Ofgem Accelerates £4 Billion Investment to Reinforce UK Power Grid

Image Credit: National Grid

In a decisive move to accelerate the UK’s clean energy transition, energy regulator Ofgem has relaxed procurement rules, empowering transmission operators National Grid, SSE, and ScottishPower to inject £4 billion into upgrading the country’s electricity grid.

The newly approved Advanced Procurement Mechanism (APM) is designed to combat supply chain bottlenecks, allowing grid operators to secure vital equipment, materials, and services years in advance. By eliminating red tape and enabling early-stage procurement, Ofgem aims to prevent costly delays that often plague large-scale infrastructure projects.

This preemptive strategy ensures that once projects receive planning approval, they can break ground immediately—keeping costs in check, attracting international investment, and fast-tracking the UK’s clean energy ambitions.

£4bn ‘Use It or Lose It’ Fund to Support 80 Transmission Projects

The regulator has earmarked a £4 billion allowance under a “use it or lose it” framework, available before and during the next price control period (2026-2031). The funding is part of a broader effort to modernize the electricity grid, ensuring it can support the UK government’s ambitious goal of achieving an immaculate power system by 2030.

According to Ofgem, 80 transmission projects must be completed to meet this target. This monumental task demands swift action and strategic foresight.

By unlocking these funds and simplifying procurement, Ofgem is not just clearing roadblocks; it’s paving the way for a future powered by clean, efficient, and resilient energy infrastructure.

Ofgem director-general for infrastructure Akshay Kaul 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.

“The APM is an innovative model that could be extended in the future to develop other areas of the energy sector and possibly mirrored by other regulatory bodies supporting the delivery of national infrastructure.

“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.

“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.”

UK Energy Minister Michael Shanks added: "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.

"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.”

Ofgem stated that to reduce the risk of stranded procurement assets, only transferable equipment between multiple projects will be eligible for the funding.

Nicola Connelly, CEO of SP Energy Networks, said: “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.  That’s why the speedy delivery of this national infrastructure upgrade is critical.

“Securing our supply chains early for cables and other equipment is vital if we’re to re-wire Britain at a record pace. This is good news for growth, good news for jobs, and good news for electricity consumers.

“We will continue to work with Ofgem and the government as we accelerate investment in the transmission network.”