The Mayor of London’s office has been developing various scenarios for what London may look like by 2050, to allow them to make plans for important investments in infrastructure and services to ensure the city can cope with a growing population and continue to thrive.

Low, medium and high assumptions are made, but the medium assumes the population will grow from the current 8.6 million (unofficially they believe it may well be higher already) to 11.3 million. To accommodate these new people, housing provision will need to increase by 50 per cent, and non-domestic floor space (offices, shops, leisure etc) will need to increase by 25 per cent. This growth will be replicated to a greater or lesser extent in towns and cities across the UK.

As a result, the Mayor’s housebuilding targets have increased to a minimum of 42,000 homes a year, which is a positive step, but the Greater London Authority’s own calculations suggest London requires between 49,000 and 62,000 new homes every year. In practice, Savills Research estimates that an average of only 32,000 homes a year will be built over the next five years.

The infrastructure investment required in London by 2050 is estimated at a staggering £1.3 trillion. Energy provision will need to balance the needs of this newly expanded London with the climate change targets of cutting greenhouse gas emissions by 80 per cent on 1990 levels, which will be tricky.

How they expect to go about it plays nicely in to what we are already focusing on here. It’s about energy efficiency improvements for existing building stock, ensuring new buildings reach zero carbon, decarbonising the electricity grid, and scattering in decentralised generation (electricity and heat).

It’s only through a combination of technologies, policy measures and innovative financing mechanisms that we will get there. The estimated cost to deliver the required energy infrastructure is £50-100 billion, 50-70 per cent of which will be spent on energy efficiency retrofits, and around 20 per cent on heat networks.

Developers, property owners, local authorities and planners need to be thinking now about how the future changes may impact them, what they can do to mitigate any negative impacts, and the opportunities presented. For instance, over 100,000 new solar PV installations are expected, and National Grid forecasts over 5 million electric vehicles will be on the UK streets by 2035.

Those with a stake in the city need to be factoring this in to their decision-making to ensure property assets are fit for purpose in the future. A great example of the innovation needed is Islington Council and Transport for London looking to use waste heat from the tube to heat local homes.

Areas we are working on now include Energy Saving Performance Contract models that work in the landlord/tenant space to deliver energy efficiency retrofits at scale for the commercial sector. For the wide-scale roll out of heat networks, commercial models are needed that encourage mass connections and take up to maximise developer revenues, whilst protecting consumers. Smart grids and innovative charging/revenue models are needed to accommodate the growth of electric generated heating, electric vehicles, intermittency of renewables, and more onsite generation.

Exciting but daunting times lie ahead if London is to rise to the challenge and deliver the homes, jobs, infrastructure and services required to facilitate this growth.

Further information

Contact Savills Energy & Infrastructure