Electricity networks told to consider UK jobs and skills during procurement

Electricity networks could face new legislation if they fail to do enough to support UK jobs, skills and manufacturing through their procurement.

That’s the message from the UK Government that warned utilities, including electricity, gas and water networks, that they could face new legislation that will force them to use procurement to support jobs and manufacturing skills if they failed to do so voluntarily. 

It’s not exactly news that the UK Government wants utility firms to do more to boost jobs and skills – with the Department for Energy Security and Net Zero having set out guidance earlier this month. That guidance supports voluntary alignment with a minimum 10% social-value weighting in network procurement, with 20% identified as a longer-term ambition. 

It is the first time the Government has threatened the industry with further legislation, however. That could ensure there’s significant voluntary uptake from across the utilities sector. 

So, how does the guidance work in reality? Well, it should give social value a more defined role alongside the commercial and technical considerations used to assess major network contracts. That’s important for the UK Government which is trying to boost a sluggish economy – as it could mean more jobs are created, rather than simply offshored to the lowest bidder. 

In practice, if there are three companies bidding for a procurement contract from a DNO, for example, that DNO would have to take into consideration how many jobs each firm would create in the UK – and give more weight to the firm that would create the most jobs – even if it’s not necessarily the cheapest or most technically advanced. 

It could be set to go further too. The UK Government has asked Ofgem to consider an approach that directly encourages final UK assembly and growth in higher-value domestic manufacturing. Reporting could also eventually show how much network supply-chain spending remains in the UK compared with overseas.

That could become increasingly important as network operators place large orders for cables, transformers, switchgear, substations and other equipment needed to expand Britain's electricity system.

The scale of that procurement opportunity is already visible. Earlier this month, National Grid announced £624 million of network contracts across 78 suppliers, including 69 SMEs. On one major converter station project, a supplier has identified opportunities that could support around 270 local jobs and more than 3,000 apprenticeship weeks.