HEADLINE: “Britain’s other grid, just as vital as the electric one, is underfunded and creaking”, By Kathryn Porter
“Failing to invest in legacy infrastructure puts our nation’s energy security at risk”
Britain’s other grid, just as vital as the electric one, is underfunded and creaking
Failing to invest in legacy infrastructure puts our nation’s energy security at risk
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20 September 2025 1:04pm BST
Amid all the talk of covering the countryside with pylons and solar panels, the gas grid often gets overlooked, but it’s vital infrastructure that ensures all consumers wherever they are in the country, have the gas they need, when they need it.
The gas transmission system is Britain’s primary energy system with nearly 5,000 miles of high-pressure pipeline running from Scotland to Devon. It serves half a million businesses, over 30 power stations, and more than 24 million homes. Annually, the grid transports an average of 72 billion cubic metres of gas which is about three times the energy transported through Britain’s power networks, at just under a tenth of the cost.
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The system is required to respond to huge swings in demand from gas-fired power stations as wind and solar output vary from close to zero to over half of electricity demand, sometimes in under a day. A failure on any one of the critical pipelines could impact over half a million gas users.
The Government believes the gas grid is critical national infrastructure, and its failure whether a result of an accident or terrorism, is listed on the National Risk Register. In the Register, the Government says that “natural gas is a crucial fuel source that is used to heat homes and businesses, generate electricity or act as a feedstock for industrial processes across the UK”. It goes on to say that a failure of gas supply infrastructure would have “serious impacts on human welfare, essential services and the economy”, with restoration taking approximately three months.
Unfortunately, just as with the electricity grid, the gas grid has suffered from years of under-investment in legacy infrastructure. On the electricity grid, regulator Ofgem has been far more enthusiastic about what it calls “load” capital expenditure (capex) which relates to the connection of renewables and other net zero infrastructure, while cutting back funding requests for “non-load” capex, that relates to upgrading legacy grid.
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We saw in March the consequences of not making sure old infrastructure is properly maintained or replaced when a transformer dating back to the 1960s caught fire, closing Heathrow airport for a day.
National Gas is facing the same challenges. In both the previous price-control period, known as RIIO-2 which is ending in March 2026, and the new one (RIIO-3) that will run from April 2026 to March 2031, Ofgem has slashed non-load capex in its draft determination which is now open for consultation. In RIIO-2, Ofgem rejected 24 per cent of National Gas’ requested capex, and in RIIO-3 it has proposed cutting it by 38 per cent, with non-load capex reduced by a huge 57 per cent compared with 21 per cent in RIIO-2.
The amounts allowed in the price control are the basis of network charging on our bills. Because National Grid Electricity Transmission and National Gas are both monopolies, their revenues are regulated to stop them from abusing their monopoly power. Ofgem is concerned that in the context of a cost of living crisis, along with the huge sums needed to deliver net zero, consumer bills are held down as much as possible. This has resulted in savage cuts to expenditure on legacy infrastructure.
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Ofgem proposes to more than halve the investment in gas asset health from £1.15n to £0.55bn. Such a reduction would seriously impair National Gas’ ability to meet the resilience standards which were agreed with Ofgem and the Government, and which consumers expect. When viewed under Ofgem’s approved Network Asset Risk Metrics methodology, the proposed investment levels would see network risk increase very significantly, raising the likelihood of more frequent and longer unplanned interruptions requiring more costly interventions to resolve. This is far from the risk stabilisation goal agreed at the May 2023 Resilience Summit.
Significant reductions in expenditure have apparently been made by Ofgem based on partial evaluations. Roughly only half of National Gas’ IT projects had been reviewed prior to publication of the draft determination. Reductions to gas quality, metering and telemetry submitted costs appear to have been made before Ofgem had undertaken a detailed technical review, meaning they have been made in an arbitrary way rather than based on evidence.
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National Gas is required to increase its cyber resilience in the wake of the hacks at Marks & Spencer, Transport for London and others. Ofgem only granted half of the necessary funding, meaning that National Gas will be unable to carry out work the regulator deems as essential. It is implausible to suggest that National Gas would be able to negotiate such a large discount with its IT vendors, or that this work can be carried out by its existing teams.
National Gas believes that Ofgem has not considered the implications of Construction Design and Management Regulations in its proposals. These Regulations legally require that competent resources be deployed in high-risk operational technology environments. Failure to resource projects properly will result in unacceptable delays in delivery leaving the gas grid exposed to emerging cyber threats, putting energy security at risk.
Again, the evaluation of the business plan is incomplete. Ofgem proposes to more than halve National Gas’ submitted information technology and telecoms costs, yet the assessment methodology used by Ofgem’s consultants has been applied to only 38 of the 80 projects submitted.
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Even on operating expenses, Ofgem seems to be making arbitrary, badly evidenced and poorly justified assessments. For example, using simple cost averaging across price control periods is flawed because it overlooks the actual drivers of cost changes. In reviewing business support costs, Ofgem claims to benchmark National Gas against electricity transmission companies, but in fact has simply compared the new business plan to National Gas’ own past costs. This is unreasonable, since the past does not reflect current requirements given new capacity that has been added across many business support areas.
Ofgem says that the gas transmission system has “a crucial role in security of supply” and that “network resilience is paramount”. Yet it is failing to allow National Gas the money needed to achieve the necessary resilience. According to National Gas, Ofgem’s cost reductions create “an unacceptable risk to our ability to deliver a secure, stable, and reliable energy supply for our customers and the country”.
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We have seen in the water sector what happens when low bills are prioritised over asset maintenance. You can get away with this for a year or two, but not for a decade or more. If savings are to be made, reducing the expenditure on connecting new things to the grids should be at the very least considered, yet time and again Ofgem has signed this spend off in full while decimating the funds for maintaining legacy assets.
And because Ofgem believes the gas grid will be obsolete in the future it is even less inclined to allow consumers’ money to be spent on it. Yet at the same time it is authorising grid expansion, for example, a major new pipeline is to be built across South Wales to expand the capacity to bring gas from the import terminals at Milford Haven to homes and businesses in England.
With the slow pace of the heat pump rollout, and the expectation that gas power stations will be needed for decades to come (albeit running for fewer hours each year), the gas grid will still be needed for many years. By prematurely cutting investment in this vital infrastructure, Ofgem is risking the very energy security it claims to protect.