The UK’s electricity grid infrastructure is almost overcome by requests for new or additional power requirements as the system adjusts to the implications of decarbonisation, decentralisation and changes in technology.

Originally developed for traditional power generation and demand use, the grid’s transition to net zero involves a move towards renewable energy sources, as cleaner and more sustainable alternatives. Heating and transport account for a significant proportion of carbon emissions and the growth of electric heating sources, such as heat pumps, and increased numbers of electric vehicles have introduced technologies that require a more robust and flexible grid.

As a result, the queue for connections to the electricity transmission and distribution systems has grown exponentially and many developers are identifying the timing of a power connection as one of the most significant risks to project programme and delivery. This applies to renewable energy and battery storage projects, as well as commercial and residential development. Everyone is in the same queue.     

High Demand

The situation is particularly acute in areas that are currently experiencing high levels of growth and are further exacerbated where that growth is in R&D. Laboratory buildings typically require a significant amount of mechanical ventilation and air changes. Their power demand is typically 4-5 times more than that for a standard office building and can be even higher for more specialised requirements. In Oxford, it is widely reported that there is very limited power available until after Q4 2026, following the completion of significant reinforcement works to the Extra High Voltage (EHV) lines at all subsidiary substations within the Cowley Grid Supply Point area.

What is less reported is that all the power and capacity that will be available after Q4 2026 is already under contract and allocated. Contracted connection applications with Distribution Network Operators (DNOs) are not registered against the capacity data. Published capacity data therefore does not provide an accurate picture of capacity and also does not take account of any upstream impacts, such as the need for reinforcement works to EHV lines. Efforts to identify and map any spare capacity in the network are therefore almost irrelevant.

Oxford is not unique and the same challenges are faced across the UK, as networks face unprecedented demand for power demand and generation connections. The root of the problem is that the power allocation system works on a first come first served basis. If you have not submitted and accepted a formal offer for power, you are unlikely to be allocated power until after the submission of a formal request and the next tranche of reinforcement works have been completed.

The National Grid Electricity System Operator (NGESO) Transmission Entry Capacity (TEC) Amnesty, a process that has been running to allow any party with a Generation Connection Agreement to cancel at a reduced or nil cost, has been extended to the end of April 2023. The amnesty is a first step to addressing the situation of over allocation, but is not the solution. The new electricity distribution price control (RIIO-ED2*) has also come into force, which will assist customers with the cost of reinforcement works. It is expected the possibility of lower costs will mean there will be a new influx of connection applications and the connections queue will grow yet further.  

What can be done?

First, at Savills we are working with clients to masterplan for their power needs and to engage with the DNOs to look at phased power options. Unlike other statutory authorities, such as water, DNOs are not statutory consultees on planning applications and the planning system assumes that once a scheme is consented, the power will be available to supply it. Our experience is that engaging with the DNOs alongside the project design and planning stages will help ensure that power will be available where and when it is needed.   

Second, do that very British thing and join the queue. This may require an initial upfront capital outlay before planning permission is granted but you have to be in the queue to be allocated power.    

Third, focus on improving energy efficiency and reducing the requirement for power. Central to this is ensuring buildings are designed from an OpEx as well as a CapEx perspective and deploy renewable technologies and efficient building management control systems.  

In the short term, change will come if Ofgem agrees to adopt NGESO and the DNOs’ proposals for ‘Queue Management’. This will allow effective queue management, enabling developers that meet their agreed milestones to be allocated power in preference to those that do not.

In the longer term, investment is needed to modernise the grid, to connect it with renewable energy sources such as solar farms and off-shore wind turbines and to develop grid-scale battery storage. Planning reform is also required to speed up the delivery of the powerlines required to support this and to help the UK’s progress towards net zero.

*‘RIIO’ stands for ‘Revenue = Innovation + Incentives + Outputs’ and ‘ED’ stands for Electricity Distribution.

Further information

Contact Emma Andrews or Michael Lock