The £200 Billion Bill For Upgrading The Grid For Net Zero
By Paul Homewood
h/t idau
Billions have already been spent integrating wind power into the grid. But that is a drop in the ocean to what is now needed:
5th May 2023 – Press release
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‘Delivering for 2035: Upgrading the grid for a secure, clean and affordable energy future’ – released today by National Grid – lays out five priority actions to ensure the networks can play their full role in achieving net zero
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Specific reforms are needed on planning, the regulatory system, the grid connections process, community benefits and supply chains
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Investment in Great Britain’s electricity networks could contribute an average of £18.4bn of annual GDP to the economy and support over 220,000 jobs each year to 2035.
National Grid has set out how industry, government, and the regulator can take immediate and decisive action to enable the decarbonisation of the UK power sector by 2035. The recommendations set out in ‘Delivering for 2035: Upgrading the grid for a secure, clean and affordable energy future’ are critical to realise the scale and pace of the transformation needed over the next decade.
Significant progress has already been made towards transforming the UK’s power system, with a huge expansion in clean energy in recent years, as well as substantial investment in our electricity networks. But fully decarbonising the power sector by 2035 will require more urgent action from industry, government and the regulator.
If the UK can get this right, the prize is significant. Addressing these priorities will collectively deliver greater energy security and lower long-term bills. Investment in Great Britain’s energy networks could also contribute an average of £18.4bn annually to GDP and support over 220,000 jobs each year to 2035.
National Grid’s five priority actions set out in the report are:
1. Reform the planning system, centred around a strategic clean energy vision.
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As an immediate step, finalise the National Policy Statements by the summer, ensuring they provide clarity and certainty to support urgent delivery of net zero infrastructure.
2. Ensure the regulatory and governance framework is set up for delivery.
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Review the current suite of regulators’ objectives and duties and clarify roles and responsibilities across the institutions accountable for the energy transition.
3. Transform how clean energy connects to the grid, accelerating Net Zero projects.
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Shift from a ‘first come, first served’ to ‘connect or move’ connections process.
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Develop strategic ‘capacity hubs’, enabling a more coordinated and innovative approach to connections.
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Create a fast-track connection route for critical net zero projects, prioritising those areas where the economic value could be greatest.
4. Put communities and consumers at the forefront of the transition.
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Deliver a consistent community benefits framework that ensures local people secure real value for hosting critical net zero infrastructure.
5. Develop supply chain capacity and a skills pipeline across the country.
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Deliver a targeted package of incentives to attract potential clean energy manufacturers and training providers to locate and expand sites in the UK.
John Pettigrew, National Grid PLC Chief Executive Officer, commented: “The UK has made significant progress in decarbonisation over the last decade. But today, we all stand at a critical juncture. The scale of the transformation needed over the next decade and beyond is a level not seen for generations with a far greater level of investment needed over a much shorter timeframe. Incremental change will not be sufficient – we need a transformative approach.
“We believe the five priority actions we have set out today can drive our energy transformation, bringing with it a huge boost to the economy, more jobs, lower household bills and greater energy security.
“National Grid is already playing its part in investing in clean energy infrastructure and transforming the UK’s energy system to make sure it is fit for the future, investing more than £16bn in the five years to April 2026 to upgrade our networks and support the UK’s net zero ambition.
“We are committed to working with government and the regulator we focus on delivering a clean, fair and affordable energy future.”
https://www.nationalgrid.com/national-grid-sets-out-urgent-reform-energy-transition
So we are effectively looking at a cost of £200 billion by 2035.
It is presented as “investment”, and “contributing to GDP”, as if it was something good. But investors will want their money back, and with interest; and it is the public who will end up paying the bill.
They also talk of 220,000 new jobs, but these are a cost that must be paid for, not a benefit. And the workers who fill these jobs will be taken away from work elsewhere which is more productive and has a value, so GDP will not grow but likely decline instead.
As for energy security and lower bills, I think we all know the answer to that!
Comments are closed.
NOT A LOT OF PEOPLE KNOW THAT 
That’s almost £7,500 per household. Given that net zero will cost every household more than £100,000 before the end, it’s a drop in the ocean, but it’s a very big drop.
You are right to call out the gaslighting for what it is. It’s not a necessary investment, it’s an unnecessary cost that could have been avoided were it not for the obsession with net zero.
“That’s almost £7,500 per household.”
Judging by the Stupid Meter fiasco, you can probably put a zero on that and drag the timescale out to infinity.
And even then it won’t work…
Despite all of the media lies , the cost to consumers will continue to soar with the increase in unreliables generation .
Prior to 2021 , the cost of generation had been stable for over 10 years at about [ varied a bit time to time ] an average of £35 per MGh.
Since then , with carbon taxes and the huge increase costs for wind / solar , the cost now varies around £100 per MWh .
This hits everyones pockets , not just energy costs , but everything has to go up to cover increased prices for manufacturing , farming and everything else .
When will someone question this deliberate policy of destroying the economy .
Wow, it makes HS2 look a positive bargain (sarc)!
‘Investment in Great Britain’s electricity networks could contribute an average of £18.4bn of annual GDP to the economy…’
Doesn’t this mean money spent not earned, actually?
A bit like importing thousands of Channel-hopping dinghy divers at a cost to the state of £40,000 per year, then claiming they add £X millions to UK GDP!
Zero productivity, 100% costs. Enhanced GDP claims are statistical nonsense on stilts.
These buffoons make Bastiat’s broken window economics look positively sensible.
I try to read the reports that National Grid issue so frequently, but they are so full of acronyms and self-congratulatory indices that I usually give up. The NG strategy of issuing reams of reports that are in the main unintelligible is a brilliant cover-up for the deficiencies that are occurring in our power system: particularly the aim to extend demand management to everyone and all businesses. Midnight shopping and night-shifts for all….. if the wind is blowing.
The only projects that come close to low carbon (NetZero) are nuclear, but I see no mention of nuclear. Of course new nuclear can use existing sites and so do not need new grid lines, so National Grid won’t benefit and its profits won’t balloon out of control.
Who do they think will believe that spending £200 billion on electricity supply is going to lower their bills?
The report as a whole is a classic piece of misdirection based on the assumption (probably correct) that 99% of those who read it are completely unaware of the context. There are crucial points of scale. Looking at NGET’s most recent accounts – NGET is NG’s UK electricity transmission company – its gross revenue was about £2 billion and the net book value of it physical assets was about £14.5.
Hence, they are proposing to spend about 150% of their current assets on new investment every year for the next 10 years. Anything closer to complete impossibility it is hard to think of – whether in financial, physical or human terms.
Suppose by some miracle it happened. Using a standard but quite low cost of capital plus operating and depreciation expenses, the annual revenue required to support this network would have to increase from about £2 billion per year to a minimum of £16-17 billion per year – i.e. their transmission charges would be a minimum of 8 times the current level.
Finally, as implied in previous comments, the supposed contribution to the UK economy would be pure diversion from – in effect a tax on – other economic activity. And similarly for the people employed who would be diverted from other more productive uses.
This is the final reason why such a plan would have dire economic consequences. In effect, what NG wants to do is to divert a substantial portion of what the UK spends on replacing and expanding its capital stock to build its network. So everyone will be drastically poorer, not merely because of the costs of building and operating the network, but because all of the funds have been diverted from more productive investments. Such logic is, of course, par for the course for groups with a shortcut to your pockets.
I’ve only had a skim read but I can’t see any reference to £200 billion cost. It’s all presented as a positive benefit.
Another question is, are all those things listed actually within the remit of NG ? Surely the wind generation capacity (for example) will not be provided by NG itself ?
I also note the huge increase in interconnectors within this plan, 2.5 to 3 times the current capacity (by 2035?). So much for energy security then. I guess this will be a lucrative income stream for NG in the future.
Interconnectors, like tracer bullets, work both ways.
There are still some who forget that wind lulls tend to affect many neighbouring countries simultaneously. So when GB is short of wind power, it’s highly likely there’ll be little of anyone else’s excess to keep our lights on.
Wind generation in 31 European countries. 12 months to March 2023. Source: Grafana.
My understanding is the grid is just the high voltage distribution network above 33,000 Volts. So that upgrade is £200 billion
The local distribution network to your substation is 4,000 or 11,000 Volts stepped down to 415V for domestic use. (single phase 240V.)
The average daily use of electricity in a standard house(OFGEMs cap is based on this) is 8kWh
A heat pump of 5kW capacity in winter will have to run 24hrs, so that is 120kWh, plus two BEV say another 40kWh, so 160kWh per day plus the original 8 for your fridge freezer etc.
From 8kWh to 168kWh that is 21 times more energy.
A little known fact is “diversity factor” In the recent past (1950 to 2010) it was assumed not everyone would boil a kettle or electric shower at the same time, so the substations and underground street cables are just not going to be able to handle the heat pumps and BEVs.
What about the cost of upgrading the local distribution?
I believe the plan is Demand Side Reduction (DSR) controlled by smart meter pricing, so the rich can afford to stay warm while the poor have no choice but to freeze or in the WEF master plan downsize into social housing scheme.(you will own nothing and be happy…Klaus Schwab)
The NG report says electricity demand will increase by 50% (by 2035?). But then it goes on to mention that the capacity connected to the grid needs to treble. The report is quite ambiguous, probably intentionally so.
Also note this is by 2035, not 2050. By 2035 we’ll still be a long way from 100% heat pumps and EV ownership.
National Grid are already saying that the unreliable projects they already have in the pipeline will have to wait 10 to 15 years to be connected to the grid.
in reply to kzbkzb….my back of envelope calculation just for domestic is a twenty fold increase in electricity use, not 3. Heat pumps are for all homes on a typical estate are going to be a colossal mistake, I guess by 2050 we will not have any industry to speak of.
Surely 20-fold is incorrect. It is not that high.
You have to bear in mind that a heat pump is 3X as efficient as a gas boiler. Also that the average annual car mileage is only about 7,000 miles, and at 0.28kWh/mile will use only about 2000kWh per year. The entire UK car fleet would use an average of about 8.6GW, which is roughly about 30% of current demand.
Look up your annual gas consumption in kWh. Divide that by 2.5 to get the kWh that would be used by a heat pump.
Then find out your annual car mileage and multiply that by 0.28kWh per mile. Add to your total.
Add on your existing electricity usage.
The total will not be anywhere near 20 times more than your existing usage. More likely 2.5 to 3 times more.
You ignore the very considerable difference between the energy prices of gas and electricity.
Currently, my electricity is priced at 47.73p/kWh and gas at 12.01p/kWh, so electricity is 3,974 times the price of gas per unit.
The respective standing charges are 47.40p/day and 26.16p/day.
Catweazle666: the question was specifically about electricity usage not about the cost.
So in electricity COST, the electric bill will be 2.5-3X current bill, but there won’t be a gas bill.
Also you are paying way over the odds for your energy. Mine is about 34p/kWh electric and 10.5p/kWh gas. The gas is going down to 7 point something next month and the electric is going down 5%.
“You have to bear in mind that a heat pump is 3X as efficient as a gas boiler.”
yes, but the COP of a heat pump tend to be based on what goes on at 7ºc and the low temperature range typical in the UK -5ºc to 5ºc is worse than – 10ºc or even -20ºc due to humidly (there is less water in colder air ironically) so you will need to factor in the heat pump icing up so either needing resistive heat or to switch to cooling mode to take heat from inside (although why no one has designed a heat pump with a mechanical ice scraper is a good question) which needs to be included in any efficiency comparison.
PlatformZed: for the purposes of calculating the amount of electricity required for your home in a year, it is average performance that is important.
I think I saw the real-world annual COP is 2.65 or something?
Also, the heat pump aficionados will tell you the COP is increasing with each generation of new models. Many of them now operate in sub zero temperatures quite nicely.
@kzbkzb “for the purposes of calculating the amount of electricity required for your home in a year, it is average performance that is important.”
No its the worse case instantaneous heat & electricity demand that is important as in an extreme cold spell think a 3 month 1947 or 1963 style winter as a lack of electricity & space heating will likely kill people but due to electricity being impracticable to store vs even linepacking with natural gas (which gives us time to warn people if there are shortages) and due to how life critical the electricity grid is and what could happen if it collapsed (see February 2021 in Texas which only lasted a few days 100s in not over 1000 people died from a combination of hypothermia and carbon monoxide poisoning, traffic accidents due to lack of street light and traffic lights, fires etc. and they were starting to have issues with supplying water)
– the system has to be sized for the extremes using electricity for space heating without it being grid controllable and requiring backup heating sources in a climate like ours with generally mild winters is a disaster in the making as politicians are not going to care about building infrastructure that is need probably once every 10 years let alone once every 25 years especially if not doing so will make them more popular due to cheaper electricity cost & the tabloid accuse them of supporting what look like a white elephants (till you need it) – So I think look at developing natural gas/oil heat pumps vs condensing boilers make more sense.
“I think I saw the real-world annual COP is 2.65 or something?”
The problem is this is likely based on homes that are less insulated than they could be so heating demand will likely happen at a lower temperature.
“Also, the heat pump aficionados will tell you the COP is increasing with each generation of new models. Many of them now operate in sub zero temperatures quite nicely.”
I actually mentioned this the problem is an air source heat pump will have more difficulties at the low temperature range typical in the UK -5ºc to 5ºc and the typical humidly than -20ºc in say Alberta Canada with very low humidly due to the heat pump icing up so either needing resistive heat or to switch to cooling mode to take heat from inside (although why no one has designed a heat pump with a mechanical ice scraper is a good question) which needs to be included in any efficiency comparison.
That’s another £200bn. Kerching! And National Grid bought Western Power Distribution to tap into it.
Click to access Travers-Net-Zero-Distribution-Grid-Replacement.pdf
My figure for heat pump is WINTER below freezing, I assumed 5kW to get 15kW of actual heat (my boiler is 32kW). So it would be on all the time. and would also need to de-ice periodically. The BEV I took a 30 mile commute to work for two cars, more than average but not unknown in the home counties around London. Averaged over a year your figures are fine, worst case high demand mine are fine.
GeoffB: the question was all about what will be the total electricity demand for the country. In other words you need the average consumptions not your own consumptions.
Average mileage is about 7,000 per car. Yes I was surprised it is so low but that is what the official stats say.
Also, and it depends a lot on the property, it seems unlikely you would need a 24/7 heat input of 15kW. Not for the average home anyhow.
‘Upgrading the grid for a secure, clean and affordable energy future’
Pick one. ONE.
Gamecock : Note that the word “reliable” has been omitted.
Excellent point, and an astute observation. My question; is this a typo or a gaffe, or have they actually realized, and are admitting, “reliable green energy” is an oxymoron? Based on the hubris displayed in the past, this is a typo.
Not really. It’s really a hilarious joke.
The government is destroying power generation assets, to the point that outages are likely, and will continue to get worse. Dangerously worse. NatGrid comes along and says you need a gold plated grid system for your Bulgarian power supply. More delivery systems for less and less power. You couldn’t make this up.
*Apologies to Bulgaria.
“National Grid has set out how industry, government, and the regulator can take immediate and decisive action to enable the decarbonisation of the UK power sector by 2035.”
Spot which important sector is missing from that list: that’s right, the poor bloody public (and we shall be poor!).
If NG are going to get £200B of our money and only return £18.4B a year, how long will it take for us to see a return.
I’ve not seen this figure of £200bn in the NG report.
The supposed return is like paying people to dig holes and fill them in again. It provides jobs on paper but it’s an economic fallacy. More jobs would be created elsewhere if the same money were invested in more productive activities.
You have a point, I took the number in good faith as an overall figure calculated by Paul for the headline. I have now been to the NG site linked in the piece and searched all the listed docs for the word Billion. There were very many but no 200 B. That said, there were many instances of projects being proposed of around 40B each so I suppose it possible they all add up to around 200B. Perhaps Paul can say where his headline came from. Either way, NG seem to have found a forest of money trees for there plans,
Simple maths. 11 years of £18.4bn a year. You have to get used to how NG spins its numbers, like its ridiculous claim that DFS powered 10 million households.
P8 : “And building a network fit for the future will turbo-charge our economy. Investments in Great Britain’s electricity networks will contribute an average of £18.4bn to GDP and support over 220,000 jobs each year between 2024 and 2035.”
(2035 – 2024) x £18.4 bn = £202.4 bn
I like the way spending is described as “contributing to GDP”.
Somebody drank the green kool-aide.
If the extra cost is not passed on to b business and industry, it will add to the taxpayers bill. If it is passed on, business and industry will leave in droves for a cheaper alternative abroad. It’s a lose, lose situation.
“Investment in Great Britain’s electricity networks could contribute an average of £18.4bn of annual GDP to the economy and support over 220,000 jobs each year to 2035.”
Have I finally lost my marbles or have they? Where is this £18.4 billion a year going to come from that will boost the economy? Or the 2,200,000 jobs over the next 10 years?
Which country is going to invest in the UK’s network upgrade? And if the answer is none (as seems more than likely) that must be borrowed money which will need to be repaid. As will the costs of those jobs, jobs being an on-cost not a benefit (except to those that have them, obviously).
This is pure flannel!
Surely it will come from the bill payer. Also, it could come from foreign investment, but of course that means the resulting profits would be extracted from the UK and paid to foreign companies.
So the same as currently, but on a bigger scale.
The unicorn power industry will need a unicorn grid.
Sorries.
‘This new infrastructure must also be delivered in a way that supports and empowers communities and consumers’
It will need a woke, unicorn grid.
Please can we have a chartered electrical engineer running this private company called the National Grid. John Pettigrew is an economist, and currently has also the following post :
Non-Executive Director and Senior Independent DirectorNon-Executive Director and Senior Independent Director, Rentokil Initial Jan 2018 – Present · 5 yrs 6 mos
I feel that he has mixed up the two roles and is treating the public like vermin who annoyingly use electricity.
Sorry but I despair.
I suggest you try looking at his company profile. Joined NG as a graduate for example. A Fellow of the IET (which includes the former IEE). A Fellow of the Energy Institute.
We are committed to working with the government and regulator to tripling our monopoly turnover, profits and value at customer’s expense.
To borrow a statement from IL Senator Everett Dirksen in the 1960’s; A few hundred billion here, a few hundred billion there; before you know it you’re talking teal money. To borrow a saying from my ne’er-do-well brother-in-law, “You can’t put a price on a good time.” He was in a jail cell when he said that, and perhaps that is where these climate grifters belong as well.
NG’s report on P3 :
“Drive forward demand flexibility through retail market reform, while ensuring vulnerable households are protected through the development of a social tariff.”
Why is “demand flexibility” needed when on P19 of the Net Zero Strategy is written :
“Our power system will consist of abundant, cheap British renewables, cutting edge new nuclear power stations, and be underpinned by flexibility including storage, gas with CCS, hydrogen and ensure reliable power is always there at the flick of a switch.”?
As electrical power disappears, prices will tend to infinity to deter its use until eventually even vulnerable households will be devoid of power.
Like I said — flannel!
Let’s see if we can translate the official language.
1. Reform the planning system, centred around a strategic clean energy vision.
As an immediate step, finalise the National Policy Statements by the summer, ensuring they provide clarity and certainty to support urgent delivery of net zero infrastructure.
Translation: We can’t let the public keep deciding that they don’t want their countryside ruined by our pylons so we want to alter or abolish the planning system. While we’re at it, can the Government please make up their mind and not keep changing it.
2. Ensure the regulatory and governance framework is set up for delivery.
Review the current suite of regulators’ objectives and duties and clarify roles and responsibilities across the institutions accountable for the energy transition.
Translation: OffGen’s remit should be changed from the protection of the public to the protection of us.
3. Transform how clean energy connects to the grid, accelerating Net Zero projects.
Shift from a ‘first come, first served’ to ‘connect or move’ connections process.
Develop strategic ‘capacity hubs’, enabling a more coordinated and innovative approach to connections.
Create a fast-track connection route for critical net zero projects, prioritising those areas where the economic value could be greatest.
Translation: We’re so short of time we don’t want to be restricted by procedures. On top of that we want to prioritise all those wind turbines that those foreign producers want to spread across the landscape.
4. Put communities and consumers at the forefront of the transition.
Deliver a consistent community benefits framework that ensures local people secure real value for hosting critical net zero infrastructure.
Translation: We want to bribe people living in the way of our new grid infrastructure so they keep their mouths shut.
5. Develop supply chain capacity and a skills pipeline across the country.
Deliver a targeted package of incentives to attract potential clean energy manufacturers and training providers to locate and expand sites in the UK.
Translation: Introduce higher and more widespread subsidies.
Thx for the breakdown.
In all, it is word salad. Just wondering who their target audience is.
Excellent translation !
I thought bribery was illegal.
NG’s report on P8 :
“Connecting home-grown, clean energy sources will also reduce our reliance on imported gas and improve our energy security.”
Where is the security when :
– We rely on China, a state described by our security services as “hostile”, for the manufacture of wind turbines and solar panels and supply of critical metals and minerals for motors, generators, batteries and cabling?
– Putting all our energy eggs into one energy basket, namely electrification, particularly when no economic means to store electrical energy exists?
So lets take today we have spent all this money on a grid system to shift the wind power but it disappears. NGs forecast SP28 was 6GW yesterday morning then upgraded to 7GW at 2330 last night outturn is 4.6GW so a 2.4GW deficit has to be covered by paying through the nose to get the CCGTs to fire up.
I just can’t believe how naïve people are about whats going on here and that virtually no politician takes the trouble to really understand how all this hangs together and the vast costs that are being loaded onto peoples bilss. Oh and i wouldn’t find if all the kit was manufactured in the UK but its isn’t with 80% of transmission equipment having to be imported.
When did the whole of government start thinking they were they were much much smarter than the people they governed?
When they started paying academics and NGO’s handsomely to tell them they were and cut funding off to anyone who would not play the sycophant.
It’s no wonder governments need to control “disinformation” lest the unwashed realize the king is naked.
When organisations like NG burble about contributing £X per year to the economy, invariably what they mean is that is what they are going to raise from all of the rest of us and then spend it on whatever they want. That is, I assume, where Paul’s £200 billion came from – 11 years @ an average of £18.4 per year = £202 billion.
Of course, what NG may have done – and none of the figures are spelled out – is done the usual economic lobbyists’ trick of applying a multiplier to account for knock-on effects in the rest of the economy. That is tosh because all of the spending will be diverted from other purposes and is likely to have a higher level of import and other leakages. Hence, if one traced the impact through strictly the net effect of such spending will be to reduce GDP. Naturally that wouldn’t go down well with NG!
GH, it is very difficult to think what the economic balance would be. It could be argued we benefit from cheaper energy, which would grow the economy. The investment capital might come from abroad, so no cost to the UK but then again the profits will go abroad too. But if we get cheap power at zero capital cost to ourselves they could argue that is still net beneficial to the economy.
We will have to pay for the capital cost. It will, as Gordon Hughes explained, add substantially to our bills. There is no way we end up with cheap electricity.
Using a standard but quite low cost of capital plus operating and depreciation expenses, the annual revenue required to support this network would have to increase from about £2 billion per year to a minimum of £16-17 billion per year – i.e. their transmission charges would be a minimum of 8 times the current level.
Something like another £50/MWh. Same again for the distribution system.
Book sellers would shelve this report under the science-fiction heading.
Second choice would be the English Mysteries signage.
At the least the estimated £200 billion to upgrade the UK grid is much smaller than the estimated £3 trillion+ cost of achieving net zero in the UK.
The power of a religious belief.