The UK’s energy regulator, Ofgem, has launched a new mechanism to help transmission owners (TOs) access infrastructure financing faster.
The new Advanced Procurement Mechanism (APM) will allow TOs to purchase essential equipment for project development – such as switchgear, cables, and steel – ahead of when it is needed, which Ofgem states will ensure that green-lit projects can begin construction as soon as planning permission as been granted. According to the regulator, this will avoid delays, control costs, and promote international investment into UK clean energy projects.
The framework aims to balance acceleration with accountability to ensure that projects are delivered on time and at the best value to UK energy consumers. TOs will be allowed to procure equipment up to a pre-agreed cap, which will be adjusted each year, without requesting further permission from the regulator. Ofgem states that this will help to speed project development while also saving money, as equipment and procurement costs rise year on year.
In order to avoid wasted spending on assets, eligible spending under the APM focuses on fungible procurement – procurement of assets that can be used on many different projects. For more bespoke procurement needs, the regulator will consider their necessity and validity on a case-by-case basis. Ofgem notes that for services and labour to be eligible under the APM, these must be able to track their usage to ensure they support eligible equipment types.
Consultation on the mechanism was launched in November of last year, and is one of a number of processes that the regulator is introducing in order to speed up the development of electricity generation and transmission infrastructure. Ofgem’s Accelerated Strategic Transmission Infrastructure (ASTI) mechanism is another process that has been created for this purpose, with significant success; the Eastern Green Link 1 transmission project was greenlit for £2 billion of funding through this scheme in late 2024.
Ofegm is also currently consulting on changing the Strategic Innovation Fund (SIF) in order to ensure the aims of the scheme – that is, to fund ambitious network projects to speed net zero – continue to be met.
Akshay Kaul, director general of infrastructure for Ofgem, said: “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.”
Energy minister Michael Shanks 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. This builds on our work to reform our broken planning system to speed up renewable energy projects like wind farms, and to overhaul the grid connections queue to connect clean power projects quicker.”
