National Grid's Multi-billion-pound Investment Plan Revealed: Aiming to Decarbonize the Energy System
**National Grid Unveils £60 Billion Investment Plan to Decarbonise UK Energy System**
National Grid has announced a monumental five-year investment plan, worth £60 billion, aimed at decarbonising the UK's energy system and supporting the government's renewable energy targets. This strategic move forms a 5-year financial framework, with £35 billion earmarked for electricity transmission alone during this period.
The investment is designed to double the capacity of the energy network, supporting an additional 35 gigawatts of renewable generation and 19 gigawatts of incremental demand. This significant capital expenditure will drive asset growth and enhance the grid's capability to handle low-carbon energy sources.
The investment plan is integrated into National Grid's latest price control submission to regulators, such as Ofgem, which supports the necessary funds for developing transmission infrastructure rapidly and efficiently by 2030. Ofgem’s RIIO-3 draft determinations endorse an approach prioritising speed, efficiency, and adaptability in funding to meet clean power system goals by 2030.
Funding for this ambitious project is supported through a combination of regulatory price controls, government backing, and public-private partnerships. Regulatory price controls provide a certain framework for funding customary to energy network operators, while government mechanisms like the National Wealth Fund motivate private investment by providing initial public capital to accelerate decarbonisation technologies.
In terms of allocation, 80% of the capital investment will be allocated for the expansion of electricity networks. The investment will also support the UK's transition to electric vehicles (EVs), with ChargeUK committing to investing £6 billion in EV charging by 2030. ChargeUK has also published an election manifesto titled "Our Electric Future", focusing on 12 areas to improve EV rollout and meet net zero targets.
Adur & Worthing Council has selected Worthing crematorium for a trial as part of a "world-first" green hydrogen trial, running from 20 May 2024 to 14 June 2024. The crematorium, which has the largest carbon footprint across its sites, is committed to becoming a carbon neutral authority by 2030 and a net zero borough by 2045. The trial will involve running one of three cremators on 100% green hydrogen, instead of fossil gas, as a sustainable alternative that does not release carbon emissions when burnt.
The Public Accounts Committee (PAC) has published a report calling for a gas decommissioning plan by June 2025. The report found that most households will still require an additional £5,000 to cover the total cost of heat pump installations. The PAC report also recommends the creation of an easy-to-use website to make the heat pump landscape more accessible for consumers.
Regen has made interim recommendations for the establishment of the RESP (Regional Energy System Plan) system, including government financial resource and guidance for local authorities, the creation of an industry-wide 'in-development' register, trialling a regional board structure, and providing more opportunities for regional feedback on investment plans. The RESPs will have specific responsibilities of providing consistent standards for data, guiding on shared standards and processes for local area energy plans, mapping existing and significant stakeholder relationships, and having a hands-on approach to resolving conflicts between stakeholders.
National Grid is preparing for a £7 billion, fully underwritten rights issue to fund the plan. The company has also announced plans to sell off a number of its renewable businesses, including National Grid Renewables (its US onshore renewables division) and its UK-based liquefied national gas asset, Grain LNG.
This ambitious investment plan is a key part of National Grid's plans to deliver a resilient, decarbonised energy system aligned with UK government net-zero ambitions by the end of this decade. The investment will align £51 billion of the proposed investment with the EU Taxonomy to decarbonize energy networks, and ChargeUK recommends reducing obstacles to the expansion of EV chargers by incorporating EV chargers within Permitted Development Rights, including renewable electricity in the government's Renewable Transport Fuel Obligation, equalising VAT at 5% for both public and private charging, and working to lower the cost of electricity.
- The renewable energy industry will receive a substantial boost with National Grid's £60 billion investment plan, as it aims to double the capacity of the energy network and support an additional 35 gigawatts of renewable generation.
- In order to support the UK's transition to electric vehicles, the investment plan will also allocate funds for ChargeUK to invest £6 billion in EV charging infrastructure by 2030.
- National Grid's ambitious investment plan is aligned with the UK government's net-zero ambitions and aims to decarbonize energy networks to the tune of £51 billion, aligning with the EU Taxonomy.
