The UK transmission sector is gradually moving beyond its traditional monopoly- led, regulated asset model toward a more competitive, project-based delivery framework. This shift is being introduced through the CATO model, which enables private developers, infrastructure investors and utility-backed consortiums to compete for the delivery of selected onshore transmission assets.

Under the CATO framework, eligible transmission projects are no longer automatically allocated to incumbent transmission owners. Instead, specific assets can be tendered competitively, with the selected CATO responsible for designing, financing, constructing, owning, operating and maintaining the asset under a regulated licence. This preserves regulatory oversight and revenue visibility, while introducing private-sector competition into parts of the transmission network.

The model is being implemented under the statutory framework created by the Energy Act 2023 and associated secondary legislation, which created the statutory basis for CATOs. As per Ofgem’s Tender Regulations 2025, the NESO has been designated as the delivery body responsible for running competitive processes, including early market engagement and future tendering. The approach supports the UK’s Clean Power 2030 objectives by broadening the delivery base for critical grid infrastructure, introducing competitive pressure into selected transmission projects and providing additional routes for infrastructure investors to participate in network expansion.

The new framework will play a key role in opening investment opportunities in onshore networks for new entrants, which will be imperative if the £58.0 Bn of investment needs outlined in NESO’s ‘Beyond 2030’ network design recommendations are to be met.

The UK’s OFTO regime provides the closest precedent for CATO, extending a proven model of competitive transmission ownership from offshore assets to selected onshore projects in order to attract private capital and support future grid expansion.

While the UK is the most advanced European market in developing competitive transmission ownership models, progress elsewhere remains limited. Most European countries continue to rely on incumbent TSOs and regulated monopoly structures, with private capital participation typically concentrated in interconnectors, PPP-style arrangements and project-level financing structures. As a result, the UK currently serves as the primary test case for the broader applicability of competitive transmission models across Europe.

CATO is currently at an early implementation stage, but the regime is moving from policy design into practical market engagement. The Early Competition model allows competitive tendering to begin before detailed project design has been completed. This enables the successful bidder to influence design, financing and delivery strategy earlier in the asset lifecycle, with the aim of improving cost efficiency, innovation and execution quality.

NESO’s Expression of Interest (“EoI”) process, launched in March 2026, represents a material step in testing market appetite for early- stage onshore transmission competition. The EoI is not a formal tender or pricing request, but a market-sounding exercise to assess investor capability, financial capacity, relevant experience, risk appetite and views on project packaging and sequencing. The information gathered will help NESO refine competition design, engage with Ofgem on returns and risk allocation, and shape the future CATO project pipeline.