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The UK’s energy regulator, Ofgem, has unveiled an ambitious proposal for an Advanced Procurement Mechanism (APM) to supercharge the nation’s transition to net zero. This innovative fund, valued between £5 billion ($6.3 billion) and £8 billion ($10.1 billion), is designed to accelerate the early procurement of critical energy transmission infrastructure.
Under the APM, transmission owners would be empowered to purchase key materials—such as switchgear, cables, and steel—well before final project details are secured. This preemptive strategy aims to ensure that energy projects are shovel-ready when planning approvals are secured. By reducing reliance on just-in-time supply chains, the APM seeks to prevent supply chain disruptions and minimize cost inflation, a growing concern given the global demand for infrastructure materials.
Purchasing materials ahead of time also addresses the challenge of escalating construction costs. As the prices of raw materials surge due to supply and demand pressures, Ofgem believes the APM could offer a proactive solution to control costs, ultimately helping the UK achieve clean power by 2030 and its long-term net zero goals.
Ofgem is committed to safeguarding consumers from unnecessary costs. The APM will operate as a "use-it-or-lose-it allowance," ensuring funds are spent solely on necessary procurements. Any unspent resources will be returned to consumers. To mitigate risks tied to stranded procurement, Ofgem will focus on versatile equipment to be used across multiple projects, evaluating unique procurement needs on a case-by-case basis.
This proposal aligns with independent recommendations from the National Energy System Operator (NESO), which recently urged a transformation in the energy sector to meet the UK government’s 2030 clean power target. Ofgem’s APM is not just a response to these recommendations but a crucial step toward delivering on the UK’s ambitious climate commitments.
Stakeholders have until 18 December 2024 to contribute to the consultation, which is anticipated to be implemented by early 2025. Ofgem hopes this forward-looking approach will lay the groundwork for an energy system capable of withstanding future challenges while keeping the UK firmly on track to achieve its sustainability objectives.
Ofgem infrastructure director general Akshay Kaul stated: “The race is on to meet the government’s 2030 clean power target, and we are determined to clear the way for trailblazing projects to drive forward.
"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.
"Such avoidable delays to construction could cost consumers billions of pounds over the coming years.”
In November 2024, Ofgem approved two pilot interconnector projects linking transmission networks to North Sea offshore wind farms.
"Ofgem consulting on new fund to expedite transmission projects" was created and published by Power Technology, a GlobalData-owned brand.
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