Private participation in transmission infrastructure remains relatively limited compared to generation assets, making it one of the less developed areas of the energy transition investment landscape. Historically, ownership of transmission networks has been concentrated among regulated monopoly operators, limiting direct access for institutional capital despite the sector’s attractive characteristics, including regulated revenues, long asset lives and essential-service status.

The emergence of competitive delivery frameworks such as OFTO and CATO is beginning to broaden investor access to transmission infrastructure. These models allow private capital to participate in the financing, ownership and operation of specific transmission assets while maintaining regulatory oversight and system coordination.

As grid investment requirements continue to increase, competitive ownership structures could provide an additional mechanism for mobilising capital into a sector that has traditionally relied on incumbent network operators and regulated balance sheets.

The attraction for investors lies in gaining access to transmission assets that have historically been unavailable to private capital. By introducing competition into project delivery and ownership, CATO creates the potential for investors to earn attractive risk-adjusted returns while supporting the substantial grid investment required for the energy transition.

The UK’s OFTO regime provides a practical example of private capital already participating in transmission infrastructure. Since its launch in 2009, the framework has attracted over £11.0 Bn of private investment into offshore transmission assets, demonstrating investor appetite for regulated transmission infrastructure with long-term, predictable cashflows. Looking ahead, the UK’s target of up to 50.0GW of offshore wind by 2030, from approximately 16.5GW installed as of 2025, is expected to drive further investment in offshore transmission links, grid connections and associated network infrastructure.

The OFTO regime also provides an important precedent for CATO, demonstrating that competitive ownership frameworks can successfully attract private capital into transmission infrastructure while operating within a regulated environment.

While the investment case is compelling, private transmission infrastructure is not without risk. The central challenge is that the asset class pairs defensive revenue characteristics with significant delivery complexity.

• Regulatory risk is the most material consideration. Allowed returns, cost recovery mechanisms, incentive structures and tender rules will ultimately determine whether private capital finds the sector attractive. Although RIIO-3 provides a clearer return environment for incumbent transmission owners, it remains to be seen whether emerging competitive models will offer returns sufficient to compensate investors for the full spectrum of design, construction, financing and operational responsibilities.
• Political risk also warrants attention. Transmission networks are strategic national assets, and governments may be reluctant to cede too much control of core grid infrastructure to private investors. This is likely to constrain the scope of full privatisation and favour more targeted participation models for discrete, project- based assets with clear boundaries and well-defined regulatory oversight.
• Construction and delivery risk is similarly material. Large transmission projects must navigate long planning timelines, environmental approvals, community opposition, supply-chain constraints and shortages of skilled labour. Competitive ownership structures may bring additional capital and delivery discipline, but they cannot fully resolve system-level constraints such as permitting delays and network planning complexity.
• Pipeline visibility presents a further challenge. While the headline investment requirement is substantial, not all of it will be accessible to private capital. Core transmission assets remain largely within regulated transmission owner structures, and newer competitive models are still at an early stage. Investors will therefore need to focus on segments where frameworks are already proven or where the project pipeline is clearly defined.
• Bid Risk: As a competitive tender model, there is no certainty that bidders will secure projects after committing significant time and resources to bid preparation. Returns may also be compressed if competition becomes intense, reducing the attractiveness of successful bids.