The UK's energy regulator has approved a smaller-than-expected £4 billion of investment for the country's three transmission owners owned by National Grid PLC (LSE:NG.), SSE PLC (LSE:SSE) and Scottish Power to build out the electricity grid.
Late last year, Ofgem launched a consultation into potentially providing funding of between £5 billion and £8 billion to help speed the expansion of the electricity network.
Today the regulator confirmed a £4 billion advanced procurement mechanism (APM) that it said would allow Britain's high-voltage transmission network to be "expanded quicker", enabling the transmission owners National Grid ET, SSEN Transmission (75%-owned by SSE) and SP Energy Networks to conduct procurement years in advance of when they need it.
"This streamlined process will ensure signed-off projects are ready to break ground as soon as planning approval is granted, allowing TOs to avoid delays, control costs and attract international investment in the drive to clean power by 2030," the regulator said.
The £4 billion of 'use it or lose it' capital allowances has been agreed to help with 80 transmission projects required to achieve clean power by 2030, it added.
"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," said Ofgem director-general for infrastructure, Akshay Kaul.
He said the APM is a model that could be extended in the future to develop other areas of the energy sector and possibly 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."
National Grid's shares were 2% higher, as were SSE's.
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