Engineering Services

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

£640bn

2020–2025

There are five fundamental long-term trends that will support the Group’s growth over the next ten years.

Long-term trends

Opportunity for Renew

Political and economic landscape

Conservative Government infrastructure election pledge

Impact of Covid-19 on working practices

Brexit uncertainty

  • Increased speed of investment in UK critical infrastructure
  • Additional investment in telecoms
  • Infrastructure investment acts as fiscal stimulus
Population growth

Increased pressure on transport capacity

Housing shortages

Demand for natural resources increases

  • Investment to improve rail and highways capacity
  • Regeneration of urban areas and brownfield sites
  • Need for better resilience in energy and water supply
Government regulation

Drive to optimise assets

Incentives linked to customer satisfaction

  • Focus on upgrading and maintaining infrastructure assets
  • Increased spend to reduce leaks, faults and network delays
Climate change

Focus on decarbonisation

Increased flood risk

  • Investment in renewables, electrification and new technology
  • Flood alleviation, dam safety and network resilience programmes
Technological developments

Move towards smart cities and smart transport

Need for improved wireless networks

  • Digital railway, digital roads, battery storage and electric vehicle charging
  • Roll-out of 5G network, including the Shared Rural Network, across the UK

 

Key markets

Investment in Control Period 6

£53bn3

Market opportunity

  • 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.

Our response

  • 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

£3bn7

Market opportunity

  • 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.

Our response

  • 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")

£51bn9

Market opportunity

  • 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.

Our response

  • 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

£5bn2

Market opportunity

  • 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.

Our response

  • 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")

£27.4bn4

Market opportunity

  • Unprecedented level of committed spend on England’s strategic road network over the 2020–2025 period.
  • Increase in Highways England spending in renewals.

Our response

  • 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.

 

Target markets

Estimated investment in electricity network during RII0-1

£37bn10

Market opportunity

  • 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