UK Grid Network Charges To Increase £9bn in Next Few Years
OFGEM have increased the network component of the energy price cap by £66 a year, effective from 1st April. The gas component is related to safety maintenance, but there is an increase of £32, to pay for the first tranche of electricity grid upgrades, to facilitate ‘net zero’
£32 may not sound a lot, over the grid as a whole, the cost is nearly £3 billion a year. And it is just the start.
It is all the result of the new RIIO-3 Price Control Framework, which reimburses transmission networks for grid upgrades, which OFGEM have said will cost £80 billion in the next few years.
But what will this mean for bills?
OFGEM have sent me more details, which provide an insight.
By 2030/31, transmission charges are forecast to rise to £12 billion. This compares around £3 billion last year.
Source: telegraph.co.uk
The upgrades include thousands of miles of new pylons, subsea cabling, sub-stations and storage.
None of this would be needed for ongoing operations, it is all needed to meet ‘net zero’ objectives, as OFGEM acknowledged last summer:
Source: ofgem.gov.uk
OFGEM have ludicrously claimed that these upgrades will eventually save money by reducing constraint payments to wind farms. This is an outright lie.
Last year, NESO stated that constraint payments amounted to £1.7 billion, which is well below the £12 billion we will soon be stumping up.
An extra £9 billion a year, ie the increase from £3 billion to £12 billion, means a surcharge on bills of about 11 percent.
Overall, it equates to a cost per household of £330 pa, part of which will appear on energy bills – the rest will feed through into higher prices and taxes.
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