Investing in a smarter, more flexible grid

Blog
Jonathan Brearley Ofgem Chief Executive

Jonathan Brearley

Ofgem Chief Executive

Dyddiad cyhoeddi

Sector diwydiant

Distribution Network

I regularly talk to customers so I know that many readers will be extremely worried about rising energy bills. This is a difficult time for many households. Customers struggling to pay for their energy may be eligible for extra help such as debt repayment plans, emergency credit for prepayment metered customers, priority support, and schemes like the Winter Fuel Payment, and I would encourage anyone struggling with their bills to get in touch with their energy company to see what support is available as soon as they can.

At the same time, like so many we at Ofgem are shocked and heartbroken by what is happening in Ukraine, and by the immense suffering of the Ukrainian people as a result of the Russian invasion. Many of us have relatives and friends who are caught up in this conflict, and I want to make it clear that Ofgem is doing whatever is needed to support the UK government in executing its strategy on economic sanctions against Russia.

This war will undoubtedly change many things about our world. We cannot yet know all of them, but it is already clear it will have long term impacts on our fuel prices, gas prices, and the energy sector as a whole. This makes Ofgem’s mission to protect the interests of consumers, ensuring a secure supply of electricity and gas, and helping the country make the transition to a low-carbon domestic energy system, at least cost, more important than ever.

To make this transition happen, we need to invest billions of pounds to upgrade our electricity network: to accommodate a nation-wide network of electric vehicle charging points as we move away from petrol and diesel cars; increasing our grid capacity to power heat pumps as we transition from gas boilers; upgrading our transmission network assets to get new low carbon energy from where it is generated to where it is in demand; and making power supplies more resilient to more frequent storms, such as those we have seen this winter.

Later this year Ofgem will strike a landmark settlement with electricity distribution network companies to help deliver this investment. Since this will ultimately be paid for by customers, we are determined that we get the best deal possible, and throughout March we held virtual open hearings across the country, enabling consumer groups and other stakeholders, alongside us, to scrutinise each company’s spending plans.

The hearings attracted over 750 interested parties, dialling in to hear the network companies take searching questions from Ofgem, consumer representatives, environmental groups, representatives of large industrial energy users, electric vehicle organisations, as well as county, local and city authorities. We want to make sure the voice of consumers is heard, and that stakeholders can probe these companies’ plans and highlight weaknesses. 
 
As we make these investments, we need to be ready to think differently about energy – how we insulate our homes, use energy more efficiently, and harness the power of new technologies.

A smarter, more flexible grid will give consumers more control to save money through better data and more regularly updated prices for peak and off-peak demand. It will also enable smart gadgets that draw energy from the grid at cheaper rates when demand is low, supporting the roll-out of low-carbon technologies like electric vehicles.

These changes will reduce the need for costly new generating and grid capacity, in the long term could save customers up to £4.5 billion a year, helping keep bills down and achieving our climate change goals at the same time.

Given the extraordinary pressure on household bills, it is extremely important that our network companies can demonstrate value for money. In the lead up to the publication of the draft determinations in the summer, Ofgem will continue to take forward a tough settlement process and providing strong challenge to the network companies where their plans fall short or are not fit for purpose, driving the right decisions for consumers.

Ofgem cannot control volatile global gas prices, and sadly I cannot pretend that we can protect customers from the full impact of rising energy bills today. But I want to assure customers that by pressing ahead with plans to build a low carbon, more resilient, energy system at the lowest cost, Ofgem is working hard to insulate customers from future price shocks tomorrow.