Ofgem said UK distribution networks must first use flexibility tools—such as smart EV charging and battery storage—before winning approval for physical grid upgrades.
The regulator framed the rule as a way to curb customer bills by managing demand more efficiently and forcing utilities to prove that extra network spending is necessary.
Its new framework covers the 2028-33 investment period and sets an allowed 6.08% cost of equity for those investments, higher than in the previous regulatory cycle.
The approach signals a broader shift in UK grid policy toward smarter, demand-side solutions before passing large infrastructure costs on to households.
Ofgem promises lower bills but higher investor returns. Who ultimately pays the price for rewiring Britain's energy grid?
Is the UK building a multi-billion pound smart grid market without the digital 'operating system' needed to manage it?