As the sector continues at pace on the delivery of proposed reforms to decarbonise the GB power system by 2030, few issues are as high on the agenda as reforming connections to the electricity system.
By the end of summer 2025, the connections process should – fingers crossed – be reformed, with generation and storage projects receiving new connection offers from the National Energy System Operator (NESO).
Until now, connections reform has focused on energy supply; understandable, given the Government’s Clean Power by 2030 (CP30) Action Plan and an ever-expanding queue for power connections. The focus is now beginning to shift towards the wider challenges of demand to ensure electricity distribution networks – the ‘last leg’ of the system connecting to most homes and businesses – are ready for the electrification of heat, transport, and industrial processes needed to deliver the anticipated increase in electricity demand. Plans to upscale the supply of low-cost, low-carbon electricity are welcome but to be economically sustainable, this must be matched by a parallel increase in demand from flexible low-carbon technologies.
The Climate Change Committee’s (CCC’s) Balanced Net Zero pathway estimates that up to 15 million electric vehicles supported by around 300,000 public charge points and millions of individual domestic chargers will be needed by 2030. Fulfilling this pathway would also mean that five million homes will have a heat pump, of which two million will be households currently connected to the existing gas network. New demand is also expected from the emerging, electricity-hungry artificial intelligence (AI) sector and the electrification of business processes such as electric arc furnaces for steel manufacturing.
The list of challenges is long but overcoming them is necessary to decarbonise heat and transport.
The distribution system is one of the weak points holding back the transition. Whether installing a heat pump or developing local, community-owned low-carbon generation projects (e.g. an onshore wind turbine or battery storage device), delays are frequently encountered from the networks and a lack of transparency over connection fees and timelines for grid upgrade and connection milestones.
The reasons for this vary and it is positive to see the National Infrastructure Commission (NIC) provide analysis and recommendations for overcoming the distribution system challenge, its final publication before becoming the National Infrastructure and Service Transformation Authority (NISTA). Ofgem is also keen to address this challenge, providing recommendations in its ‘end-to-end review’ of connections; most of these are generally welcomed by the energy sector.
The list of challenges in demand planning and Distribution Network Operator (DNO) processes is long but overcoming them is necessary to decarbonise heat and transport, two of our biggest sources of emissions, and unlock the benefits of cheaper long-term system costs.
History of the distribution network
GB distribution networks are some of the oldest in the world, beginning with the 1881 connection of the first coal-fired power station, in Godalming, Surrey. In 1900, acts of Parliament granted rights to power companies to supply electricity to authorised undertakings and for industrial and manufacturing purposes. This is how the GB electricity industry started – a council would build a small power station; coke or coal would feed it, and it would generate and distribute electricity. The technology improved over 50 years, with voltages rising in stages from 6.6 kV to 132 kV by the 1920s.
From 1926-1947, generators and networks were run by more than 600 local institutions and companies with different ownership models and processes. The Electricity Act of 1947 concentrated control under the state-run Central Electricity Board (CEB), establishing 15 Area Electricity Boards (AEBs) across GB for distribution and supply of electricity. Privatisation in the 1980s and 1990s established 14 distribution areas, creating modern DNOs as private companies and highly regulated monopolies.
It is this regulation that appears to be the source of many of the challenges seen across DNOs today. So, what are the challenges?
Key barrier 1: Delays and a lack of incentives to connect and provide good service
Those connecting to distribution networks frequently report delays, a lack of clarity regarding timelines and connection costs, and an overall lack of transparency and communication from DNO connection teams. There is no standardised process for new grid connections across DNOs. Connecting new demand, low-carbon technologies or generation involves completing different forms and paying different fees for the same outcome. Connections, even comparable ones in the same region, are subject to different timescales and often cannot be connected in bulk in one application.
Initial quotes for required works are only valid for six months and can expire before connecting customers even begin works, requiring the quoting process to be restarted. Once DNO works start, these frequently take longer than the illustrated timeframes, with no legal framework for maximum timeframes for completion or for when DNOs should inform connecting parties of any delay.
DNOs cite a lack of resources, supply chain bottlenecks and a lack of statutory service-level agreements for these delays. These are valid issues, but it is ultimately for DNOs to provide clear timelines, communicate requirements to the connecting customer, and procure labour and electrical components ahead of need.
DNOs, as regulated utilities, have not been incentivised to act proactively beyond the initial connection offer to connect customers quickly, provide high-quality processes and timelines, and more broadly prepare the system for more low-carbon technologies. The Ofgem price control, through which DNOs earn their revenues, focuses on encouraging DNOs to minimise near-term costs for consumers, and on outcomes rather than processes.
This made sense when DNOs only had to focus on building out the system in reaction to relatively predictable long-term economic and population growth metrics, but it makes little sense to continue that approach when rapidly extending the network and reinforcing substations to meet the challenge of the potential more-than doubling of electricity demand by 2050.
Ofgem could address this challenge by standardising connection processes across DNOs and mandating clear standards for processes, communications, and timelines. In both cases, obligations must ensure a high level of service befitting a major utility company.
Key barrier 2: Planning restrictions
Planning barriers also impact connections and broader development of distributed energy assets and low-carbon technologies.
The current voluntary process system for wayleaves and easements is costly and complicated, regularly serving to delay the deployment of renewables and causing uncertainty for investors and developers alike. The process is ‘one size fits all’, making it more suitable for certain developments (e.g. property development) but unsuitable for others (e.g. distributed energy infrastructure).
The DNO connections process relies on DNO legal teams finding the landowner and contacting them by post, which landowners may ignore or simply never see. While DNOs can summon the landowner to a wayleave hearing, the hearing process can be a lengthy and costly process for all parties. Meanwhile, the connecting customer is reliant on the DNO to fight their corner to enable the connection and cannot self-represent, further straining the DNO’s legal resources.
The industry is eagerly awaiting delivery of the Government’s Planning and Infrastructure Bill.
As part of existing planning reform efforts, the Government must address wayleave processes with the nuance they require; the industry is eagerly awaiting delivery of the Government’s Planning and Infrastructure Bill.
Key barrier 3: Lack of granular data
A major issue for those connecting and for DNOs planning system reinforcement is the limited granular data regarding the state of the network, especially close to the point of final consumption.
To efficiently schedule strategic upgrades closer to demand, DNOs need to know:
- The available network capacity and typical energy flows;
- What assets are connected to the network;
- When new assets will be connected to the network;
- The likely behaviours of those assets.
This requires a much smarter network and much higher standards for DNO datasets.
When customers request a connection, DNOs need to send engineers on-site to assess the local substation before providing a proposed engineering design and quotation. Given resource constraints, this process can take several months and, as connection requests become increasingly frequent, there is significant concern that DNOs will not be able to process these requests at the pace required.
There are efforts to improve data visibility, such as the Data Sharing Infrastructure (DSI). There are also good examples of DNOs improving data visibility. For example, United Kingdom Power Networks (UKPN) has created a site planning tool through its Optimise Prime project, allowing those connecting to the system to estimate the capacity of sites using a live online map and database of substation data. Attempts to standardise this approach in various workstreams have been network-led, with little to no ramifications for those DNOs that do not deliver.
It is critical that Ofgem establishes standards for open DNO data, sets out funding for on-network smart monitoring technologies, and require upgrades to IT capabilities and digital literacy within DNOs.
Key barrier 4: The need to unlock system flexibility to enable connections
Flexibility solutions, such as energy storage solutions and demand-side response (DSR) have shown the potential to help avoid or defer reinforcement at all levels of the network, ultimately bringing down costs for consumers. While avoiding investment to keep near-term costs low has led to the current state of the network, aligning flexibility with planned investment has enabled faster connections to the distribution system and more cost-efficient network build-out. The ‘Project COMMANDER’ study indicated that distributed flexibility could reduce peak GB electricity demand by up to 66GW in a highly electrified energy system. This could mean more connections to the grid without the need for network reinforcement, as well as targeted network build-out to best allocate the available supply chain and skills resources.
However, there are a variety of barriers to enabling flexibility at the distribution level. Key among these is ensuring that consumers are incentivised and rewarded for flexibility actions. The Demand Flexibility Service (DFS) has shown great potential in reducing system constraints and thus reducing the need for reinforcement, while engaging and rewarding people for taking part. However, it remains an out-of-market service. Energy consumers are not being compensated fairly for grid support compared to the value across wider markets. Until this is addressed, the potential of flexibility in reducing network requirements will be limited.
Clear price signals through price controls and competitive markets are needed to incentivise investment and behaviours.
Ofgem and NESO are critical to resolving this barrier; clear price signals through price controls and competitive markets are needed to incentivise investment and behaviours, in addition to wider clarity regarding the role of flexibility in strategic system planning to incentivise networks to seek flexibility wherever possible. A strategic approach is needed to the desired role of flexibility at the local and national level.
Key barrier 5: Supply chain and skills shortages
Delays and shortfalls across component supply chains and skilled labour is a global issue faced by many sectors, including energy. DNOs are also impacted and as the rest of the world accelerates toward Net Zero these constraints will only worsen.
Baringa’s analysis in 2024, commissioned by the Government, indicates that the market is already seeing significantly longer lead times (in some cases doubling) of up to 15 months for 33kV, two years for 132kV, and four years for 400kV transformers. Switchgear lead times have effectively doubled, partly due to increased demand from other sectors and the transition to SF6-free, gas-insulated switchgear.
Energy & Utility Skills (EUS) research indicates the average age of construction workers in the UK is 55 years old, with a large sector of the skilled workforce expected to retire before 2050. Only 23% of construction employers, compared with an average of 38% across the economy, offered a work placement, impacting the sector’s attractiveness to new workers. Skills and supply chain shortages could seriously delay connections to the network and increase the overall delivery cost.
Considering how network companies and the broader energy sector can attract, train, and retain a skilled workforce will be critical to delivering CP30 and the wider decarbonisation of the economy. The Government must embark on a concerted mission to obtain the needed components and labour for the distribution network ahead of need, as has already been considered for transmission under ongoing workstreams.
It is essential that the Office for Clean Energy Jobs works with Skills England to establish clear pathways for careers across networks as well as generation.
Efforts to help tender for equipment (and potentially labour) far in advance at the transmission level through an Advanced Procurement Mechanism (APM) are broadly welcomed by the sector and should be considered at the electrical distribution level. A wider review supply chains by the Government under the Industrial Strategy would be welcome.
The future: Adaptive, strategic distribution network planning
In addition to the challenges outlined above, there is an essential need for distribution network delivery to be adaptive to changing circumstances. Uncertainties include the changing outlooks for electricity demand over time, especially considering the still uncertain role of new technologies such as carbon capture and hydrogen; the pace and extent of low-carbon technologies uptake; the potential changes under electricity market reforms, and; the distribution of new demand such as AI centres.
It is welcome to see Ofgem’s increased recognition of the need for adaptive planning being built into the price control alongside a shift toward more strategic system planning at all levels. Coordinated efforts are required across the regulator, the Government, the NESO, and the networks to ensure that price controls, regulatory controls, system planning frameworks, and legislation are aligned toward an effective long-term strategic approach to delivery.
This begins with clarity at all levels, from a more defined and specific Strategy and Policy Statement (SPS) to help focus prioritisation across Ofgem and the NESO, to more specific requirements under the ongoing and future network price controls. Developing an effective whole-system approach to investment planning through Strategic Spatial Energy Plans, Regional Strategic Energy Plans, and wider coordination across utilities (disrupt once, build for the future) will help to ensure consumers see cost-efficient investment in public infrastructure over the coming decades.
In an increasingly uncertain world, adaptability is essential to connecting customers and unlocking the benefits of CP30.
The Government must continue exploring all options, working to deliver better regulation across utilities through its Smarter Regulation workstream and wider consideration of the ‘adaptive planning’ process endorsed by the Department for Environment, Food and Rural Affairs (DEFRA) as a method for planning water and sewage infrastructure. Such an approach would involve DNOs making more proactive assessments about known investments needed in the coming years along with contingency spending and infrastructure plans related to identifiable uncertainties in local areas. Moreover, in an increasingly uncertain world, such adaptability is essential to connecting customers and unlocking the benefits of CP30.
The final point, and perhaps most crucial to delivery, is around cost. The long-term savings and benefits of adaptive planning and strategic delivery outweigh the cost of non-delivery, but it is for the Government to consider the approach to investment in public infrastructure and how costs are fairly distributed. We must move past recent failures in high-speed rail and water infrastructure, and into a new era of investment and delivery that modernises and future-proofs our energy system, strengthens our energy security, and capitalises on the economic potential of decarbonisation.
