Ofgem has today unveiled proposals that would see the UK invest £25bn over the next five years to deliver a “greener, fairer energy system” while cutting consumer energy bills. But the plans were immediately panned by network operators, who have warned the new spending regime will struggle to attract the level of investment needed to deliver the UK’s net zero target. In plans published today, Ofgem explained the upfront expenditure, generated in part from slashing network companies’ returns and linking spending plans to ambitious climate targets, would support the growth of green energy in the UK while enabling ongoing maintenance and operation of gas and electricity networks.
Business Green 9th July 2020 read more »
Current 9th July 2020 read more »
Up to £35bn will be spent making Britain’s electricity grid greener and more resilient to cyber attacks, under plans by the energy regulator that will also knock £20 off the average annual household bill. Ofgem is proposing an overhaul of the network that delivers energy from the power producers to households to prepare it for a period of significant change as the country works to have a zero-carbon electricity system by 2025 and to be carbon neutral overall by 2050. The money will be invested in hooking dozens of new wind and solar farms to the grid and upgrading the network to deal with the significant fluctuations in supply that can occur do to the intermittent nature of renewable energy.
iNews 9th July 2020 read more »
Energy suppliers are bracing for a showdown with regulator Ofgem over a controversial £25bn spending plan which will hammer their profits. Major players including Scottish Power are furious after the watchdog announced it would halve the profits which they are permitted to make, shaving £20 a year off the average household bill. The proposals – announced as part of Ofgem’s latest five-year plan for the industry – have sparked claims that companies will be so tightly squeezed there is no money left for investment in infrastructure. Scottish Power chief executive Keith Anderson claimed that regulators had “completely flunked” the first test to prove their green credentials by doing too little to bolster spending on clean power.
Telegraph 9th July 2020 read more »
Leading energy companies have warned that they could ration their investment in power network upgrades after the regulator said that their returns would need to halve. Under Ofgem’s plans, groups such as National Grid, SSE and Scottish Power would have to invest £25 billion over the next five years to improve electricity and gas networks and thus help Britain to hit its carbon reduction targets. Households would save about £20 each year on gas and electricity bills under proposals that Ofgem’s chief executive claimed would lay the foundation for “a greener, fairer energy system for consumers”.
Times 10th July 2020 read more »
All regulators like to make a name for themselves. So hats off to Jonathan Brearley, the Ofgem boss. He’s done it with his first public outing — by giving Britain’s energy networks an electric shock.
He’s left the bosses of SSE, National Grid and Scottish Power incandescent. A result, too, for the man only running the regulator since February. Isn’t it proof he’s doing his job? Whatever the industry, five-year price reviews always create fireworks. And no regulator expects companies to like their “draft determination”: that would prove they’d been too soft. Even so, Mr Brearley has gone too far. As Bernstein analysts put it: “These proposals do not appear financeable.” Politically, they’re odd. Mr Brearley pressed all kinds of consumer-friendly buttons, but missed the bigger post-corona politics. He’s priced up £25 billion of investment over the five years from next April, allowing £8 billion less spending than the companies wanted. And there was no hiding his joy to be “cutting returns to the network companies to an unprecedented low level”. He claimed it would amount to £20 a year off customer bills, with “less of your money” going to “company shareholders and more to improving the network”. Yet that only works if the companies are willing to invest. And there’s a big doubt over that now that he’s halving their “allowed baseline return on equity” from about 8 per cent to 3.95 per cent. Keith Anderson, the Scottish Power boss, called the proposals “gravely at odds with the UK government’s ambition to boost investment in green infrastructure” — one day, too, after it had formed a key plank of Rishi Sunak’s jobs plan.
Times 10th July 2020 read more »