ESP is an independent gas transporter (“iGT”) and independent electricity network operator (“iDNO”) providing the ‘last mile’ of connection between properties (predominantly residential, but also industrial and commercial) and the gas and electricity distribution networks. In 2021. ESP built a team that allows it to bid for, and adopt, last-mile residential water connections as well. 

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Overview

It focuses on being an ‘independent asset owner’. It adopts (bids for) gas, electricity and water connections from ‘utility infrastructure providers’ (“UIP”), 'independent connection providers' ("ICP") and 'self-lay providers' ("SLP"), who have themselves designed and installed the connections for property developers. ESP is then responsible for maintaining the connections going forward and receives a regulated revenue stream for each connection from the utility companies who charge the end customer as part of their overall gas, electricity and water bill. Price regulation for both residential gas and electricity connections is based on the regimes of the gas and electricity distribution companies and regulation is overseen by OFGEM. Price regulation for residential water connections is overseen by OFWAT. 

Today ESP owns over one million live connections and has a further 250,000 committed in its order book, making it the second largest iGT/iDNO/NAV in the UK. ESP also has a domestic metering business.

Why we invested

ESP operates under an established and proven regulatory framework that drives stable and high quality cash flow generation. Significant growth is forecast from the demand for new UK housing. The financial crisis led to a number of years of low levels of new builds, which exacerbated the shortage of supply versus demand.

ESP does not undertake installation works and so does not compete with the UIPs. This lack of conflict of interest enables it to be a preferred acquirer of assets and to focus on customer service as it is a neutral host, which gives it a competitive advantage against other players in the connections market. 

Recent developments

In recent years, ESP has experienced significant demand for its I&C EV offering. ESP offers support to cusotmers to design, plan and obtain grid access.