As part of the plans, funding will be made available for vital upgrades of the networks that were largely built in the 1950s and 1960s, as well as strong incentives on the companies to invest for a low-carbon future.

The proposals, approved by Ofgem’s governing authority, also include ambitious new incentives and other measures to reduce carbon emissions. Companies will have strong incentives to connect up to 10GW of low-carbon generation to their networks over the next five years and improved incentives to cut network losses – currently at a level equivalent to the electricity used in about six million homes.

Ofgem is proposing a new £500 million Low-Carbon Networks Fund to support large-scale trials of advanced technology including smart grids, and new commercial arrangements with customers. Ofgem hopes these advances will "help the networks to accommodate growth in local generation, electric vehicle use and other developments anticipated in a low-carbon economy".

Ofgem announced the plan as part of its five year review of distribution charges that electricity suppliers must pay to use the network. Ofgem said annual bills would go up by £4 each to pay for the money it says companies need to invest.

Ofgem now has a remit to protect consumers, no longer just by keeping bills down, but also by cutting carbon emissions.