While transmission ownership and regulatory frameworks vary across Europe, most markets continue to operate under a broadly similar model characterised by regulated TSOs, centralised network planning and long-term revenue frameworks. The UK provides a useful case study of this traditional approach, given the maturity of its regulatory system and its role as the first European market to actively develop competitive transmission ownership models through frameworks such as OFTO and CATO.

The UK’s traditional electricity transmission model has historically operated as a centralised, regulated monopoly framework. Under this structure, major network companies own, develop and operate the high-voltage transmission grid through long- term licences established under the Electricity Act 1989. The model has been designed to provide system reliability, predictable capital recovery and regulated returns, supported by extensive oversight from the Office of Gas and Electricity Markets (“Ofgem”).

The traditional UK transmission framework operates under a Regulated Asset Base model. Transmission owners invest capital into network infrastructure, while Ofgem assesses whether the expenditure is efficient and determines the level of allowed revenues. Approved investments are added to the operator’s Regulatory Asset Value, on which the operator earns an allowed return over multi-year regulatory periods.

This framework, currently embedded within Ofgem’s ‘Revenue = Incentives + Innovation + Outputs’ (“RIIO”) regime, provides transmission owners with long-term revenue visibility, stable cash flows and relatively low financing risk. As a result, UK transmission assets have historically been viewed as attractive, low-risk infrastructure investments with regulated return profiles.

The model has three defining features.

• First, it offers stable and relatively low-risk returns because revenues are primarily determined through regulatory price controls rather than market price exposure
• Second, investment planning is highly centralised, with network needs assessed through system-wide modelling, regulator- led scrutiny and Ofgem-approved funding allowances
• Third, transmission development typically involves long lead times, reflecting multi- stage regulatory approvals, planning consent, environmental assessments, stakeholder consultation and supply-chain procurement requirements.

While the traditional model has supported reliable infrastructure delivery, it is increasingly being tested by the speed and scale of the UK’s energy transition.

The most significant challenge is the mismatch between transmission build-out timelines and renewable deployment. Prior to the much-needed ‘First Ready, First Needed’ reforms introduced by NESO, an independent body responsible for planning and operating Great Britain’s electricity transmission system, the UK’s legacy grid connection queue exceeded 700.0GW. Projects often faced connection timelines of 10–15 years, with many viable renewable and storage assets receiving connection dates well into the 2030s.

Regulated monopoly structures can limit innovation, as returns are primarily linked to approved investment rather than technology risk. Ofgem’s RIIO-T3 framework seeks to address this through targeted incentives for more efficient network delivery and operation. A further limitation is the sector’s high dependence on regulatory and public capital allocation. Transmission expansion remains closely tied to Ofgem-approved allowances, strategic funding mechanisms and regulated network charges. While this supports bankability, it also means that investment delivery depends heavily on regulatory cycles at a time when grid expansion needs are accelerating.

Finally, the existing grid was largely designed around centralised fossil-fuel generation rather than decentralised, variable renewable generation. The growth of distributed clean energy projects, storage and new connection requests has exposed a structural gap between legacy grid planning assumptions and the requirements of a more decentralised energy system. NESO has estimated that around £60.0 Bn of grid investment will be required to support a clean power system, underscoring the scale of capital deployment needed.

Overall, the UK’s traditional transmission model has historically been effective in delivering reliable infrastructure, attracting long-term institutional capital and maintaining system stability. However, the accelerating shift toward renewables, electrification and decentralised generation is exposing the limitations of a purely centralised, regulated model. The UK transmission framework is shifting towards faster delivery, greater investment flexibility and increased use of competitive models.