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National Grid lays out plans for £54bn upgrade to UK energy network

National Grid has laid out plans for a £54bn upgrade to the UK’s electricity network, the biggest investment since the 1960s in real terms, to facilitate a rapid expansion in offshore wind energy.

The government wants 50 gigawatts of offshore wind operational by 2030, up from 10GW currently and the new network would provide capacity for an additional 23GW. At full output this would meet almost two-thirds of current peak electricity demand.

The plan marks the first time that the development of offshore connections for wind farms has been co-ordinated and will be one of the largest ever civil infrastructure programmes in the UK.

National Grid Electricity Systems Operator, a subsidiary of the FTSE 100-listed National Grid, which moves electricity around the system and keeps supply and demand in balance, has proposed 15 connection points to bring energy from 18 offshore wind farms to land. The aim is to minimise disruption for coastal communities and reduce construction costs.

At present most offshore wind farms build their own connection to the onshore grid, leading to a proliferation of cables, pylons and substations and provoking opposition from local communities including Tory constituencies in Suffolk.

The plan “is a key step in providing certainty to offshore wind developers and mitigating potential impacts on the environment and local communities from energy infrastructure,” said Fintan Slye, executive director of National Grid’s electricity system operator.

Given it is one of three regional monopoly providers of a crucial service, the revenues for National Grid’s electricity transmission system are determined by Ofgem, the regulator, and levied on consumer energy bills. National Grid ESO said it would save consumers £5.5bn in costs by 2030 by increasing network capacity compared with connecting wind farms individually.

Duncan Sinclair, analyst at consultancy Baringa, welcomed the plans and said this was a “much more sensible way to connect the huge volumes of new offshore wind capacity needed and would save on costs for consumers overall”.

The network upgrades will be essential to make use of the electricity from a wave of new projects that have secured leases to Britain’s seabed, including at least 8GW of projects around England and Wales and some of the 25GW of wind farm sites that Scotland leased earlier this year.

Offshore wind has become the cheapest form of renewable energy in the UK, beating solar and onshore wind. In 2020 wind energy accounted for almost a quarter of total electricity generation in the UK.

There is already a queue of projects waiting for connection to the grid, meaning that some renewable energy generators are waiting for up to 10 years to produce power.

National Grid receives around £20 a year from each consumer bill as part of an electricity transmission charge. The network upgrade will be financed through these payments.

The company’s chief executive, John Pettigrew, recently came under fire for receiving £6.5mn in total pay and bonuses for the year to the end of March 2022, a year in which many households are struggling to cope with soaring energy bills.

National Grid ESO became a legally separate part of its FTSE 100 parent in 2019. The government confirmed earlier this week that it would be split from the company to become an independent state-owned body though parliament has yet to approve the change.


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