Ofgem has approved an initial £28bn of investment to upgrade UK grid infrastructure, with the costs pushing up network charges on household bills by £108.

The £28bn forms part of an estimated £90bn to be invested in networks by 2031.

However, the regulator’s final verdict on price controls over the next five years sees an increase to the allowed investment spend from the initial £24bn given the go-ahead in the summer.

Ofgem says the higher funding package will see £17.8bn spent on gas transmission and distribution networks in the five years to 2031, with a further £10.3bn used to strengthen the UK’s high-voltage electricity network.

The £108 added to bills by 2031 will comprise £48 for gas and £60 for electricity.

Ofgem says alongside maintaining grid resilience this investment will deliver significant savings of around £80 compared to not expanding the grid.

It says electricity grid expansion alone is expected to reduce bills by £50 by 2031, thanks to lower reliance on imported gas and the halting of constraint costs ensuring power flows efficiently from where it’s generated to where it’s needed, even at peak demand. In short, investing now is cheaper for consumers than delaying, and electricity grid investment more than pays for itself.

Overall, the net increase in bills to cover all costs by 2031 will be around £30 or less than £3 per month with costs expected to fall further over time.

Jonathan Brearley, Ofgem CEO, said:  “The funding announced today will keep Britain’s energy network among the safest, most secure and resilient in the world. The investment will support the transition to new forms of energy and support new industrial customers to help drive economic growth and insulate us from volatile gas prices.

“But this is not investment at any price. Every pound must deliver value for consumers. Ofgem will hold network companies accountable for delivering on time and on budget, and we make no apologies for the efficiency challenge we're setting as the industry scales up investment. We've built strong consumer protections into these contracts, meaning funds will only be released when needed and clawed back if not used. Households and businesses must get value for money, and we will ensure they do.”