Jonathan Brearley, Ofgem's CEO, emphasized that this investment serves as a 'long-term insurance policy' to protect households from price shocks and ensure a stable energy supply.

The new energy price cap, effective from July 1, 2025, has been set at £1,720 per year, reflecting a 7% decrease, with another small drop anticipated in October 2025.

This announcement comes in the wake of rising energy prices due to geopolitical tensions, particularly following Russia's invasion of Ukraine, which had previously driven household energy bills close to £4,000 annually.

The increase in household bills will comprise an additional £30 for gas networks and £74 for the electricity grid, although costs would have been higher without this investment.

The proposals for this investment are currently open for consultation, with final decisions expected by the end of 2025.

Ofgem has approved a substantial £24 billion investment aimed at upgrading the UK's energy infrastructure, which is projected to increase annual household energy bills by £104.

The funding plan includes a proposed increase in returns for private investments in grid companies, raising the cost of equity from 4.55% to 6%, a move that has garnered mixed reactions from energy firms.

This funding will support 80 major energy infrastructure projects, including the upgrade of 4,400 km of overhead lines and the addition of 3,500 km of new circuits, primarily for renewable energy sources.

The UK government has reiterated its commitment to green energy initiatives, aligning with the funding strategy to enhance the renewables sector and improve energy security.

Brearley also highlighted that cost controls are in place to negotiate a fair deal for both investors and consumers, ensuring that network companies meet deadlines and budgets.

This initiative marks the largest overhaul of the electricity grid since the 1960s and is expected to quadruple current levels of electricity network construction.

The investment also includes over £15 billion for gas transmission and distribution networks, marking a significant expansion of the UK's energy infrastructure.