Every five years, the UK energy regulator Ofgem sets out how much electricity transmission operators can invest and how much they are allowed to recover from customers. This regulatory framework is essential in a market with only three electricity transmission providers, ensuring prices remain fair while supporting a secure and reliable energy system.
The next price control period, known as RIIO-ET3, begins in April 2026 and will run until 2031. It will determine how much the three transmission operators; National Grid Electricity Transmission, SP Transmission and SSEN Transmission, can charge and invest over the coming five years.
What is RIIO-ET3?
RIIO stands for Revenue = Incentives + Innovation + Outputs, and ET3 refers to the third five-year price control period for electricity transmission.
At the heart of RIIO-ET3 is a clear objective from Ofgem:
to build a stronger, more resilient grid while optimising the use of renewable power.
Why RIIO-ET3 Matters
Forecasts show an enormous increase in electricity demand over the next five years, driven by electrification, data centres, electric vehicles and the transition away from fossil fuels. Ofgem has acknowledged that the current transmission network cannot meet projected demand without significant investment.
Without substantial upgrades and expansion, the grid risks becoming a major bottleneck to economic growth and the energy transition.
Fast-Tracking Grid Connections
One of the most significant changes under RIIO-ET3 is how grid connections are being managed:
- “Shovel-ready” generation projects are being leapfrogged forward in the connection queue
- Mothballed or stalled schemes are being removed
- Priority is being given to projects that can deliver power quickly
This approach is designed to unlock capacity faster and prevent viable projects being held back by speculative developments.
Challenges with Renewable Generation
Ofgem has also identified issues with wind generation, particularly over-capacity at certain times, which has led to costly curtailment; paying generators to switch off because the grid cannot accommodate the power.
Improving transmission capacity and flexibility is key to reducing these inefficiencies and ensuring renewable energy is used effectively rather than wasted.
Investment and the Cost to Consumers
Ofgem has given initial approval for £10.3 billion of transmission investment and estimates that up to £70 billion may be required by 2031. However, this approval comes with strict conditions:
every pound spent must be fully justified and transparent.
With increased investment inevitably comes higher electricity charges. Ofgem has outlined price increases that depend on consumption levels:
- Consumers are grouped into six usage bands
- Increases range from 70% to 149%
- The more electricity a business uses, the higher the increase
What Can Businesses Do to Control Energy Costs?
While price rises may be unavoidable, businesses still have effective ways to reduce their exposure. Some options can be implemented quickly:
- Analyse half-hourly consumption data
Understanding when energy is used can reveal opportunities to reduce demand or shift usage.
- Reduce peak demand
Peak usage determines supply capacity. By adjusting production schedules or adopting other new practices to smooth demand, businesses may drop into a lower charging band, reducing unit costs.
- Install voltage optimisation
Voltage optimisers can reduce unnecessary energy consumption without affecting performance.
- Generate power on-site
Solar or wind generation with or without battery storage, can significantly reduce reliance on grid electricity.
How Olympus Power Can Help
All of these options can be assessed and delivered with support from Olympus Power. We work with businesses to:
- Analyse energy usage
- Identify cost-saving opportunities
- Design and implement solutions
- Advise on installation and funding of sustainable technologies
As RIIO-ET3 approaches, proactive energy management will be critical. Businesses that act early can protect themselves from rising costs while contributing to a more resilient and sustainable energy system.
Next steps for businesses
With transmission costs forecast to climb and infrastructure pressures mounting, now is the time to act.
Olympus Power can provide a tailored assessment of your current energy usage, identify savings and build a roadmap that aligns with your business goals.
Book your assessment or speak to our team to explore your options. Get in touch to find out how we can help.
Read more about RIIO-3-Final-Determinations-ET here.