Today, NESO published its Expression of Interest for the CATO market sounding - the clearest signal yet that competitive onshore transmission is moving from policy document to real project. The journey to get here is longer, and stranger, than most people realise.

The network that predates most of what we take for granted

It is easy to assume that Britain's high-voltage transmission network is a creature of the privatisation era. It is not. The 132kV national grid was built between 1927 and 1933 under the Central Electricity Board, a publicly owned body created by the Electricity (Supply) Act 1926 to rationalise a patchwork of nearly 600 competing local electricity undertakings. That grid was nationalised in 1948 under the British Electricity Authority, then operated from 1958 by the Central Electricity Generating Board (CEGB). In 1961, the CEGB launched a major Transmission Construction Project to build out a 400kV supergrid over the existing network: the backbone that still carries most of Great Britain's bulk electricity flows today.

By the time Margaret Thatcher's government passed the Electricity Act 1989 and broke up the CEGB, the physical network was largely already in place. Privatisation transferred ownership of a grid that previous generations had built across the 1930s and 1960s; it did not build the grid itself. The three Transmission Owners that emerged - National Grid Electricity Transmission in England and Wales, SP Transmission in central and southern Scotland, and Scottish Hydro-Electric Transmission in the north - inherited a remarkable piece of infrastructure. Their job, for most of the privatisation era, was to maintain and modestly extend it.

This matters because the CATO regime is, at its core, about what comes next: who builds the new infrastructure that Britain's energy transition demands, on a network that is now sixty years old in much of its design and scope, facing the largest expansion programme since the supergrid era itself.

Why the incumbent model came under pressure

Under privatisation, onshore transmission infrastructure could only be built by one of the three licensed TOs. Regulated through Ofgem's RIIO price controls, TOs set capital expenditure programmes, recover costs through regulated charges, and deliver against those programmes at their own pace. There is no competitive process for deciding who builds what; the relevant TO builds it.

For much of the privatisation era, this arrangement worked. The TOs developed deep expertise, established supply chains, and maintained a network that by global standards performs reliably. The question of who builds new assets was rarely contentious, because large new transmission builds were rare.

The energy transition changed that calculus. NESO's Beyond 2030 analysis identified approximately £58 billion of required transmission investment. New overhead lines, substations, and potentially underground cables need to be consented, designed, and built at a pace the UK has not attempted since the 1960s supergrid programme. At that scale, the question of whether competition might drive better outcomes for consumers became serious policy territory.

It is also worth noting what the TOs are already contending with. The Accelerated Strategic Transmission Investment (ASTI) framework - through which National Grid Electricity Transmission is already delivering significant new capacity ahead of RIIO-T3 - is stretching internal programme management to its limits. The argument is not that the TOs cannot deliver. It is that the volume of delivery required over the next decade is larger than any single set of regulated entities can comfortably absorb, and that introducing competitive discipline into a defined subset of new, separable projects might improve outcomes across the board.

Offshore first: The OFTO precedent - and its important limits

Ofgem's first attempt to introduce competition into network infrastructure came offshore. The Offshore Transmission Owner (OFTO) regime, developed from 2009, created competitive tenders for the ownership and operation of offshore transmission assets connecting wind farms to the onshore grid. Wind farm developers build the connection; Ofgem then runs a competitive tender to select an OFTO, who buys and operates it on a long-term regulated revenue stream. Successive independent evaluations have shown cost savings of 19 to 23 per cent against regulated counterfactuals across OFTO tender rounds one through three. Those are real, documented numbers.

But there is a critical caveat that tends to get lost when the OFTO model is cited as the proof of concept for CATO: under the OFTO regime, the asset already exists when the competitive tender takes place. The wind farm developer builds the cable and substation; the OFTO steps in to own and operate a finished asset at a price set through competitive tension. The OFTO build model - in which an OFTO would be appointed before construction to design and build the asset - has, in practice, never been used.

CATO is therefore not simply an onshore extension of the OFTO model. It is something genuinely new in the UK context: competitive appointment before the asset is built, on assets that are significantly more complex to route, consent, and deliver than an offshore cable. The OFTO track record tells us competition in network ownership can work. It does not tell us that early-competition transmission delivery will.

A long policy journey with plenty of false starts

Ofgem first raised the prospect of competitive onshore transmission in earnest around 2015 to 2016, under the Extending Competition in Onshore Transmission (ECIT) project. There was genuine industry momentum. Then Brexit happened. Parliamentary time evaporated. CATO was quietly shelved.

It came back via the Energy Act 2023, which provided the primary legislative foundation by amending the Electricity Act 1989. Two further statutory instruments followed: the Electricity (Criteria for Relevant Energy Projects) (Transmission) Regulations 2024, setting out which projects are eligible, and the Electricity (Early-Model Competitive Tenders for Onshore Transmission Licences) Regulations 2025, establishing the tender mechanics. NESO was designated as the delivery body. The commercial framework covering the Tender Revenue Stream, the Post Preliminary Works Cost Assessment, performance incentives, and security obligations was finalised by Ofgem in July 2025.

Even then, progress was uneven. The first proposed pathfinder project - a sub-component of the WCN2 circuit connecting Scotland to England - ran into difficulty when Ofgem was unable to confirm the needs case ahead of the tCSNP2 network planning refresh. NESO and Ofgem committed to identifying an alternative, and to publishing a schedule of future projects. The process moved on, but it moved slowly.

What this process demands: better planning from the outset

One underappreciated consequence of the CATO framework is the quality of planning work that needs to underpin each project before a tender is credible. Unlike the RIIO model - where a TO scopes, designs, and delivers largely on its own timeline - a competitive tender requires the system operator to present a project that is sufficiently well-defined for multiple independent parties to price it rationally. That means credible routing envelopes, quantified consenting risk, and clear interface boundaries with adjacent regulated assets.

This is where infrastructure planning technology starts to matter at the programme level, not just the project level. Tools like Optioneer, Continuum Industries' infrastructure planning platform, are already being used by major transmission planners in the US to accelerate exactly this kind of pre-tender work: rapidly assessing routing alternatives, screening environmental constraints at scale, and generating evidence-based comparative analysis that gives all parties - developers, system operators, and regulators - confidence in the scope they are working from. Optioneer has already been deployed by all UK incumbent TOs, delivering savings of up to 60% over traditional option assessment timeframes across a range of transmission voltages.

The argument is not that new technology solves the CATO delivery problem. Instead, it is that the CATO model, by introducing competition at the earliest project stage, creates a premium on planning rigour that the existing regulated model has rarely needed to demand. That premium matters whether you are a TO bidding for CATO work, a new entrant making a first move into the UK market, or NESO itself trying to run a credible tender on a timeline that the Clean Power 2030 target will not forgive.

Today: Market sounding, not yet a tender

Which brings us to this week’s announcement. NESO has published its Expression of Interest Supporting Information Pack for the CATO Market Sounding exercise. It is worth being precise about what this is and what it is not. This is not a tender. NESO is not selecting a CATO. It is asking the market to tell it what it thinks: about project appetite, cost drivers, risk tolerance, consortium preferences, and what would make participants more or less likely to bid in a real process.

The pack presents a portfolio of illustrative projects, including two in Scotland: roughly 50 km of new 400kV overhead line connecting three generators to a new substation, and roughly 80 km of new 400kV overhead line for a larger multi-user configuration. Responses are due by 30 April 2026. The tCSNP2, expected in summer 2026, will be used to identify the first real pipeline of CATO-eligible projects. From there, Invitations to Tender could follow.

The CATO regime now has its legislative framework, its regulatory mandate, and its first concrete market engagement. What it does not yet have is a competed and awarded project, a delivery track record, or certainty about how long a competitive process actually adds to project timelines. Those are not reasons to dismiss it - but they are reasons to watch how the first tender is run, and who bids.

The real question the market is asking

The industry concern around CATO is not ideological. Most participants accept the principle that competition can drive efficiency. The concern is practical: in a sector where connection dates are already stretching into the late 2030s and the Clean Power 2030 target demands unprecedented build rates, does adding a competitive procurement layer help or hinder?

That concern was expressed plainly in legal commentary following the Tender Regulations approval. As Burges Salmon noted, wider stakeholders are focused on ensuring that delivery of significant transmission works is not held up by the new regime. It is a fair question. The answer will depend less on the elegance of the framework than on the quality of planning and execution behind every project that enters the tender pipeline.

In Article 2, we look at what international experience tells us about how competitive transmission markets tend to play out - and what separates the programmes that delivered from those that disappointed.

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About this series

This three-part series was published by Continuum Industries on 12 March 2026, the day NESO launched its CATO Market Sounding Expression of Interest. Article 1 covers the history of the UK grid and the CATO policy journey. Article 2 examines competitive transmission evidence from the US, Australia, and emerging markets. Article 3 addresses what competitive delivery actually demands in practice, and where the programme will be won or lost.