Ofgem calls for preparation for low-carbon economy

The energy regulator says that this is nearly double the amount of expenditure seen over the last 20 years. It estimated that a total of £200bn should be spent over the next 10 years to secure electricity supplies for customers.

New sources of generation, such as large-scale wind, gas or nuclear plants or small-scale renewables and home-based microgeneration, means there will be greater requirements for network investment.

Ofgem says that the scale of investment required will mean higher energy bills are almost certain for consumers. Therefore, network companies will have to show customers that they are getting value for money over the longer term, setting out clearly what is being delivered and at what cost.

The energy regulator has unveiled a new price-control model, dubbed RIIO (Revenue = Incentives + Innovation + Outputs). According to Ofgem, the model is designed to encouraging finance in new infrastructure and rewards electricity and gas transmission and distribution network companies that invest in innovation and efficiency.