Great. Good morning, everybody. I'm Philip Hoare, Group Chief Executive. I've had the pleasure of meeting many of you before, so hello again. I'm delighted to be able to welcome you to this project and to be able to talk about our power transmission business in a bit more detail. I think one of the things that we continue to need to do better as a company is really just demonstrate the depth of breadth of capability that we have as an organization. I think over the course of the next few hours, you'll really see that come to life on this project, but as an example of what we're capable of in this particular space and why it's just such a great market opportunity for us moving into the future. Before we get started, I guess I'll just orientate you around our business.
I think most of you know our organization, but I think it's always important to anchor where does power really sit as part of our portfolio, and again, why it's such an important opportunity for us moving forward. Our business focused on our core geographies of the U.K. and the U.S., around about a 50/50% split between the two. Then this absolute focus on a number of core markets. We chose those markets around U.K. energy, U.K. defense, U.K. transport, and U.S. buildings because that's where we see both our capability being strong, but also long-term funding plans put in place by whatever that is, the respective government or investors in those particular spaces.
When we look at that, we see those medium to long-term growth opportunities for us as a company, and none more so than in power in the U.K., and we'll talk about that. Power transmission sits firmly as part of that U.K. energy growth market for us as a business. Our profitable growth framework around Evolve, Energise, and Explore. I'll talk to you about that in a moment, but this sits firmly as part of that growth framework as we move into the future. Look, we often talk about the end-to-end capability that we have as a company, the ability to vertically integrate some of the things that we do from, or horizontally integrate, if you look at that slide.
But from engineering and design through to procurement, construction management, in this case, manufacturing and production, all the way through to construction and then on into commissioning. There's no better example in our business of our collected capability on that end-to-end than this business. Again, you'll see some of that as we talk about this particular project and our business this morning. Our Evolve, Energise, and Explore platform. Evolve is all about strengthening the core of our business and one key element of that is shape our portfolio. I thought I would mention Gammon at the start of this so that we can talk about that later on if we need to. But clearly, we've made that choice to divest our business in Hong Kong.
I think important for us in terms of the conditions in that market, but also really allowing us to focus on those growth markets in the U.K. and the U.S. Part of our strategy is always to think about those elements of our portfolio that are perhaps best owned by others and allowing us to focus on delivering our plan. I guess that's the Gammon mention of the day, and we'll get back into power transmission now. But another part of our strategy is about accelerating profitable growth, and energize, I guess, works particularly well for this particular market in power.
But actually, energize is all about being focused on those areas where we feel there's an opportunity to take an outsized piece of that market to perhaps grow faster, and we identified a couple of markets in the U.K., power and defense, where we believe that opportunity exists for Balfour Beatty. This is very much part of our plan, and power sits as a key element of accelerating profitable growth in a number of key U.K. markets. Finally, a little bit about U.K. power transmission, and I know that you've seen this slide. It's one of my favorite slides, actually, in terms of this graph on the bottom left of the slide. I guess a number of things to pick out from that.
Firstly, this is a significantly growing market, and Nick will talk in a moment about some of the demands that are happening and why this market is such a great growth opportunity. But from the published spending plans of our clients, we can see a 20% CAGR growth in this market happening over the course of the next five years and beyond. We enjoy a really, really strong market position built up of decades or a century of actually capability in this particular space, and also some really deep client relationships. Our absolute aim is to maintain or beat our current market share as this market continues to grow, obviously providing a great opportunity for the business. And actually, it is about momentum.
When you look at how we've been performing over the last two or three years, significant growth, our half-year revenue standing at GBP 366 million, which is up over 100% on the position in 2023. When you look at actually our order book, GBP 2.1 billion in our order book now, up from GBP 1.6 billion at the end of last year and up significantly on the same period a couple of years ago. Then we talk often about this pipeline of opportunity that we have being more than a pipeline because this is projects that we're already working on that will convert to our order book over the course of the next 18 months. Then, of course, we are well-positioned in the U.K. market. We have a real depth of capability that's unrivaled by any of the competition.
And particularly when you look at that end-to-end capability, I think we are really well-positioned to capture the growth that we see in the market. Look, a really core part of our overall growth strategy as Balfour Beatty in an area where we are really well-positioned with really deep customer relationships, and we are very confident about our ability to grow into this market into the future. But I guess that is enough from me. The important bit is really learning about our business and the project. I am going to hand over to Nick now, who is going to take you through a bit more detail.
Over again, Nick.
Thank you. Morning, everybody. As Philip says, I am Nick Crossfield. I am the Divisional CEO responsible for power, defense, and also what we do in regional infrastructure across the U.K. I am going to spend just five or 10 minutes talking a little bit about the power sector, but I think we have got a video that we are going to run just ahead of that.
The scale of what is happening in power right now is so huge.
A lot of our network is many, many decades old, and it needs to be renewed, but it also needs to cope with the increased demand that we have as a country.
Offshore wind, nuclear energy, all of these projects require connection to the network.
The network needs to be resilient enough to take those new energies coming online.
Due to that demand, we cannot stand still. We have to invest in our machinery and our people so we can meet that demand in line with our clients' and customers' expectations.
I'm confident in Balfour Beatty because we're doing it already.
New lines, new substations, new connections.
We already have the largest power transmission workforce in the U.K.
We can design all elements of the job. We can then fabricate the steel towers for Painter Brothers. We've got our people that will deliver these projects out on site.
It does offer a level of consistency and continuity and quality.
When we are met with a challenge, we can meet that. We have the in-house knowledge and capabilities.
We are investing heavily in state-of-the-art machinery that will give us enhanced capability, enabling us to produce more steel.
Balfour Beatty, in my opinion, are one of the best in the industry at developing their own people with our supply chain. They come on the journey with us.
At the Derby Training Center, this is a live training school that we have got. We will develop current capability here as well as new capability here. We are also looking at how we re-skill people in the industry, so taking people from different backgrounds. That could be rail, it could be telecoms.
We take that experience from different parts of the business to allow us to grow.
At Glenmore, we are building a camp for staff accommodation, also welfare.
What we have got now is a full village behind us. We need to have the right facilities to get the right people to come to the project.
The pipeline is the best pipeline visibility I've known in 20 years.
The opportunities in the U.K. power network are endless. The scale of the projects that we're now delivering in Balfour Beatty in power transmission and distribution is far greater than it ever has been.
Our baseline of people and our growth is really scalable to meet the challenge.
I want to be part of something which will leave a legacy, not just for myself, but for my children and my children's children.
We are not waiting for the future of U.K. energy. We are building it now.
Hopefully that gives you a sense of the sort of depth of capability and the kind of intensity of investment that we are putting into this sector. It is, as Philip Hoare said, an incredibly important part of our future story. What I want to do now is just give you a little bit of context as to why it is so important before I hand on to Tony Wilson and Ian Smith, who can talk to you about some of that capability and some of those specific plans that we have got here. Just to set the scene as to where we operate, as we have talked about the capability that we have got, we essentially cover all aspects of the onshore grid. The only bit that we perhaps do not get involved in is the offshore subsea cabling. That is very much a specialist discipline itself.
But we have the capability to handle everything offshore. You can see there on the screen the subtly different areas of that market that we operate in. If I start off with the middle, which is probably the most intensive part of what we are doing today, which is the transmission network, this is essentially the trunk road, the primary route infrastructure that delivers the power to the local distribution networks. We have a significant capability from cabling, tower erection, substations, but apart from that, we have all of the building and civil engineering capabilities to support those operations. So we are, to all intents and purposes, completely self-dependent upon what we can deliver there. About 80% of what we do today in power transmission and distribution happens in that space.
That is not to say that the other two areas, HVDC converter stations and interconnectors is not important or local distribution is not important. They are sectors that are emerging increasingly in importance as we sit here today, and we do have plans and intentions in those sectors as we move forward. But effectively, what you have got on the screen there is where we operate today, and we have all of the capabilities to allow us to deliver all of that scope. What is more, we continue to invest quite heavily in making sure that we are positioned for how those sectors grow in the future. The market is growing and growing very, very rapidly, as Philip has alluded to, and there are some real clear drivers. On the left-hand side of that slide, you will see some of the political priorities that are driving the growth.
It's a mixture of sort of decarbonization. The government has got very, very clear plans to get to net zero by 2050. That is a very important part of the government's energy strategy going forward. Also, we're looking here at resilience. The government has clear plans to improve the resilience of our transmission and distribution network going forward. If we do not deliver that increased resilience in the network, it will compromise not only the cost of energy in this country, but also the security of that energy delivery system going forward. So very, very clear political imperatives are driving some of the investment wave that we're currently seeing. On the right-hand side, you see some of the classical long-term structural drivers in the industry. We're seeing increasingly levels of electrification across what we do in this country.
If you look at the growing use of electric vehicles, if you look at the growing electrification that we're seeing in some of our key industrial processes. A good example of that would be the transformation that's happening in the steel industry, where we're moving away from blast furnaces to electric arc furnaces. Transportation, industrialization are two big structural drivers of the move towards electrification. Generation is interesting. We are investing as a country in generation capacity. But by definition, some of that investment is taking place in remote locations. Nobody typically wants these assets close to centers of population. And that actually then increases the need for a transmission and distribution network to get that generated power into where it is being consumed. And that investment is absolutely key critical. We're also seeing a replacement and replenishment of an aging asset base.
Part of that resilience equation is modernizing and refreshing that asset base, and we're also seeing some particular spikes in specific areas of demand. One of those could be data centers, where the growth is astronomic, and when you look at a data center, their consumption requirements on the local power grid are immense. On the screen, you have the three key customers that we are working intensively with today. They are the three regulated network asset owners. And for a period of time now, we've worked intensively and closely with those organizations in terms of understanding their future pipeline, in terms of understanding their future needs, which then feeds our investment process that we'll talk about a little later on.
We've got National Grid in the room with us today, and you'll hear from National Grid later today in terms of some of the specific programs that we are working with them on. And in fact, this site that we're on today is a National Grid project, a very important part of their network investment here. But you can see there the scale of the numbers. And we're talking about a period here on this slide up to around 2030 to 2031, because that is very much where the intensity of effort is right now. Some of that pipeline that Philip talked about takes us out to that 2031 period. So it's imperative that we understand the details and the drivers of that pipeline. And that pipeline has to be realized in that timeframe. Timing is absolutely key critical to this.
As we will talk about a little later, the consequences of delaying this investment and delivering these networks is significant, in particular to the cost of energy delivery in this country, which given the cost of living crisis that the country is wrestling with is a key critical driver to consider. National Grid, between now and 2031, are looking at an investment portfolio of around GBP 30 billion- GBP 35 billion.
Investment in overhead line, substations, and more importantly, investing in the workforce to deliver those assets in that time horizon. We are today embedded with National Grid here in England and Wales. We have been working with them for many, many years. They are one of the most important customers to the group, not just necessarily to my division, to the whole group, given the scale and the size of what we are attempting to deliver with National Grid going forwards.
BTNO, as I said, is a National Grid project. Woolavington. Woolavington is a substation that we are delivering. You can see then the cabling projects also in this part of the world that we are delivering with National Grid going forwards. SSE, another primary customer, north of the border in the north of Scotland. Again, GBP 29 billion -GBP 30 billion of investment out to 2031 across overhead lines, substations, converter stations. If you look at some of the work that we are engaged in right now with SSE in the north of Scotland, they are very, very large projects. If you look at Beauly to Peterhead, one of the country's largest overhead line projects. If you look at what we are doing at Longside, which is part of a wider investment program at Netherton.
Netherton, as you will probably find out later, is a piece of earth near Peterhead, larger than Monaco. It is a campus of transmission and distribution assets. Longside is a substation on that campus, Europe's largest substation, and we are currently in the process of delivering that. Then moving across to ScottishPower in the central to mid-belt of Scotland. Again, significant pipeline. Again, overhead line, substations, and the critical infrastructure there, and around GBP 12 billion -GBP 13 billion of investment already identified with that number being reviewed continuously all of the time. I think you can see from there between now and 2031, we have a very, very significant investment wave in front of us. The challenge really for us is firstly to understand precisely what the customer wants and where it wants it, and then to invest very, very rapidly in giving ourselves the capability to deliver.
I want to talk a little bit about distribution, which was the thing on the far right-hand side of that chart that I showed a couple of slides ago. Distribution is very much the local infrastructure that takes the power from that primary sort of transmission and distribution network, the so-called motorway network of power distribution, right through to the consumer's door. Much more fragmented market, a very different market in terms of its characteristics, but an incredibly interesting market from the perspective of growth, and also it fits our capability set. Now, I have to qualify that by saying distribution is much more fragmented and does a lot of different things. The bit of the distribution market that we are interested in is a 132 kV network, which suits our systems-wide capabilities better than some of the other aspects of that market.
But again, you can see from distribution is emerging as an increasingly important factor because as that investment wave takes place in the trunk road network, the transmission distribution network, it is then driving the need to uprate and increase the capacity of the local distribution network. And that, again, is an area that is part of our core strategic growth plan moving forward. I have talked about the phase up to 2031. It does not stop there. And looking at the GBP 80 billion-GBP 85 billion of confirmed investment up to 2031, you can see that beyond 2031, there is continued momentum. So, this is not a business that we will be in for five or six years, and then we suddenly move off to where the next interesting opportunity is. This is a commitment for us that extends out to 10-`1 5 years.
Because beyond 2031, if you look at that investment pipeline, there is circa GBP 60 billion -GBP 70 billion of opportunity that is currently being looked at. And that actually, indeed, if you look at some of the documentation around that, there are already specific projects. We allude to the 40+ specific projects that are already identified beyond 2031 with a collective value of around GBP 33 billion. So it is very much a working brief, but the key message that I want you to leave you with this slide is that this is a long-term commitment. This market will continue to grow and develop for the next 10- 15 years, and that is why it is imperative that the investments that we make in this area are done now and are done to position us to ride that investment wave for that duration of time.
Now, at that point, I think I am going to hand over to Ian Smith, who will start to talk to you about some of the mechanics behind the funding and the planning of this market going forward. Ian.
Yeah. Thanks a lot for that, Nick. And yeah, good morning, everyone. My name is Ian Smith. I am the new business and strategy director for Balfour Beatty's power business. I have been with Balfour Beatty for just over 16 years, and I am very proud to say that I actually started my career with the company on the graduate scheme. I have been with the power business for the last 10 years, and I am delighted to be able to talk to you today about an industry that I know and genuinely love. To me, what is more important than an industry that supplies green electricity to homes and businesses, schools and hospitals? And that is exactly what Balfour Beatty is at the heart of. So I am going to build on some of the market context that Nick gave you today by explaining how our projects are funded.
In addition to that, explain why this investment is absolutely needed if we are going to bring down electricity bills in the long term for the U.K. I am then going to explain the supportive regulatory environment that exists for this investment, and I will then go on to talk about some of the principal customers that we are working for and the market access that we have already secured. I will then explain some of the positive shifts that we have seen in how the projects are actually being contracted, and then go on to talk about some of the key barriers to entry, as well as the principal differentiators that we believe Balfour Beatty brings to this market. First of all, let me explain how these projects are funded because it is quite important.
An important distinction to take away from this slide is that the projects we deliver are not funded through the Treasury. In fact, they are funded by our clients, which I will go on to explain. Another key point, as it says at the bottom of the slide, this investment is absolutely needed if we are going to bring electricity bills down for the U.K. But let me start with where the projects come from. First of all, there are two key data points that feed the demands on the network. You have government policy, which Nick alluded to earlier, legal commitments for net zero, Clean Power 2030.
Those are combined with long-range electricity demand forecasts, and it is then the job of NESO, the National Energy System Operator, to look at where power is broadly going to be generated, where the demand centers are going to be, and therefore the upgrades that need to take place to the National Grid. Those plans then go to our clients, the regulated network owners, and it is the job of the regulated network owners to develop specific capital investment plans over a five year period to actually identify where the grid specifically needs to be upgraded. They will then take these plans to Ofgem, and Ofgem are the regulator in our market, and it is Ofgem's job to ensure that this investment represents value for money for the bill payers who ultimately pay for it, and also agree an acceptable rate of return with our clients.
Once the investment plans have actually been signed off, our network owners will then go ahead and invest and build in the assets. This is the point that I made earlier. Our network owners invest in these projects directly from their own balance sheets. They are not dependent on Treasury allocations. That is not to say that the investment is not subject to scrutiny. All of the projects need to demonstrate that they are value for money for the consumer, which brings me on to the impact on electricity bills. At the moment, if we do not invest in the electricity grid in the U.K., it will not be able to take the new generation that is coming online. In fact, right now, we are having to pay power generation outfits to turn off their plants in order to keep the grid stable.
Those costs are only expected to rise over the next few years if we do not upgrade in the grid. That is why we say this investment is needed if we are going to ensure that energy bills stay as low as possible for everyone in the U.K. in the long term. If I move on to the regulatory environment, the key thing with the regulatory environment is it is really supportive of this investment and can give us a lot of confidence in the growth that is ahead. I will start with RIIO. RIIO stands for Revenue equals Incentives plus Innovation plus Outputs. The key thing with RIIO is it is not a new mechanism. It has been in place since 2013. It is very well established, and it defines the regulatory periods over which our clients can invest, which I mentioned earlier.
The whole point of RIIO is it balances both investment certainty for the market against that consumer value that I spoke about earlier. The regulatory periods, as I say, run for five years. The regulatory period for transmission, known as RIIO-T3, started April 2026 of this year, and will run through to 2031. We expect significant uptick in investment compared to the previous period. Distribution, which Nick spoke about earlier, is set slightly back. The next regulatory period for the distribution clients is known as RIIO-ED3, and that will start in 2028, and like with transmission, run for five years. Like with transmission, we expect a significant uptick in investment. The key point with RIIO is it is not new, and it really helps establish real investment certainty.
However, because of the growth in the market, and in particular, the growth in major large-scale transmission schemes that are needed to enable Clean Power 2030, both the regulator, Ofgem, and our clients, the network owners, recognize they need to do something different. In particular, they need to speed up the process for these major projects. That is where ASTI comes in. ASTI stands for Accelerated Strategic Transmission Investment, and there are two really key things that ASTI does. First of all, for them big transmission projects, of which BTNO is one, it speeds up the approval process by effectively signing off the needs case en masse for a set of transmission schemes that are needed.
The second point, and this is really important from a supply chain and Balfour Beatty perspective, is it enabled the release of earlier funding onto these projects, which as I will come onto, means we can invest earlier in design development, value engineering, innovation, and also critically, the procurement of key assets. The demands on grids are global. It is not just a U.K. thing, and therefore, the lead times on some of the key equipment like overhead line conductor, substation equipment, are increasing all the time. So it is really important for the certainty of the programs that we are delivering that we procure that equipment early.
If you look up in Scotland, where we are delivering a sizable part of SSE's ASTI portfolio, we have already procured the key substation equipment, the key overhead line conductor, and that is in advance of actually landing a construction contract, because that makes sure that we can actually deliver the infrastructure on time, when it is needed, so that we can upgrade the grid. RIIO brings certainty, and ASTI brings the pace necessary to deliver major infrastructure. We have spoken about the growth, we have spoken about a supportive investment environment, but none of that is of value to Balfour Beatty if we cannot actually access this investment. Really, the key point to this slide is to say we have already secured access to almost all of the principal customer investment programs in this market.
Our clients, recognizing they need to grow the supply chain, have put in place very long-term frameworks and allocated portfolios of projects to the supply chain so that we, in turn, have the certainty to be able to invest. The other thing I will note from this slide are the asset types on the right-hand side, the colored boxes. You will see from the array of colors down there that all of the four principal asset classes that we have mentioned earlier, overhead lines, cables, substations, and converters, are all in play on the frameworks that we have already secured. I will explain to you some of the frameworks that we are already on. Starting with National Grid, who own the transmission network in England and Wales. The Electricity Transmission Partnerships are a really good example of how the approach to frameworks has changed.
What National Grid have done is introduced a portfolio approach for their contractors. They have got an Electricity Transmission Partnership for substations, where Balfour Beatty is the preferred contractor for the northeast of England and Wales, which actually spans all the way from Lincolnshire, across Yorkshire, and up to the border. It is a big area. That was our preferred region. As a result of that, we are going to be the first choice for major substations in that part of the world for the next six to seven years. That gives us the certainty to be able to invest in local training, local supply chain, people, et cetera. They have also got an Electricity Transmission Partnership for overhead lines, which is actually a national approach.
As with substations, we have got a really good portfolio of projects running out for five or six years, again, giving us that confidence to be able to invest. Nick mentioned earlier HVDC, the bit on the left-hand side, which is a growing part of the market. Because of the growth in that market, National Grid introduced a specific framework for the construction works on them projects. This is a really good example and proof point of how Balfour Beatty is differentiated. Because there was two lots on that particular framework, one for converter stations, one for underground cables, and Balfour Beatty was the only contractor in the market to get a place on both lots of that sizable framework.
Underpinning that, National Grid have a number of different frameworks for RIIO, which have been running for quite some time, and which we have a place across all three overhead line cables and substations. In addition, National Grid actually own the distribution network in the southwest, South Wales, and the Midlands. Again, that is another customer that we have been working with for a very long time and have some very long-term, well-established frameworks. Also in distribution, which is not mentioned on the slides, we also work for Northern Powergrid, who are the distribution owner in the northeast and Yorkshire of England. You can start to see some of the geographical focus that we have got in the frameworks that we have secured, and therefore the investment that we can do in those parts of the country.
If we move then up to the north of Scotland, we are a principal contractor on SSE's framework for all of their ASTI works. Again, if you look across the asset types there, we are present across all four assets, delivering infrastructure right across the north of Scotland for SSE. Same as National Grid, they have got a number of longstanding RIIO frameworks which we have presence on and tend to be used to procure the smaller capital projects. Finally, in that central belt of Scotland, we are now working with ScottishPower. We are on their ASTI framework for overhead line works, and we have got a number of live projects which we are in pre-construction on and which are strategic overhead line projects in that central belt of Scotland. You can see we are working for all of the principal clients.
We have secured long-term frameworks, and you can see the way the frameworks have set up is very favorable for certainty and growth. It is not just the framework approach that has changed. How the projects are actually being contracted has also changed, and this is a really favorable shift in the market. Traditionally in this market, most projects have tended to be competitively tendered single-stage contracts. What we mean by that is the design, the construction, the procurement is all let as one contract. The result of that is fairly obvious in that you have to price in often quite high levels of uncertainty because you have not yet developed the design. In some cases, you have not yet procured the equipment. We have to build that into our cost and to our schedule, which ultimately is a cost for the client and for the bill payer.
Because of the scale of the investment that is now needed, a new approach was needed, and actually, this is an approach that we have seen in lots of different infrastructure sectors across Balfour Beatty that are seeing growth, and that is a shift to multi-stage contracts. What we mean is rather than just being one contract for all of the works, we will often have an initial part A or first phase which will be over one or two contracts, and in those initial stages, we will do the design, we will do the value engineering, we will do the surveys, we will support the client with the consents, and we will procure the key equipment. After we have done that and increased the certainty of the outturn on the project, we will then agree a construction contract with the client. This is great for everyone.
It's great for consumers and it's great for clients because they get much more certainty of outcome in terms of the project, and obviously it's great for Balfour Beatty because equally, we have much more certainty about what we're going to be delivering. So it's a much more mature, collaborative approach, and we're seeing it be applied to almost all of our major projects that we're delivering in this market. We've spoken about the market. The final thing I want to talk about with regards to the market is this is a complex market where the barriers to entry are very significant, and I'll explain some of them, as well as point out what we believe are some of the key differentiators for Balfour Beatty. As I say, this is a niche market. It's a complex market that requires an array of capabilities to deliver successfully.
It's a safety-critical industry. The assets that we design, build, and commission, if not done correctly, are extremely dangerous and obviously can impact the entire country. Therefore, you require significant accreditations, both in terms of individual people and as organizations, and you often need many years of experience to be able to do particular roles on site. Our clients themselves pride themselves on their network and the stability of their network, and as a result, quite rightly, they have very strict specifications which you need to comply with if you're going to be a supplier in this market. As I mentioned earlier, most of the frameworks in this market have already been let. They're very long-term portfolios of projects. Again, you need to have that established position if you're going to access the works. I think this is increasing in this market.
It's a market that rewards an array of specialist knowledge and capabilities. It's not a market that just needs electrical engineering. Actually, it needs complex civil engineering, structural engineering, electrical. It needs extensive quality teams, safety, and understanding of specifications, and as we'll come onto, that's what Balfour Beatty can bring for the benefit of our customers. Finally, scale and breadth. The size of the projects in this market is increasing, and as we alluded to earlier, the geographical spread of the projects, by the nature of the grid, is quite wide and therefore it requires suppliers that are able to deploy large-scale capability in often remote parts of the U.K. So the barriers to entry are significant, but I'll turn my attention now to the differentiators that we see.
Overall, across all the infrastructure markets, Balfour Beatty clearly brings an element of confidence for our clients because of the size of our balance sheet, and therefore they can work with us on major infrastructure programs. But if you focus specifically on the power market, this is a market that we've been in for over 100 years. We helped build the 132 kV first-ever National Grid back in the 1920s, and then the first-ever Super Grid, we helped build that in the 1960s and 1970s. But really the key point with that is that we've got very long-term, well-established customer relationships. As I'll come onto on the next slide, we can demonstrate our involvement in the major transmission upgrades that have happened in the last few years and the ones that we're involved in now.
We have a genuine end-to-end offering all the way from design through to commissioning, which Tony's going to talk about in a little bit more detail. Again, as the scale of these projects increases, the value to our customers of that end-to-end offering is increasing at the same time. We do have the largest workforce in the market. As we'll come onto, we'll explain some of our workforce numbers. The key point with that is not only is that design and delivery, but we're able to deploy that workforce nationwide for the benefit of our clients.
Finally, as Tony's going to talk about, we need to grow the capacity, we need to grow the industry if we're going to meet the demands that the U.K. has, and we believe we're leading the industry in the investment that we're doing in capacity growth and in innovation. I come on to my final and favorite slide now, because I get to talk about the amazing projects that our people are out there building across the grid. As it says in the strapline there, Balfour Beatty has been involved in almost all of the major transmission upgrades that have taken place in the last 20 years. Some examples I've got there on the left-hand side, which I'll talk through. This is not just a past thing.
Actually, we are on site right now delivering construction projects, as you see from BTNO today, delivering for our clients. This is not a future thing, it's something that's happening right now. In addition, because of the growth, we're going to be mobilizing some significant projects over the next 18 months, as I'll explain. Let me start on the left-hand side with Peterhead. Peterhead, for those that don't know, is up in the northeast corner of Scotland, and it's an area of the country that we've been very well established in for a very long time. Balfour Beatty recently completed the first ever 400 kV substation for SSE, a really good demonstration of where a customer has entrusted us to deliver something that's new on their network.
You'll see from the little colored dots there, we didn't just build the substation, we also did the overhead lines and we did the cabling, again, bringing those different capabilities to bear on a specific project for the benefit of our customer. Going south of the border to Viking Link. Viking Link is a project that we delivered in Lincolnshire. That's the longest interconnector in the world. So it interconnects the U.K. grid with the grid in Denmark. Balfour Beatty was the contractor that delivered all of the onshore works from a cabling perspective for National Grid, 65 kilometers of cabling through the Lincolnshire countryside. Then the Hinkley Connection project. So you all know about Hinkley Point C nuclear power station. We need to connect it to the grid. So National Grid had a major infrastructure project to build that connection.
Balfour Beatty was chosen to deliver both the overhead lines and the underground cabling works to build it. There are a few things that are worth drawing out on this particular project. First of all, you will see the structure there, which is known as the T pylon. You will see the towers that you see today, or pylons as they are sometimes called, traditional lattice structures. This was the first time a new transmission structure was put on the network since the lattice structures started being put up in the 1920s. National Grid entrusted Balfour Beatty again to deliver something new and innovative onto their network. The other key point with the Hinkley Connection is it was a really good example of where we are bringing all the different capabilities within Balfour Beatty to bear. For the access roads, we used our local civil engineering capability.
For the actual piling works, foundation works for these new structures, we used our own internal ground engineering and foundations capability. Then to actually do the electrical works themselves, we used our power capability. So it is a really good example of where we used different Balfour Beatty expertise to deliver a benefit for our customer and reduce those interfaces. In terms of what we have actually got in construction right now, it is a really important point. We are on site right now across all of the U.K. delivering these new future energy transition projects. The Netherton Hub, Nick spoke about that earlier, bigger than Monaco, great stat. I am told the weather is a little bit different, but it is a huge project that is going to house three converter stations and two substations.
Again, in that northeast corner of Scotland, where we have got great presence and we are able to invest in the supply chain and in people. The Woolavington project is an interesting project because I think it is a really good example of where Balfour Beatty is at the forefront of the energy transition. The reason I say that is it is a new substation in Somerset that is going to connect into the T pylons, which we built, which means you are going to have new nuclear power flowing from Hinkley Point C nuclear power station. But then the substation itself is being built to connect a new EV battery factory. That EV battery factory, once built, will supply over half of the U.K.'s needs with regards to batteries for electric vehicles.
So a great example of where we are right at the heart of the change that needs to happen if we are going to achieve the energy transition. Argyll, back up in Scotland. We have been present in Argyll for quite a number of years. We have completed a number of very large overhead line upgrades in that part of the country, and we are now also delivering three new substations in Argyll for SSE.
So great proof points, I think, of the projects that we have already completed and are delivering. We are also now going to be mobilizing some really sizable projects over the next 18 months. Nick mentioned earlier Beauly to Peterhead. So this is over 200 km of new overhead line across the north of Scotland. To give you a sense of scale, we are going to be manufacturing and delivering and erecting enough steelwork on that project to build four Eiffel Towers.
But we've actually got to do it in 600 different locations across the north of Scotland, really demonstrating what Balfour Beatty can bring and the scale that we can deliver at. You'll note again the colored boxes. We're also doing substation upgrades, and we're also doing cabling for SSE on that particular major project, the Isle of Skye. This was an interesting project because actually back in the 1970s, Balfour Beatty built the high voltage network out onto the Isle of Skye. And now here we are in the modern day coming back to build an entirely new network for the benefit of Skye and the Western Isles. Obviously a very remote part of the U.K., and as a result, we're building two workers' camps at that particular project which will house over 600 people for the duration of the project.
Another great example of how we can deliver at scale in remote locations to deliver these complex schemes. Then finally, for National Grid, the Birkhill Wood project, which is a new substation we're going to be building in Yorkshire. This new substation is going to connect three new offshore wind farms which, as a result, will power over 4 million homes. So a really great project in England that's going to power a huge amount of that part of the country. Look, I've explained to you about the market, but really the key point with this slide is that Balfour Beatty has been there and done it in this market, and we're doing it right now. This is not a new thing.
As you can see, we've got some amazing projects ahead that we're going to be delivering. I'm going to hand over to Tony Wilson now, who's the MD for our power business. He's going to explain to you our end-to-end capabilities and our really exciting plans in growth, in investment, in capacity. Okay.
Thank you. Excuse me. Thank you. He's good, isn't he? And I've got to follow that. Wow. I'm going to do my best. First of all, thank you, and welcome to Bramford to Twinstead project, fondly known as BTNO. Hopefully, you'll be enjoying the presentations, but also, more importantly, getting out on site and seeing what we do on site, and that's really important. Like I say, my name's Tony Wilson. I'm the MD of the power business. I've been in the industry for 40 years. And I know I don't look it, but yeah, I do. And there's never been such an exciting time in the power business. I often say to people, "I wish I was 10 years younger." But it is exciting, and it is fantastic.
Ian and Nick talked about the market, the growth, the funding. What I want to talk about is our capacity, but also our capability and our people. First and foremost, when we look at the end-to-end capability, Philip touched on it, from design right the way through to commissioning and energization, we provide the complete suite of services. This is unique in the industry. It is a massive opportunity for us to maximize us winning more work and growing in the business. When we look at, we spotlight the designers. We have 550 designers that work across India and the U.K. The big point about that is they are integrated with our construction teams.
The construction teams are continually feeding back areas of concern, what we could do different, how we can think differently, and our designers are taking that and looking at different network solutions, but also value engineering what we do. The bottom line is we need to continue to improve. That integrated approach is a real strong value to our customers. Secondly, we have the largest specialist transmission plant holding in the industry, and we continue to grow invest in that.
What does that really mean? What it means is that when we are on site and we need tension pullers, winches, cable pulling machines, we need to make sure they are outside, they are ready, they are fit, they are ready to go. Our heavy investment in specialist plant is essential and gives us certainty around delivering our program and our commitments. Last but not least, I will touch on ground engineering.
Ian nearly stole my thunder when he talked about Beauly to Peterhead, where we have 620 towers to deliver over 187 km, even though you said 200 km. That means 620 platforms, working platforms that need to be piled and delivered in the north of Scotland. We have that capability. That is a differentiator. That makes us be able to drive value for our customer up in Scotland. When we talk about differentiators, we talk about what do we do different. Here we have, we are the only contractor that has an in-house manufacturing company that delivers steel towers, gantries, and structures within substations, and that is fantastic. They are one of three suppliers in the U.K. They have grown as the market has grown. They have moved from delivering 5,000 tons to 10,000 tons.
They have moved from having 45 operatives to over 100, and they are looking to grow to 15,000 tons and grow and extend our factory bases. That really is driving fantastic value and provides a unique vertical offering, which reduces interfaces and makes us more efficient. They design the steel, they fabricate the steel, galvanize it, patch it all up, send it on to our projects, and as you will see later today, we then start to erect and deliver the project. Now we look at how we have got the largest workforce in the U.K., and really, we have got some great plants, we have got some great systems, we have got some great processes, and we have got some great history. But the most valuable asset for me is our people, and that is my favorite subject, people.
When we look at being the largest workforce in the industry, we talk about 550 designers, as mentioned earlier, 900 construction delivery people, and so on. You can see it. That is supported and underpinned by working with our supply chain partners, which is really crucial and something I will touch on later. We know this market has grown, and in the last three years, you can see we have moved from recruiting 560 to 642 to 700. That 700 number for this year was at the end of September. I see that number probably reaching more like 800. That is fantastic. It is amazing. A lot of it is done by in-house recruitment. They know the market. They know the people, the people know Balfour Beatty, and there is a great push for those guys to join our business.
In those three years, we have effectively recruited over 1,700 people to look and deliver the demand that is requested by our customers. When we look on the right-hand side, because it is not just about recruiting, it is about training, it is about developing. On the left-hand side, you can see there is a number of projects around that. Not all our projects, we have got more than that. But we have got strategically placed training schools, both in the northeast of Scotland, in the central belt of Derby, and only this week we have had an agreement with ScottishPower to have another training school in Glasgow. That doesn't just train our people, it also trains the customer's people, but also trains our supply chain. Because you need to be able to grow the industry and the market, you cannot produce and train as many people to deliver demand.
We have to think differently about how we recruit, and I will probably touch on that in the next slide. We look at the demand, and we have got a sophisticated capacity model, which is a workforce planning model. That has got a list of all our people, the 2,500 people, understands their capability, their competence levels, the work streams that they work in, and we are able to run some scenarios to decide what projects need what people and what skill set. The great thing about that is we can understand what the demand is so we can reach that capacity. But also it identifies areas that we need to focus on. Do we need more people in Scotland? Do we need more people in Suffolk? Do we need more people in the Midlands?
That gives us a real focus around what we want to do, where our focus is. Most of our delivery people on the projects are transient, so a lot of them will work away from home. When you see the previous slide, and you see most of the projects around the coast, that is not unusual, but people do live away from home. So it is really important that we prepare all the trainees that are coming through. We prepare them for that, recognize what their needs and wants were, and support them as they grow through the training schemes. As you can see, with a mix of supply chain and direct force, you can see that we are at 3,200, and we can see a demand for up to 6,000. We are very confident that we can reach that demand and probably exceed it, which is, again, really exciting.
When we look about attracting, and I've talked about recruitment and how we've recruited internally, we've had to think differently. We've had to go to other industries, oil, gas, highways, rail, organizations that have got transferable skills that can come into Power. The Power pool of technical people, as Nick's nodding from National Grid, they're not there. We have to think differently, and we have to develop and grow those people with those transferable skills into our industry. We had a record number of transfers, and this isn't the football scene. We've had over 62 people that have worked in different parts of Balfour Beatty that have joined Power, and I'll embarrass Dave Emery, who's going to come up later and talk about this scheme because three years ago he worked with me on HS2, and now he's on the project here.
He'll speak with passion and pride about being part of the Power business and how exciting it is. We talked about early careers. As you could see on the previous slide, we have between 70, 90, and now 100 a year that are joining us. We're developing people. We're growing our workforce. We also have to think differently because the supply chain will make up a big chunk of the gap. We've got strategic supply chain partnerships. We've got exclusive agreements with organizations that we help develop, we help support. We have a mantra that we develop together, we invest together, we succeed together, and that's the mantra that we need in the industry. Those supply chain partners want to work for Balfour Beatty. They get treated well. We support them in their development, and they grow as a business.
They have to invest and commit to us as well. We've talked a lot about development, but retention is also key. Just bringing in hundreds of people, you've got to stop and think, "How does the existing people feel?" We've had a real focus around how we can develop and grow people to their full potential. Over the last three years, we've promoted over 82 people. We've got, as we see here, 17 different bespoke development pathways. Whenever I do roadshows and go to meet and do engagements with all our projects, it's about them as individuals. How can they grow? I want them getting up in the morning, coming to work, and really enjoying being at Power. If they want to be an engineer instead of a surveyor, let's develop that. Let's help them get there.
There's a fantastic opportunity, not just for the business, but also for the people to grow and develop. Finally, I'll just touch on innovation, and we're always thinking about different technologies and how we can improve things. Just getting people in, recruiting more people isn't always the answer. We've got to stop and think, how can we do things differently? How can we do things smarter, quicker, safer? One of those is using robotic technology, and I'm never the best at describing this, so bear with me. It's effectively when we look at two towers, in between are conductors. These conductors need to be kept apart by what they call spacers. We would put two people up in a basket, and they'd pull themselves along the conductor to put these spacers in. That's now and can be done by robotic technology with someone on a remote control down.
It gets lifted up by a drone onto the conductor, and it gets done quicker, it gets done four times quicker. It takes people out of a basket, so it is safer, okay? It is more efficient and effective. That ticks all the boxes. It has got to be for everyone. But we need to think wider. We need to think more. We need to think differently, because that is just one example, and we have got so much more that we can do in the industry to make us a little bit more efficient. Look, I only had five, six minutes up here because they know I waffle and talk. Someone is dragging me off this stage very quickly. I would just like to say, I hope you really enjoy the day. It is a really exciting time for us in the power sector.
I really hope you enjoy it, and I am going to hand over to Philip.
Great.
I would just like to spend a couple of minutes just summarizing what we have heard, and I hope you share our thoughts around the ambition that we have in this market, but also the incredible opportunity that it presents. Starting from the exceptional market growth that we see over the course of not just the next five years, but well beyond that in terms of the spending plans that are being set out. I think it is clear to see the passion that we have for what we do, but also just the depth and the extent of the capability from the young to the older in terms of the population that we have. I am just playing on your words.
But actually, it is the way that we are able to integrate that experience, I think, and particularly in that end-to-end capacity that we have, which is a differentiator in itself, and I think really important as we continue to move forward. Look, we are investing in this business, whether that is in our production facility at Painter Brothers or in our people or in innovation and technology. I think this just further increases those barriers to entry and therefore positions us well as we continue to develop out the relationships with our customers.
I think, for me, that's probably the most important area here, is that working with the likes of National Grid, SSE, and ScottishPower, these are long-term, deep relationships that we've had, where we are working together to help them deliver their programs of work, which, as you've heard, are so essential for the ongoing development of our economy here in the U.K. We're really proud of those relationships, and hopefully, we'll hear from Nick later, who'll tell us a little bit more about where National Grid are. But they are so important that this is something we are doing together and moving the industry forward.
I think, look, ultimately what that means from a shareholder perspective, but thinking about the value that we're creating, we're creating value for communities in the U.K., I think broadly for industry across the U.K., and of course, we're creating value in Balfour Beatty, which reflects obviously on our shareholders. So yeah, we're super excited about the market and believe there's really significant opportunity for us as we move forward. We're going to go into some Q&A. I'm sure you've got lots of questions. Clearly, we're going to be together for the rest of the day, so over lunch and this afternoon as we're traveling around our sites, there'll be plenty of opportunity to talk. So if we could limit you to perhaps one or two questions each for now, and then obviously we'll come back and answer more questions later on.
So if the team would like to come up, I think we're going to take some seats at the front. Thank you. We are filming this, so if I can ask you to speak into the microphone, and then it will just be captured for our video as well. That'd be great.
Thank you so much. Can you hear me? Yes. Arnaud Lehmann from Bank of America. Two questions, if I may. Firstly, I think you mentioned 25% market share. I believe that's a U.K.-wide
Yes
figure. What will it look like if we just talk about these three customers? I am assuming it is a larger number. Can you give us any color on this? Also, the second question. These are regulated companies. How does that work in terms of customer-supplier relationship? Does that make life easier for you? For example, if a project is budgeted at GBP 50 million, you realize it is going to be GBP 55 million, what happens next? You go back to them and they are fine with it, or what is embedded in the contract when things do not go exactly as planned?
Absolutely. I will come back to you, Ian, in a moment for that second part of that question. I guess, just in terms of the first part, the three customers we talk around, they are the predominant, preeminent suppliers and network owners in this space. That 25% market share is with those three customers. There are some smaller pieces that we might do elsewhere, but it is largely with those three customers. They own those networks that we are talking about upgrading and changing. That is where that sits. We spoke a little bit about the contract forms, and clearly, the regulator is a really important part of the overall symbiotic relationship here. So delighting the regulator, keeping the regulator absolutely as a principal customer from both our client's perspective, but thinking about how we play into that space is really important.
It is something on our minds all the time. Within our contracts, there is that. Things change, don't they? Do you want to pick that bit up?
Yeah. Clearly, we are pricing and programming some very large projects here. As you say, they consume variability as we go through that process. I think the key thing is the multi-stage contracts that I spoke about enable us to be able to work really collaboratively with our customer and also the regulator to work through that process, not just in the space of a few months, but over the space of a couple of years. So actually, that multi-stage contract enables us to be able to iron out some of those uncertainties and areas of risk, but also have good conversations with our client and the regulator if anything emerges during that process and what we can do about it.
Yeah.
Thank you so much.
Thanks very much. Jonny Coubrough from Deutsche Bank. It was interesting to hear how your workforce has scaled over the past few years, doubling. I think I read that if we went back to 2024, total workforce across the industry was about 4,000 people. I was just wondering, given there have been some new entrants into this market over the period onto these frameworks, do you think total workforce across the industry has grown at a similar rate to yourselves, or do you think you've grown your people ahead of what's being offered elsewhere?
Yeah, I think probably getting accurate, really detailed numbers on that is probably hard to define. But actually, the whole market, as you said, is scaling up. You looked at that curve or that graph of the 20% growth in the market that we expect to see. We're looking to hold or slightly beat our market share in that space. But that means the overall market size is growing, and therefore others are obviously competing for people and developing people in this space. Again, I think you heard how passionate we are about the people element of our business. That's something where we believe we have a great employee value proposition. We have a great brand in this sector, and therefore people are attracted to our organization. I guess the proof's in the pudding of the number of people that we have brought into the business.
The whole market is scaling up.
Thanks.
The only other thing I would say, if it's okay
Yeah, of course.
is that I sort of touched on how we're thinking differently around recruiting and developing, and investing in the market, in the people. I think that's a really good signal that we're moving in the right direction.
Mm-hmm. It was interesting, actually. We did something called Early Careers Fest last week, where we welcomed 500 new graduates and apprentices into our business, and it was a phenomenal event, actually. But I would say, I don't know, roughly at least a third of the voices in that room were Scottish and have been brought into our business to work on the programs that we're talking about. It was great to hear that.
Andrew Nussey from Peel Hunt. Again, I got two questions connected with risk management. What proportion of your two-stage contracts where you do not progress from stage A to stage B, and what are typically the reasons for that? Secondly, new power transmission lines quite often causes quite a lot of local controversy. Where does that sort of planning, regulatory delay risk sit, and to what extent are you able to manage that?
You want to take that one straight off?
Yeah, sure. I will start with the consents question. Yeah, clearly all of these projects are subject to consents, and like you say, they are sensitive to the local community. We do see impacts as a result of that. To be honest, in most cases, we manage that by, again, coming back to those multi-stage contracts. The customer is able to instruct further works into those early-stage contracts so that we can keep the teams moving and keep the schedules on track. There are a lot of works that you can do that are not necessarily subject to consent. I think that is probably the key way that we manage that with our client. The first question, remind me, was on the power of sentiment?
Yeah, what proportion does not make it to stage B?
Oh, does it? Yeah, sure. Yeah. To be completely honest, it is very, very rare that that happens because you are working collaboratively with your customer, you are developing the construction solution, you are procuring the equipment, you are building the local teams. However, that is not to say it is guaranteed. We have to make sure that the project represents value for money for the consumer, and that is where we work, as I said earlier, collaboratively with our clients to ensure that that is the case and move the project into construction.
We have never experienced that, though, have we? At Balfour Beatty?
No, unless some of the drivers for the project have changed, the project is not needed anymore, which can sometimes happen in some cases. But no, otherwise, it does not generally happen.
Unless they find something when we are in stage A that is drastically different and everyone goes, "Wow, we will have to rethink.
Great. Thank you.
Hi there. Dan Cowan here from BNP Paribas. Just one question, please. What are you actually competing on when you're coming up for a contract with your customers? How does it work? What are the criteria? You've obviously talked about a lot of capabilities that you have, but how does it really work in practice, please?
Actually, not just in this market, but outside of this market as well in the U.K., there's an element of our qualifications, our track record, our experience, our ability to demonstrate that we can bring the capability to deliver the project. Then there's also a piece around our methodology, so how will we do this differently to others? Then there's obviously a price element. But in the vast proportion, the quality element plays a bigger part than the price element in terms of how we'll put the thing together.
Let me add to that. As I said, we tend to target the sort of larger complex programs with the big regulated network owners. These are highly complex schemes, and it's not just a price discussion. They are interested in delivery certainty. They're interested in the fact that we have the capability and the bandwidth to handle the challenges that these schemes present. Also, they're looking for these schemes to be delivered safely because you look at some of the environments in which these schemes are delivered, they can be on occasion quite adverse. You're exposed. They're not simple environments to operate in. So a lot of the decision in terms of where this work goes is based on that quality delivery and the sort of safety and sustainable way that we can deliver.
I suppose the only thing I would add to that is program.
Some of the drivers are key dates.
It means you need either a bigger, larger workforce or more capability at the front end of the program to deliver those dates.
Hi. Rob Chantry, Berenberg. Thanks for the presentation. Just two questions. Firstly, I will preface it, I am not an engineer, but could you talk about the evolution of technology? So clearly you are putting up massive cables, big towers. In 20, 30, 40 years' time, will that look any different? Will there be super towers? Will it all be tunneled? How does that evolve? Secondly,
Yeah
You talked a lot about vertical integration in the supply chain. Could you give us some indication around what percentage of stuff buy-in comes from what you make and from your own manufacturing facilities? Is Balfour Beatty only customer, or do you sell it externally? Thanks.
Who wants to take the technology one? Anyone?
I think, as the youngest one on the panel, I will take the technology one. Look, I keep kidding with the leadership team that when I retire, I want to see robots delivering this work. Whether that is realistic, I do not know. But there are certain technologies right the way across Europe and the world that we are learning from. I think you have got to look and expand your knowledge and your focus, not just in the U.K., but across Europe, Canada, and Australia. A lot of our supply chain partners will work in those areas, and they come back with fantastic ideas. So we spend a lot of time just scanning the global market to see how we can do things different.
Mm. The second part of the question?
Sorry, repeat the question.
Forgot the second part of the question.
Yeah. We are so focused on technology.
Sorry. It is a good question. Vertical integration, how much of what you buy do you make yourself, and the stuff you do manufacture is bound for the ME customer?
Yeah, I am happy to. So we mentioned Painter Brothers, a core part of our business. Almost all of the steel towers, AKA pylons, that we put up are manufactured by Painter Brothers. But Painter Brothers do also supply the wider market as well with those structures, which is our strategy to continue going forward to support the U.K. We also have a manufacturing facility in Sri Lanka, which wasn't mentioned in the slides, which manufactures a lot of our substation panels. Then some of the equipment that we use is quite specialist and manufactured by some of the big global equipment manufacturers, so we have quite deep partnerships with them to supply the more specialist equipment. So a significant portion, but we do also have deep relationships with key suppliers across the globe for some of the equipment that we install.
Thanks. Aynsley Lammin from Investec. Just two from me as well, please. Just wondering when you look at the capability, you have obviously got the very long-established high market share in the industry. Who are your key competitors who can offer similar capability? And obviously, an attractive market, are there others coming in? Would you expect that competitive landscape to change much over the next two, three, four years? First question. Then second question, if we think about the margins in power on a three to five year view, should we expect similar margin during that period, or should we expect it to change because the mix of the work or you learn more, you share
Yeah
efficiencies, et cetera?
Yeah.
How does that work?
I think, from a competition perspective, some of the companies that you follow and you will know are our competitors in this space. The likes of a Morgan Sindall or a BAM. We also see some of the utility companies operating in this space are like an M Group. They make up various different parts of our competition. There are also some international organizations that play in the U.K. market. I think, as you know, when the size and scale of a market increases, so does the level of competition. As we talked about the barriers to entry that we believe exist and the capability we have, it still sets us apart from that, even though there are new entrants coming into the market.
I think, from a margin perspective, Power sits as part of our support services segment, and our margins there are high eights to low nines, and that is the sort of region we expect it to continue in moving forward.
Graham from Jefferies. Just one question from me, actually. It is really just going back to the whole value chain that you deliver from the high voltage converters down to the distribution. How does that split when you think about the total addressable market? Where is the majority of the work that you are seeing, and is there a part of that chain that you really want to win versus other parts of it? Just trying to understand, when I look at the different projects you have around the country and the different solutions you are delivering in them, what determines what you are delivering there, and should we be thinking about it differently in terms of attractiveness from Balfour's perspective?
Do you want to use your motorway trunk road example, one of your
Yeah, just let me start, and Ian will back me up in terms of the markets lead. Today, to be clear, 80% of what we do is in that sort of transmission and distribution, the sort of trunk road, the sort of bigger stuff. In some senses, it's a phasing effect because I think the investment wave is taking place there right now, but that volume will drive investment downstream in that local distribution market. I think most of our intensity is in that high voltage transmission and distribution space right now.
Distribution, as Ian pointed out in his presentation, is emerging, and I think you're going to see from 2028 onwards, a significant uptick in volumes in distribution, which is why we have it very much as an adjacent sector that whilst we do 10% of our activity there today, we could see that accounting for much more of our overarching revenue draw going forward. Converter stations is interesting. Converter stations is part of the technological improvement in the way that power is delivered in the U.K., but we're seeing increasing appetite for converter station capability. Today in Scotland, we're looking specifically at certain projects which will come to fruition in the next 18 months, two years, and then south of the border, England and Wales, converter stations with our partner, National Grid, are certainly a part of the investment mix here.
I think transmission distribution very much mature, very much there today, but that investment will drive growth in those two adjacent sectors going forwards.
I think the only thing I'd add to that is they're equally attractive to us.
Yeah.
So it is all about deploying our capability.
Yeah
where it is needed, and it is all attractive.
Yeah, and I think just to build on that distribution, the customers are currently drawing up their plans for the next regulatory period, but we are expecting a significant increase in investment. As a result, we expect to see similar trends that we have seen in transmission towards multi-year complex programs, which we think is an area that Balfour Beatty can add a lot of value, and therefore, it is an area that we will seek to potentially target.
The other aspect of growth was just to add, and this is going off piece slightly, but the capability that we have built and are developing here in the U.K., we are also interested in exporting this capability. If we look at the operations we have got in the U.S., it is not beyond comprehension that we could take this capability into that market.
That's one for the future, definitely. No, thank you very much, everyone, and thank you obviously for listening there. Hopefully, that was useful.