Britain's grid operator filed its Palantir lock-in as the legal basis for a £21.2m direct award
NESO's transparency notice lists what leaving Foundry would cost: redevelopment, data migration, security accreditation, retraining. It is the exit bill most buyers only estimate, written down by the organisation that owes it.
The Product Desk
What happened
- Britain's National Energy System Operator has handed Palantir a direct award worth £21,240,324 including VAT for licensing and support of the Connections and Skip Rates processes it runs on Foundry.
- The legal basis is Section 41 of the Procurement Act 2023, relying on paragraph 6 of Schedule 5, the provision covering an absence of competition for technical reasons.
- The filed justification says moving supplier is not possible without significant cost, resource commitment and delivery risk, and lists redevelopment, data migration, security accreditation and retraining.
- The notice went live on Find a Tender at 6.04pm on 26 August with an earliest signature date of 8 September, which is 13 days of public notice on a £21m award.
Why it matters
- What it costs cost Licensing and support for two processes runs at roughly £805,000 a month before VAT, and NESO is funded through regulated industry charges, so the bill for keeping the lights on inside Foundry reaches billpayers rather than a shareholder.
- What it limits constraint Each month the system keeps running adds to the redevelopment and migration side of the exit bill, so the competitive option narrows through ordinary operation rather than through any decision to avoid a tender.
- What it sets up precedent The replacement competition will open with the incumbent having run the processes since 2023 and managed the handover, the same incumbency argument raised about the NHS Federated Data Platform award.
- What doesn't add up contradiction Published accounts of how long this stopgap lasts do not agree: Datacenter Dynamics reports ten to 22 months, while the notice's own extension window and risk clause both point at the longer end and beyond it.
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Foundry is where NESO holds the data and workflows for connecting new renewable projects, battery storage and consumers to the electricity transmission network [19]. Four years of that work, starting in March 2023 [6], is what the direct award is protecting.
The transparency notice, which Lindsay Clark reported for The Register [21], lists four things a move would require: redeveloping the analytics environment, migrating the data, putting the replacement through security accreditation and retraining staff [11]. Two of those are priced by the vendor's design. Redevelopment and migration cost whatever share of your schema and your process logic sits inside the supplier's ontology rather than in something you could hand to a successor. The other two you would pay to any replacement. Accreditation and retraining are the ordinary cost of change, and they tend to be the pair doing the arguing when a migration slips, because they arrive as staff time nobody budgeted.
The money gives a run rate. Datacenter Dynamics reports the contract is expected to last between ten and 22 months [8]. At £17,700,270 before VAT, 22 months works out at roughly £805,000 a month for licensing and support on two processes, Connections and Skip Rates [23][1]. VAT adds £3,540,054 on top [22].
How long it lasts depends on which document you read. The notice allows six-month extensions until 31 July 2028, a year beyond the initial term that ends on 31 July 2027 [13][3][25]. Its risk clause names legacy data structures, security, data quality and regulatory compliance as things that could go wrong in the migration, in which case the contract may be modified to extend the transition timeline [14]. Those are the conditions the justification already says exist [11].
NESO recorded that it prepared or revised a conflicts assessment, and the notice does not say what it found [16]. That gap matters because of what comes after the stopgap: a Strategic Enterprise Modelling Capability procurement running July 2027 to July 2032, with a possible two-year extension that could keep the winner in place until 2034 [17]. Held from March 2023 to 2034, that is about eleven years of the same supplier [24]. NESO says it is running a competitive procurement for a replacement and has begun sounding out suppliers [12]. In the NHS, roughly £60m of Palantir contracts, some without competition, preceded an open competition for a Federated Data Platform worth up to £330m, where incumbency was argued to have helped and the NHS said the competition was fair [18].
The usable artefact here is the notice itself. Any team about to sign a platform can draft, in an afternoon, the Section 41 justification it would have to file in year four [4]: the processes that would need redeveloping, the data that would need migrating, the accreditation, the staff hours. A buyer who cannot fill in those four lines does not yet know the price of the deal. One who can fill them in, and finds the draft reads like NESO's, at least has that price in hand before signing rather than four years afterwards.
What to watch
- Whether NESO publishes the conflicts assessment it recorded, and whether it addresses Palantir bidding for the replacement contract.
- Whether the Strategic Enterprise Modelling Capability procurement opens on schedule for July 2027 or the interim contract is modified under its risk clause.
- The outcome of Palantir's legal proceedings against the Mayor's Office for Policing and Crime after Sadiq Khan blocked the £50m Met deal.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence74
- Adoption78
- Hype gap−6
- Incentives68
- Confidence72
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
NESO awarded Palantir a contract with no competition covering licensing and support for two processes, Connections and Skip Rates, which NESO runs on Palantir's Foundry platform.
- [2]
The contract is worth £17,700,270 before VAT and £21,240,324 with VAT.
- [3]
The contract term runs from Tuesday until 31 July 2027.
- [4]
NESO used a direct award under Section 41 of the Procurement Act 2023, relying on paragraph 6 of Schedule 5, which covers the absence of competition for technical reasons.
- [5]
The notice says Foundry rests on "proprietary architecture licensed exclusively by Palantir" and that the company holds "the specialist knowledge, technical expertise and the system knowledge" the platform needs.
- [6]
The original NESO-Palantir contract began in March 2023 and was not announced; NESO says it had no obligation to publish because it then formed part of privately owned National Grid.
- [7]
The Energy Act 2023 created NESO as a public corporation, wholly government-owned and funded through regulated industry charges.
- [8]
Datacenter Dynamics reports the latest contract is expected to last between ten and 22 months.
- [9]
NESO said it did not invite rival bids for "technical reasons", citing a legal exemption that removes the requirement to consider other bids where there is no reasonable alternative to existing dependencies, and added that it would open areas covered by the contract to other bidders at a later stage.
- [10]
According to Financial Times reporting cited by Datacenter Dynamics, NESO argued that its critical grid processes now rely too heavily on Palantir's technology to run a competitive procurement process.
- [11]
The notice says moving to another supplier "is not possible without significant cost, resource commitment and delivery risk", and that it would mean redeveloping the analytics environment, migrating the data, putting the replacement through security accreditation and retraining staff.
- [12]
NESO says it is running a competitive procurement for a replacement and has already started sounding out suppliers.
- [13]
The interim contract carries six-month extensions available until 31 July 2028, and the notice puts the maximum duration at one year, ten months and 23 days.
- [14]
A risk clause lists legacy data structures, security, data quality and regulatory compliance as things that could go wrong in the migration, and says the contract "may be modified including to extend the transition timeline".
- [15]
The transparency notice went up on Find a Tender on 26 August at 6.04pm and the earliest signature date is 8 September, giving 13 days of public notice on the award.
- [16]
The notice records that NESO prepared or revised a conflicts assessment, but does not say what that assessment found.
- [17]
A separate market-engagement notice describes a Strategic Enterprise Modelling Capability running from July 2027 to July 2032 with a possible two-year extension, so whoever wins it could hold the contract until 2034.
- [18]
Palantir took roughly £60m of NHS contracts during and after the pandemic, some without competition, then won the Federated Data Platform contract worth up to £330m through an open process; critics argued the incumbency had given it an advantage and the NHS said the competition was fair.
- [19]
NESO uses Foundry to manage critical grid processes including connections and system balancing, primarily managing data and workflows for connecting new renewable energy projects, battery storage and consumers to the electricity transmission network.
- [20]
In May, London mayor Sadiq Khan blocked a £50m deal between the Metropolitan Police and Palantir, citing a "clear and serious breach" of procurement rules; Palantir then issued legal proceedings against the Mayor's Office for Policing and Crime.
- [21]
Lindsay Clark reported the award for The Register on Tuesday.
- [22]
VAT on the contract comes to £3,540,054.
- [23]
Spread over the 22-month maximum duration reported, the pre-VAT value is about £805,000 a month.
- [24]
A supplier holding the work from March 2023 to 2034 would have held it for about eleven years.
- [25]
The extension window running to 31 July 2028 sits a full year beyond the initial term ending 31 July 2027.
Sources
2 independent publishers whose own reporting we read for this story.
- datacenterdynamics.comPalantir awarded Neso grid contract in UK without competitive bidding process - report
1 article · September 8, 2026
- thenextweb.comPalantir gets £21m from Britain’s grid operator, no competition
1 article · September 8, 2026
Topics and entities
Topics
- Public procurement
- Government data platforms
- Proprietary Tooling and Vendor Lock-In
- UK electricity grid