National Grid's Strategy of Investing £60 Billion to Decarbonize Energy System Unveiled
In a significant stride towards the UK's net zero targets, National Grid's ambitious £60 billion investment plan is moving forward, with provisional regulatory approval and ongoing negotiations to finalize incentives and cost recovery mechanisms.
The company's commitment to invest around £60 billion over the five years to March 2029 aims to support the UK's transition to net zero by enabling large-scale upgrades to the electricity grid and supporting renewable technologies. Ofgem, the UK energy regulator, has provisionally approved approximately £24 billion of investment to upgrade the energy network, including over £8.9 billion for the high-voltage electricity network.
Ofgem has set a provisional cost of equity allowance of 6% (at 60% gearing) for private investment during this period, a move that represents a balance between unlocking necessary capital and protecting consumers. However, National Grid is actively reviewing the draft regulatory proposals to assess if they provide a financially viable framework to support these investments. The company emphasizes the need for further progress on incentives to balance consumer value and shareholder returns, with the final decision from Ofgem expected in December 2025.
This investment strategy is central to delivering the UK's net zero targets by enabling the massive grid expansion and upgrades required to accommodate increased renewable energy deployment, electrification of transport (e.g., electric vehicles), and other clean energy technologies as part of the government’s broader clean power and decarbonisation plans.
Meanwhile, other key developments are taking place in the energy sector. ChargeUK, a leading organisation in electric vehicle (EV) charging infrastructure, has published an election manifesto focusing on 12 areas for improved EV rollout to meet net zero targets. They recommend equalising VAT at 5% for both public and private charging, incorporating EV chargers within Permitted Development Rights, and including renewable electricity in the government's Renewable Transport Fuel Obligation.
The Public Accounts Committee, on the other hand, has called for a gas decommissioning plan by June 2025, recommended the creation of an easy-to-use website to make the heat pump landscape more accessible for consumers, and pushed the Department for Energy Security & Net Zero to clarify its approach to town-level trials of hydrogen home heating.
In the local arena, the HyCrem project, supported by the government's Industrial Fuel Switching Competition, aims to help Adur & Worthing Council meet its targets of becoming a carbon neutral authority by 2030 and a net zero borough by 2045. The project involves running one of three cremators on 100% green hydrogen, instead of fossil gas, in a "world-first" green hydrogen trial running from May 2024 to June 2024.
As the UK moves towards its 2030 goal of having 300,000 public charge points installed, the need for effective regional planning becomes increasingly crucial. Regen's report suggests that Regional Energy Strategic Planners (RESPs) will be responsible for producing consistent regional plans, aligning local and national plans, and enabling wider input and collaboration on local and regional energy goals.
These developments underscore the UK's commitment to decarbonising its energy systems and meeting its net zero targets. The outcomes from the upcoming Ofgem final determination will be pivotal in enabling companies like National Grid to deliver these transformative upgrades at the scale needed.
- The National Grid's £60 billion investment plan, aimed at supporting the UK's transition to net zero, focuses on enabling large-scale upgrades to the electricity grid and supporting renewable technologies, which are crucial elements in the nation's fight against climate-change.
- Ofgem, the UK energy regulator, has approved approximately £24 billion of investment towards upgrading the energy network, including for the high-voltage electricity network, as part of the financial model to accommodate these industry-wide changes.
- In the local context, the HyCrem project, a world-first green hydrogen trial, is an environmental-science endeavor supported by the government, seeking to help Adur & Worthing Council meet its carbon neutral targets by 2030 and net zero borough targets by 2045, demonstrating the importance of renewable-energy in reaching the UK's net zero objectives.
