Ofgem is consulting on introducing a new investment fund worth between £5bn and £8bn that should help energy transmission owners cut delays, control costs and attract international investment in the drive to net-zero.

The regulator’s new Advanced Procurement Mechanism (APM) would provide billions of pounds in allowances for transmission owners to buy essential equipment such as switchgear, cables and steel in advance of when it is needed, and often before their project has been finalised.

The streamlined process would ensure green-lit projects are ready to break ground as soon as planning approval is granted, with the key construction equipment already in place.

Advantages would include a reduced risk of costly supply chain delays as global demand for vital infrastructure materials increases. lowering or controlling build costs by purchasing materials in advance, as supply and demand steadily raises prices year on year, supporting growth in domestic manufacturing and attracting international investment to British projects.

The proposal, detailed in a consultation launched on 20 November by Ofgem will run until 18 December, chimes with independent advice provided to Government last week by the National Energy System Operator (NESO), which called for a step change across the energy sector to achieve clean power by 2030.

Akshay Kaul, director general, Infrastructure, for Ofgem said: “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. 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.”

Ofgem is consulting on the APM coming into effect from early 2025 as a ‘use-it-or-lose-it allowance’, accompanied by comprehensive governance. It would also include a re-opener allowing the regulator to increase the allowances and to add items to the mechanism’s scope or remove items if supply constraints ease.

To minimise the risk of stranded procurement – pre-ordered equipment for projects that do not progress – Ofgem will ensure that only equipment that is transferable between many different projects is eligible for APM funding. More bespoke procurement will be considered on a case-by-case basis to assess the benefit and risk.

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