Green energy plan will save households £20 a year, says watchdog

THE ENERGY watchdog has vowed to take money out of shareholders’ pockets to improve investment in a green energy network while slashing bills.

Ofgem said households stand to save around £20 a year on their gas and electricity bills under its proposals, which are set to come into force from next year.

However, the proposals were attacked by some of Britain’s biggest energy networks, which will have to shoulder the cost.

Under its plan, Ofgem will halve the rate of return that companies will be allowed to take from their investments.

The regulator argues that companies and investors will still be willing to put their cash on the line to invest in upgrades to the system as the UK’s energy networks are a very low-risk investment.

“Strong evidence from water regulation and Ofgem’s offshore transmission regime shows that investors will accept lower returns and continue to invest robustly in the sector,” Ofgem said.

Meanwhile, the watchdog is setting aside £25bn for investment in the UK’s energy networks, including those run by National Grid.

There will also be a package of around £10bn in additional funding which is only available for clean energy investment, but companies will need to apply on a project-by-project basis.

More money may be set aside if Ofgem receives enough good proposals.

The regulator will scrutinise proposed investments and only give them permission if they cut carbon at a low cost to customers.

This could include a recently proposed National Grid project to install electric car charging points up and down British motorways, and innovative solutions such as switching the gas grid to run on hydrogen.

Ofgem will also set aside £630m to encourage new research and development in green energy.