The UK infrastructure market is robust and sustainable with continued growth in forecast spending, backed by strong Government support and committed investment in all key long-term programmes.
Investment in infrastructure2
There are five fundamental long-term trends that will support the Group’s growth over the next ten years.
Opportunity for Renew
Political and economic landscape
Conservative Government infrastructure election pledge
Impact of Covid-19 on working practices
Increased pressure on transport capacity
Demand for natural resources increases
Drive to optimise assets
Incentives linked to customer satisfaction
Focus on decarbonisation
Increased flood risk
Move towards smart cities and smart transport
Need for improved wireless networks
Investment in Control Period 6
- There will be a 25% increase in spend on operations, maintenance, support and renewals in CP6 compared with CP5.
- Opportunities will arise from the integration of HS2 with the existing rail infrastructure.
- Long-term investment will be required to deliver the Government’s decarbonisation commitments by 2050, including significant spend on electrification programmes.
- National coverage with regional offices and depots.
- Strong relationships.
- Large multidisciplinary direct delivery renewals and maintenance capability.
- Reputation for being “user friendly”, responsive and able to react at short notice.
- In-house multidisciplinary design.
- Innovation in specialist plant.
Nuclear Decommissioning Authority spend per annum
- The Government’s nuclear decommissioning provision is estimated at £124bn8 over the next 120 years, with around 75% allocated to Sellafield.
- Momentum in Magnox decommissioning programme.
- New nuclear is an essential part of the Government’s objective of delivering a sustainable and low-carbon energy future.
- Over 75 years of proven performance in civil nuclear.
- Exemplary, market leading safety record.
- Multidisciplinary service offering including manufacture.
- Highly qualified and working to stringent nuclear standards.
- Large complement of highly skilled and security-cleared resource.
Estimated spend in Asset Management Programme 7 ("AMP7")
- AMP7 will focus on cost efficiency and leak reduction with expenditure to increase by 16% from AMP6.
- OFWAT focused on improving the customer experience and outcomebased solutions leading to an increase in expenditure on capital maintenance and asset optimisation.
- Additional spending to enhance supply resilience including on dam safety and infrastructure refurbishment schemes.
- Excellent client relationships.
- Strong track record of complex delivery.
- Trusted partners over numerous AMPs.
- Operating in high barrier to entry sectors driving higher margins – dam safety, live network upgrades.
- Direct delivery teams with excellent safety record.
Estimated investment to roll out 5G across the UK
- Wireless telecoms infrastructure market to grow significantly as demand for 5G internet access increases.
- All four major UK networks have announced their 5G launch sites as part of a roll-out of wireless infrastructure across the UK.
- Government to invest over £500m in the Shared Rural Network to extend 4G mobile coverage to 95% of the UK.
- Long-term relationships with all the main UK network operators, equipment vendors and managed service providers.
- Scale and location of multi-skilled direct delivery teams able to provide a rapid, UK-wide service.
- In-house expertise to provide a full acquisition, design and construct service.
- Reputation for delivery during roll-out of 2G to 4G.
Road Investment Strategy 2 ("RIS2")
- Unprecedented level of committed spend on England’s strategic road network over the 2020–2025 period.
- Increase in Highways England spending in renewals.
- Strong relationships in all Highways England areas and with other maintenance and renewals providers.
- Reputation for innovation that delivers efficiency and safety benefits.
- Multi-skilled direct delivery teams are able to provide a UK-wide service.
- Plant-led solutions that deliver margin enhancements.
Estimated investment in electricity network during RII0-1
- 40GW of new power generation needed by 2030 that will require new network infrastructure.
- £37bn of Ofgem funding to enhance electricity network (2013–2023).
- £500m to support the roll-out of super-fast electric vehicle charging network in March 2020 Budget.
- Demand for distribution networks to manage load to accommodate local generation and storage.
1 Renew uses a range of statutory performance measures and alternative performance measures when reviewing the performance of the Group against its strategy. Definitions of the alternative performance measures, and a reconciliation to statutory performance measures, are included in Note 30 to these accounts
2 HM Treasury Budget 2020 12 March 2020
3 Network Rail Delivery Plan Control Period 6 High Level Summary 26 March 2020
4 Department for Transport Road Investment Strategy 2: 2020-2025 March 2020
5 Department for Transport Road Investment Strategy: for the 2015/16–2019/20 Road Period March 2015
6 UK Government press release ‘£1bn deal to end poor rural mobile coverage agreed’ 9 March 2020
7 Nuclear Decommissioning Authority Business Plan 1 April 2020 to 31 March 2023
8 UK Government Nuclear Provision: the cost of cleaning up Britain’s historic nuclear sites 4 July 2019
9 Renew estimates from water companies’ business plans
10 Ofgem RIIO-ED1 Price Control Financial Model for the annual iteration process November 2020 Ofgem RIIO-ET1 Financial Model following the annual iteration process 2019