Ofgem Sets 'Build and Flex' Strategy for UK Electricity Grid Regulation from 2028, Requiring Distribution Network Operators to Justify Investment Using Demand Evidence

Ofgem, the UK's energy regulator, has unveiled the framework for the next phase of electricity grid regulation, covering the period from April 2028 to March 2033. The new regime will require distribution network operators (DNOs — the companies responsible for delivering electricity from the national transmission network to homes and businesses) to adopt a so-called 'Build and Flex' strategy when planning their infrastructure investment programmes. Under the new approach, DNOs must use evidence on regional demand growth to justify the mix of upfront network reinforcement and flexible capacity services they deploy. This represents a deliberate balance between two earlier regulatory philosophies: the 'flex-first' approach under the current ED2 price control period (which prioritised using flexible demand and supply services before building new hardware) and Ofgem's previous consultation proposals for ED3, which had signalled a shift back towards more upfront physical network construction. Ofgem has stated that DNOs must develop and include a Build and Flex Strategy within their business plans, explaining how they will use reinforcement and flexibility in combination to keep networks connection-ready without committing consumers to premature capital expenditure. The regulator frames the approach as minimising near-term impacts on consumer bills while preserving optionality as system needs become clearer over time. For commercial lawyers, this framework is directly relevant because DNOs will need to procure flexibility services through market mechanisms, negotiate grid connection agreements with large electricity users and generators, and structure their capital programme in ways that satisfy Ofgem's evidentiary requirements.