The UK energy regulator is mulling the launch of a £5-8 billion investment fund in 2025 to help speed the expansion of the UK electricity network.
Under the current proposal, cash would be provided to allow the UK's three energy transmission owners to buy the equipment such as cables, steel and technology "years in advance" of when they need to use it, according to the Ofgem proposal, even before the project is finalised.
The transition owners are National Grid PLC (LSE:NG.), SSE PLC's (LSE:SSE) 75%-owned Scottish & Southern Electricity Networks, and Scottish Power Transmission.
Ofgem has launched a consultation today to examine what it calls the advanced procurement mechanism (APM) fund, which it says would help speed up the process, control costs and attract more international investment.
The proposal follows the advice from the independent National Energy System Operator (NESO), which called for a massive increase in investment in the energy sector to achieve clean power by 2030.
Saying the APM framework is the first of its kind, Ofgem reckons that helping the transmission companies invest before they need the materials will reduce the risk of supply chain delays and control build costs, as the items needed to expand the transmission network are expected to be in high demand as developed and developing countries all rush to do the same, sending prices rising.
"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," said Akshay Kaul, head of infrastructure at the regulator.
"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."
The fund would aim to ensure green-lit transmission projects are ready to break ground as soon as planning approval is granted,
Ofgem wants the APM fund to come into effect in early 2025 with rules to ensure it is "used only for the intended purposes" and that any unused funding will be returned to consumers.
Energy minister Michael Shanks said the fund will "give developers a head-start to secure the essential equipment needed for new clean energy infrastructure".
"By getting ahead of the global race for these materials, developers will be able to avoid costly delays to projects and ensure nothing stands in the way of our clean power mission.”
To minimise the risk of equipment being pre-ordered for projects that do not progress, the regualtor said it will ensure that only equipment that is transferable between many different projects is eligible for APM funding, with more bespoke procurement considered on a case-by-case basis.