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Strategic report
OCU Group | Annual report and financial statements 2025
Governance
Financial statements
Market opportunity
Regulated Power
UK regulated electricity infrastructure market overview
Key programs and future initiatives
Accelerated Strategic Transmission Investment (ASTI) Ofgem has introduced the ASTI framework to fast-track critical grid projects needed for net zero. ASTI is streamlining delivery of 26 major onshore transmission upgrades (worth ~£20bn) by 2030. These projects – identified in the ESO’s 2022 Holistic Network Design – are being accelerated to make sure the network can connect up to 50GW of offshore wind by 2030, reinforcing the stability and growth of the transmission investment program. DNO to DSO transition Distribution network operators are evolving into distribution system operators (DSOs), actively managing energy flows and local markets. This transition involves deploying smart grid technologies to integrate distributed generation and flexibility services. By enabling more dynamic, two-way power flows, DSOs can leverage low-carbon flexibility (e.g. demand response, storage, EVs) to defer traditional reinforcement and reduce costs. All DNOs have DSO roadmaps under RIIO-ED2, positioning the sector for greater digitalisation and efficient network use.
Smart grid and flexibility programs Smart grid reinforcement is a core theme in RIIO-ED2, backed by funded innovation and digitalisation initiatives. DSOs are rolling out advanced monitoring, automation, and data systems to enhance network visibility and resilience. They are also expanding flexibility markets, procuring services from distributed energy resources to manage peak demand and voltage, which creates new opportunities for OCU. Ofgem notes that increased use of digital technologies and time-of-use pricing will give consumers more control and unlock flexibility benefits across the grid. These measures support a reliable, future-ready distribution network that can accommodate rapid electrification while maintaining stability for investors.
Distribution network operators (DNOs) (RIIO‑ED2 and ED3) The UK’s electricity distribution sector, spanning 14 licensed DNOs across England, Scotland, and Wales, is entering an accelerated investment cycle under Ofgem’s RIIO‑ED2 price control (2023–2028). Ofgem’s final settlement authorises an initial £22bn+ in total expenditure over five years. This funding enables critical upgrades to accommodate surging demand from millions of new electric vehicles and heat pumps, while connecting growing volumes of local low-carbon generation. RIIO-ED2 thus marks a five‑year program of network reinforcement and expansion, aimed at maintaining average consumer distribution charges. Looking ahead, RIIO-ED3 (from 2028) is expected to build on this momentum. Industry planning has signalled that the scale and pace of investment in RIIO- ED3 will be greater than seen before, as DNOs ramp up capacity for further electrification and net-zero targets. This stable regulatory framework makes sure DNOs can earn a fair return on a growing regulated asset base, highlighting the size and stability of the addressable market for investors. Transmission network operators (TNOs) (RIIO-T2 and T3) Transmission operators are similarly scaling up. Under RIIO-T2 (2021–2026), the three GB electricity TNOs (National Grid Electricity Transmission, Scottish Power Transmission, and SSEN Transmission) are investing heavily to reinforce the high-voltage grid for renewables integration and reliability. Ofgem’s RIIO-T2 determinations set baseline allowances in the low tens of billions of pounds across the transmission sector, funding projects such as new substations and upgraded lines to accommodate offshore wind and new generation. In addition, adaptive funding mechanisms are enabling extra strategic projects, notably the Holistic Network Design for offshore wind, to proceed within the T2 period. Looking forward, RIIO-T3 (from 2026) is poised to drive a step‑change in grid expansion. National Grid’s draft RIIO-T3 business plan alone proposes up to £35bn of transmission investment from 2026–2031, reflecting an unprecedented build-out of capacity. This includes significant reinforcements and new routes to deliver clean energy nationwide. The regulated transmission market offers substantial long-term growth with stable, inflation-linked revenues under the RIIO model.
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