumers by proposing the lowest ever rate of return on capital for network companies,” Ofgem said.
National Grid, one of the several firms that owns and operates the UK’s gas pipes and power cables, said it was unhappy with the proposals, adding that they “jeopardised the delivery of the energy transition.”
According to Ofgem’s price regulation system, operators submit plans for work and set out costs. Ofgem assesses the proposals and sets limits on the profit.
Consumers have to pay for the investment via network charges, which amount to a quarter of an average household power bill.
Ofgem said it was allocating 25 billion pounds upfront expenditure. It also proposes to slash more than 8 billion pounds from companies’ spending plans.
“Ofgem’s proposals nearly halve network companies’ allowed rate of return, so that less of consumers’ money goes towards network companies’ profits, and more towards driving network improvements,” it said.
(Photos syndicated via Reuters)
This story has been edited by BH staff and is published from a syndicated field