What Ofgem’s draft CATO licence means for competition, investment and delivery across the UK’s evolving onshore electricity transmission market.
Published: 15 September 2026
Authors: Steven Stewart & Sarah Johnson
Ofgem’s consultation on the draft Competitively Appointed Transmission Owner (CATO) licence and accompanying guidance marks an important development for competition in onshore electricity transmission. It provides the clearest indication yet as to how a functioning CATO regime may operate in practice.
The publication follows several years of policy and legislative development aimed at introducing competition into the delivery of selected onshore electricity transmission assets. While the first CATO projects have yet to be identified, the publication of the draft licence is another indication that the regulatory framaework is continuing to evolve from policy concept towards implementation.
The proposed licence and guidance
The draft licence is intended to apply to successful bidders appointed through an onshore electricity transmission early competition tender. This means that a CATO would be responsible for designing, financing, building and operating transmission assets on the electricity network. The draft licence broadly takes a “familiar where it can be, specific where it needs to be” approach.
Ofgem has sought to align the draft with existing transmission licence conditions where appropriate for CATOs, while adapting or introducing provisions to reflect the characteristics of a competitively appointed transmission owner. The draft licence also touches upon the mechanics of the CATO commercial framework, including security during construction, revenue conditions, asset health, refinancing, exit arrangements, milestone payments and the possibility of a CATO of Last Resort.
Sitting alongside the draft licence is the draft guidance, which is intended to help explain how the licence conditions will operate in practice. It covers matters such as processes, roles and responsibilities, information submission requirements and the obligations that would fall on a CATO.
Consultation timeline and wider market activity
The consultation is open until 16 October 2026. We will be following developments closely. The publication also coincides with continued progress in the offshore transmission sector, including recent OFTO tender activity for Hornsea Project 3.
Additional tender activity is expected to launch towards the end of October 2026, further demonstrating the continued expansion of competitive delivery models across the UK’s transmission infrastructure.