Britain's energy consumers braced for an electric shock

Customers will pay even more on their bills as the power grid is set for a huge overhaul before a consumption surge, says Tom Bawden

After decades of calm, Britain's septuagenarian power grid is about to be transformed from a short, aging, fossil fuel hungry caveman to a tall, young sylph on a low-carbon diet. Ofgem yesterday approved £24.2bn of investment in the national grid of gas and electricity pipes and wires, some of which date back to before the Second World War, with the bulk laid in the 1950s and 1960s.

The investment, to be made between 2013 and 2021 and funded by the consumer, will be used to prepare Britain's power grid for a surge in electricity generated from solar, wind, nuclear, biomass and other non-fossil fuel sources, in the biggest overhaul since it was created through a series of regional network mergers in 1938.

"Ofgem's investment decision is the culmination of a number of years of investigations and consultations. It sets the scene for a sea-change in the way the energy grid is connected up as we move to low-carbon electricity," Angelos Anastasiou, an analyst at Seymour Pierce, said.

The investment will see the grid adapted to accommodate low-carbon sources of energy, which will be individually plugged into the system to replace the coal-fired stations due to close down because of old age and the need to satisfy European emissions targets. It will include an upgrade of the pipes and wires as well as an expansion of the grid to accommodate an expected surge in energy use and to cater for a rapidly changing power-generation map.

Traditionally, the coal-fired power stations that have dominated Britain's energy generation have been based in the North of England, while most of the consumption has been in the South. However, the growth of alternative sources of energy, such as wind power, will see far-flung parts of Scotland and Wales increasingly put on the map, while many of the northern coal plants close down.

"The UK's energy future will be more diverse with greater use of renewable energy being generated locally. The challenge for essential investment to keep the lights on and integrate these changes in the coming decades will be the biggest since the grid was built," says David Smith, the chief executive of Energy Networks Association, which represents the electricity and gas network operators.

The grid will also need to be adapted to enable more liquefied natural gas to be imported from Qatar and elsewhere as North Sea supplies dwindle. Although the Government has high hopes for shale gas, very little is known about the volume of extractable reserves contained in the UK, while any substantial production is not expected for years.

The overhaul will heap a little bit more pain on Britain's long-suffering customers, who are already reeling from an 8 per cent jump in household energy prices this year, which has pushed up the average annual direct debit bill to £1,247. They will finance it through an extra £12-a-year charge on the average household bill during the eight-year investment period, but will remain in line for one further dose of Ofgem-sanctioned pain.

This is because Ofgem's investment decision yesterday excludes so-called electricity distribution, the last part of the grid which links the houses to the network. And with a revolution set to take place in that part of the network, it is likely to require about £13bn of investment by 2050, but could potentially need as much as £61bn, according to research by ENA.

The overhaul is necessary to enable households to export home-generated solar and wind energy to the grid as well as import it when the wind isn't blowing and the sun's not shining.

Among a plethora of additional charges facing energy customers, UK households are also expected to pay an additional £95-a-year on their annual bills by 2020 to finance a key subsidy for low-carbon electricity generators. A total of 6.5 million households are now in fuel poverty, meaning they spend more than 10 per cent of their after-tax income on energy, while the number could jump to 9 million by 2016, the government-funded Fuel Poverty Advisory Group warned yesterday.

Ofgem is trying to ensure the grid receives the funding it desperately needs, while minimising the burden on customers. Lord Mogg, its chairman, said the regulator had "delivered a sound regulatory environment that protects consumers by attracting the energy infrastructure investment that Britain needs at a fair price".

Its announcement yesterday represents a rise from the £22bn Ofgem proposed in July. This was denounced by the country's biggest energy distributor, National Grid, which had asked for £31bn.

National Grid said it would spend a "few months" analysing the latest proposal before deciding whether to get the Competition Commission involved. But whatever the outcome, the national grid is in for an expensive overhaul and the consumer is going to pay.

Voices
voices
Life and Style
Upright, everything’s all right (to a point): remaining on one’s feet has its health benefits – though in moderation
HealthIf sitting is bad for your health, what happens when you stay on your feet for a whole month?
Arts and Entertainment
Peter Griffin holds forth in The Simpsons Family Guy crossover episode
arts + ents
Sport
Laura Trott with her gold
Commonwealth GamesJust 48 hours earlier cyclist was under the care of a doctor
PROMOTED VIDEO
Arts and Entertainment
Gal Gadot as Wonder Woman
arts + entsFilmmaker posted a picture of Israeli actress Gal Gadot on Twitter
News
Bryan had a bracelet given to him by his late father stolen during the raid
people
Arts and Entertainment
Chris Pratt stars in Guardians of the Galaxy
arts + ents
Arts and Entertainment
Pedro Pascal gives a weird look at the camera in the blooper reel
arts + entsPrince Oberyn nearly sets himself on fire with a flaming torch
News
Danny Nickerson, 6, has received 15,000 cards and presents from well-wishers around the world
newsDanny loves to see his name on paper, so his mother put out a request for cards - it went viral
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
France striker Loic Remy
sportThe QPR striker flew to Boston earlier in the week to complete deal
News
Orville and Keith Harris. He covered up his condition by getting people to read out scripts to him
People
Arts and Entertainment
Zoe Saldana stars in this summer's big hope Guardians of the Galaxy
filmHollywood's summer blockbusters are no longer money-spinners
Arts and Entertainment
O'Shaughnessy pictured at the Unicorn Theatre in London
tvFiona O'Shaughnessy explains where she ends and her strange and wonderful character begins
Life and Style
Workers in Seattle are paid 100 times as much as workers in Bangladesh
fashionSeattle company lets customers create their own clothes, then click 'buy' and wait for delivery
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Application Support Analyst / Junior SQL Server DBA

£40000 - £45000 per annum: Ashdown Group: An established professional services...

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

The benefits of being in Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Test Analyst - UAT - Credit Risk

£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

Day In a Page

A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on
It's the best of British art... but not all is on display

It's the best of British art... but not all is on display

Voted for by the British public, the artworks on Art Everywhere posters may be the only place where they can be seen
Critic claims 'I was the inspiration for Blanche DuBois'

Critic claims 'I was the inspiration for Blanche DuBois'

Blanche Marvin reveals how Tennessee Williams used her name and an off-the-cuff remark to create an iconic character
Sometimes it's hard to be a literary novelist

Sometimes it's hard to be a literary novelist

Websites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

The woman stepping down as chair of the Heritage Lottery Fund is worried