UK ENERGY LAW AND ELECTRICITY SYSTEM: ELECTRICITY INFRASTRUCTURE PROCUREMENT LAW

1. Introduction

Electricity infrastructure procurement law governs how public authorities and regulated utilities acquire the works, goods and services required for transmission networks, substations, interconnectors, offshore infrastructure, smart-grid technology and other electricity projects. The modern framework is principally the Procurement Act 2023, alongside the Electricity Act 1989, Energy Act 2023, planning legislation and sector-specific licensing arrangements. The Procurement Act replaced much of the previous EU-derived procurement framework, subject to transitional provisions.

Procurement law is especially important because electricity infrastructure often involves high-value, long-duration projects where competition, transparency, security of supply and value for money must be balanced.

2. Procurement Act 2023

The Procurement Act 2023 establishes a unified procurement regime covering public contracts, utilities contracts and concessions. Its reform objectives include transparency, integrity, equal treatment, value for money and better commercial outcomes.

For electricity infrastructure, section 6 and Schedule 4 are particularly significant. A utilities contract is broadly a contract for goods, services or works supplied wholly or mainly for a utility activity. Schedule 4 treats the provision or operation of fixed networks providing public services connected with the production, transport or distribution of electricity, and certain supplies to those networks, as utility activities.

However, the legislation distinguishes competitive electricity activities: Schedule 4 excludes specified generation, production and wholesale or retail electricity activities in Great Britain from utility-activity treatment.

3. Procurement Procedures and Competition

Electricity authorities covered by the legislation must determine whether a proposed infrastructure contract constitutes covered procurement and then comply with applicable requirements concerning competitive tendering, notices, supplier selection, contract award and transparency.

Procurement therefore influences the entire infrastructure lifecycle—from preliminary engineering and network construction to digital systems, maintenance and major equipment purchases.

For certain electricity projects, the Energy Act 2023 additionally expands the statutory framework enabling competitive tenders for relevant electricity projects through amendments to the Electricity Act 1989.

Competition can reduce infrastructure costs, encourage technological innovation and limit preferential treatment, while procurement design can also address resilience, delivery capability and long-term system requirements.

4. Contract Management and Accountability

Procurement regulation does not necessarily end when a contract is awarded. The Procurement Act includes contract-management requirements. For example, section 52 generally requires contracting authorities, before entering public contracts worth more than £5 million, to establish at least three key performance indicators unless performance cannot appropriately be assessed through KPIs. Certain contracts, including utilities contracts awarded by private utilities, are excluded from this particular requirement.

This is important for electricity projects where delays, cost escalation or technical underperformance can affect consumers and system resilience.

5. Case Law – Nuclear Decommissioning Authority v EnergySolutions

Case Name/Citation: Nuclear Decommissioning Authority v EnergySolutions EU Ltd [2017] UKSC 34.

Facts: The Nuclear Decommissioning Authority conducted a major procurement competition concerning the decommissioning of nuclear sites. EnergySolutions challenged the procurement process after losing the competition.

Legal Issue: Among the issues reaching the Supreme Court was the legal test governing recovery of damages for breaches of public procurement obligations.

Judgment: The Supreme Court considered the relationship between EU procurement remedies and domestic law and held that damages required a sufficiently serious breach of the applicable procurement rules.

Legal Principle/Ratio: Procurement obligations are legally enforceable, but damages under the regime considered in the case were not automatically available for every breach; the seriousness of the infringement mattered.

Significance: The decision demonstrates the substantial litigation and financial risks associated with improperly conducted procurement in major energy infrastructure projects.

6. Procurement and Public-Law Principles

Procurement decisions involving public bodies may also interact with general principles of administrative law. Authorities must exercise statutory powers for proper purposes, consider relevant matters and comply with procedural requirements. Challenges may therefore involve statutory procurement remedies and, where appropriate, judicial-review principles.

The current system also remains connected with international procurement commitments: the Procurement Act expressly defines the WTO Agreement on Government Procurement (GPA) for purposes of its statutory framework.

7. Overall Significance

Procurement law is therefore a major component of UK electricity infrastructure governance. It determines who may compete, how suppliers are selected, how contracts are awarded and how performance is supervised. The Procurement Act 2023 modernises this framework while recognising the distinctive position of regulated utilities. Combined with the Energy Act 2023's competitive-tender mechanisms, procurement law supports infrastructure investment while imposing legal disciplines of competition, transparency and accountability. For electricity networks, effective procurement is consequently not merely commercial contracting; it is an important legal mechanism for achieving reliable, economical and strategically planned infrastructure.