The UK’s energy regulator Ofgem has eased procurement regulations, enabling transmission operators (TOs) to expedite £4bn ($5.1bn) worth of investment in the nation’s electricity infrastructure.
Through the introduction of the Advanced Procurement Mechanism (APM), Ofgem will help mitigate supply chain delays by allowing TOs to purchase essential materials such as switchgear, cables and steel several years in advance of their usual need.
Go deeper with GlobalData
This approach ensures that approved projects are ready to begin construction as soon as they receive planning clearance. It will help TOs prevent unnecessary hold-ups, maintain budget control and attract global investment towards the country’s net zero objectives.
The APM showcases the regulator’s commitment to fulfilling the government’s growth duty, which obliges regulators to break down obstacles that hinder growth and innovation.
This mechanism could be extended in the future to assist other sectors of infrastructure development.
Ofgem’s APM aims to find a balance between speeding up progress and ensuring responsibility, making sure that the companies adhere to its financial guidelines, deliver projects within set timeframes and provide maximum value for consumers.
The “use it or lose it” rule, introduced alongside the APM, echoes advice from the National Energy System Operator (NESO), which recommended in November 2024 that there should be significant changes to the energy sector to meet the UK’s goal of clean power by 2030.
However, Ofgem has stressed the importance of keeping the impact on consumer bills in check during the transition to net zero.
The regulator has laid out clear governance protocols to ensure that funds from the APM are solely used for their designated purposes, with any unused resources returned to consumers.
To reduce the risk of wasted procurement, Ofgem has stipulated that only equipment that can be repurposed will qualify for funding through the APM, ensuring that resources are not tied up in projects that may not progress.
Ofgem Infrastructure director general Akshay Kaul stated: “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 Advanced Procurement Mechanism 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.
“It’s a significant step on the accelerator as we drive towards net zero and we are committed to working with government, GB Energy and the National Wealth Fund to maximise the economic opportunities of infrastructure investment.”
