Energy companies have been given the green light to spend £28bn on Great Britain’s gas and electricity grids, raising fears of higher household bills.

The energy watchdog, Ofgem, approved more than £17.8bn of spending plans to upgrade gas transmission and distribution networks in the five years from 2026.

A further £10.3bn will be used to rewire the nation’s high-voltage electricity network – the biggest expansion of the grid since the 1960s, and the first phase of a planned £80bn upgrade of the power grid.

The multibillion-pound plans are higher than the £24bn budget proposed by the regulator in the summer.

The plans will fund more than 80 projects, including new high-voltage power cables, and upgrades to the existing overhead wires, ahead of the government’s plan to become a green energy superpower by the end of the decade.

The investments, which will be funded through levies on household energy bills, are expected to add £108 to network charges by 2031, according to Ofgem, of which £48 will support upgrades to the gas network and £60 will be invested in the electricity grid.

Ofgem said that the investment would save £80 from bills compared with not expanding the grid as savings will be made from cutting money spent paying windfarms to shut down when the local grid is overloaded with power.

Overall, the added net costs are “equivalent to bills being higher by about £30 a year by 2031, or around £2.50 per month”.

Jonathan Brearley, the chief executive of Ofgem, said: “The funding announced today will keep Britain’s energy network among the safest, most secure and resilient in the world.

“Ofgem will hold network companies accountable for delivering on time and on budget … 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.”