The location of more than 40 areas where residents are set to receive up to £2,500 off their energy bills has been revealed as the government announces a first wave of new pylons and grid upgrades.

Up to 160,000 households are expected to eventually benefit from the scheme, which will see a yearly discount automatically applied to their energy costs. This will come as a rebate every six months.

Those living within 500 metres of new or upgraded pylons are eligible, and will start receiving the payments from next year.

The discount area applies along the entire route of new lines, the Department for Energy Security and Net Zero (DESNZ) has confirmed.

Only overground transmission projects are in the scope of the scheme, and are included if they started construction on or after 10 March 2025.

Projects being delivered by National Grid Electricity Transmission, SP Energy Networks, and SSEN Transmission are set to be eligible.

While most people will receive the discount automatically, some – such as those on commercial meters – may need to apply.

The scheme will be administered by Ofgem, with the first payments set to be made in the first half of 2027.

Energy minister Michael Shanks said: “Upgrading Britain’s electricity grid is a vital part of how we deliver secure, homegrown energy and unlock economic growth across the country.

“It is a moment of national renewal – upgrading what was built largely in the 1960s for the modern age and is our route to bringing down electricity bills for households across the country.

“It’s vital we build again as a country and we are determined those communities which host pylons should benefit, which is why we’re bringing down the energy bills of those hosting this vital national infrastructure.”

There are 43 projects in the first tranche, including transmission infrastructure from Bramford to Twinstead in East Anglia, the North London Reinforcement project and the Emmock substation in north east Scotland.

Several are yet to receive consent or are subject to an ongoing appeals process. Only those that secure the necessary consents will be eligible for the scheme.

More are expected to be announced in the future, with a government impact assessment earlier this year finding that between 120,000 and 160,000 households could be eligible to receive a bill discount through the scheme.

It builds on government-backed ‘community funds’, where energy developers have provided compensation to communities hosting new infrastructure since last year.

The scheme is part of the government’s work to upgrade the country’s energy grid and reduce energy bills, including infrastructure that will enable cleaner energy to be delivered to the whole country.

Neil Lawrence, Ofgem executive director for delivery and schemes, said: “Communities that host new electricity transmission infrastructure are playing a vital role in delivering the cleaner, more secure energy system Britain needs.

“The bill discount scheme will help ensure eligible households living near these projects see a direct benefit through discounts on their energy bills.

“As the scheme administrator, Ofgem’s role is to make sure payments are delivered effectively, fairly and transparently to eligible customers.”