UK Energy Regulator Eases Procurement Rules to Accelerate £4bn Grid Investment

The UK’s energy regulator, Ofgem, has approved a new procurement mechanism aimed at accelerating £4 billion of investment into the country’s electricity grid. The decision, which loosens procurement rules for transmission owners National Grid, SSE, and ScottishPower, is designed to help tackle supply chain constraints by allowing essential equipment, materials, and services to be procured years in advance. The new system, called the Advanced Procurement Mechanism (APM), will enable transmission owners (TOs) to fast-track projects and avoid delays once planning approval is granted. By securing materials and equipment early, the streamlined process aims to control costs, mitigate risks, and attract international investment, supporting the UK’s push for clean power by 2030, Ofgem stated. The £4 billion "use it or lose it" allowance will be available during the next price control period, from 2026 to 2031. Ofgem has emphasized the need for 80 transmission projects to meet the UK government's 2030 clean energy target. Supply Chain Pressures and Global Competition Akshay Kaul, Ofgem's director-general for infrastructure, stressed the importance of modernizing the energy system to reduce reliance on international gas markets. He said, “Building a modern, clean and secure energy system is the key to ending our reliance on international gas markets responsible for volatile prices, so we must do everything we can to clear the way for trailblazing projects to move forward.” Kaul also noted that the APM could serve as a model for other sectors and countries facing similar supply chain pressures. "Across the world, many countries are stepping up their investment in clean energy at the same time, putting unprecedented pressure on the supply chain as growing demand for essential materials forces up prices and lengthens delivery times," he added. “This is why it’s vital that we help the electricity transmission owners move quickly, procuring at scale as early as possible to reduce financial risk – and show the global supply chain that Britain is committed to investing in its energy networks. Government Support for Fast-Tracking Clean Energy Projects UK Energy Minister Michael Shanks welcomed the fast-track measure, highlighting its role in helping to quickly build the necessary infrastructure for the UK’s clean energy future. "This fast-track measure means we can quickly get Britain building the infrastructure we need to deliver clean power by 2030 and an energy system that can bring down bills for households and businesses for good,” Shanks said. He added, "Giving developers a head start in the global race to secure essential materials and equipment will help to avoid delays by putting shovels in the ground as soon as clean power projects secure planning permission and protect billpayers by keeping costs down. Risk Mitigation and Grid Capacity Expansion Ofgem has clarified that only equipment that can be transferred between multiple projects will be eligible for funding, in order to reduce the risk of stranded procurement assets. The £75 billion investment in the transmission system, proposed by SP Energy Networks, is seen as a key part of the government's growth strategy. Nicola Connelly, CEO of SP Energy Networks, emphasized the importance of securing supply chains early, particularly for cables and other critical components. “The £75bn proposed investment in the transmission system is the foundation of the Government’s growth ambitions, unlocking grid capacity for homes and businesses, moving homegrown clean energy around the country and reducing constraint costs for consumers," Connelly said. “Securing our supply chains early for cables and other equipment is vital if we’re to re-wire Britain at record pace. This is good news for growth, good news for jobs and good news for electricity consumers.” As the UK works to meet its ambitious clean energy targets, the government, Ofgem, and energy companies are focused on overcoming supply chain challenges and accelerating the development of key infrastructure projects.

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