GB Grid to invest in Britain's electricity infrastructure

In his keynote speech at the Labour Party conference, UK prime minister Andy Burnham said his government would establish Great British Grid as a new branch of Great British Energy, with a view to it competing with incumbent private sector operators to deliver new electricity network infrastructure projects and helping to cut the cost and time it takes for projects to obtain connections to the grid.

More details of the proposals were published by the Department for Energy Security and Net Zero (DESNZ), which said GB Grid’s purpose would be to “bring additional public investment, increase competition and accelerate delivery of critical infrastructure where Britain needs it most”.

DESNZ said GB Grid would not only be able to “compete to deliver new network infrastructure”, under a revamp of competitive tendering of transmission projects, but also invest public capital in projects backed by private investors. GB Grid will exist alongside, rather than replace, existing transmission system owners.

It is not yet clear when GB Grid will be operational, but DESNZ confirmed its initial start-up costs will be covered by GB Energy’s existing budgets. Its long-term budget for its remit “will be considered as part of a future spending review”, it added. Experts at Pinsent Masons said that the immediate question raised by the announcement is whether GB Grid will “move the dial on the grid upgrades desperately needed across Great Britain”.

Last month, experts at Pinsent Masons identified grid modernisation as essential to enabling the energy transition in Britain, highlighting the insufficient number of power lines, substations and cables to move electricity around the country currently.

In addition to there being grid capacity constraints, reforms to the grid connection process overseen by NESO over the last 18 months have introduced significant uncertainty for investors and developers. While the aim of reform has been to weed out speculative projects and prioritise connection based on a project’s readiness, the reforms have been plagued by delays, impacting projects that can help meet the UK’s long-term energy needs – such as those that would enhance renewables generation or storage capacity.

A ‘Gate 2’ grid connection offer under the revamped system is highly prized by developers because it unlocks revenue generation, with delays posing a risk to the viability of some projects.

Gareth Phillips, who specialise in energy projects, said the prospect of deregulation and increased competition, under the reforms envisaged with GB Grid, could enable more privately developed grid upgrades and connections.

“Every week we hear of those projects supposedly prioritised under NESO’s connections reform, slipping beyond 2030 due to a current inability to build new substations and transmission cables promptly,” Phillips said. “The very projects identified to deliver clean power first, now risk being timed out and losing investment due to connection uncertainty. If GB Grid is intended ease pressure within the connections queue, that can only be positive. However, it isn’t the full story– delivery models like CATO are still needed to make a positive difference, alongside similar private investment in the distribution network.”

Under the Competitively Appointed Transmission Owners (CATO) regime, businesses will be able to participate in competitive tenders to win onshore electricity transmission licences, which in turn would make them responsible for designing, constructing, financing, owning, and operating transmission assets. A similar regime already operates in respect of offshore transmission, helping to drive investment in physical infrastructure that supports the energy transition.

David Trethowan and Rhian Critchell of Pinsent Masons said significant work is necessary to upgrade Britain’s electricity infrastructure and improve the grid connections process. They said the dual role GB Grid will play – as potential co-investor in private projects and competitive force in the actual delivery of new infrastructure – has the potential to make a positive impact in conjunction with existing plans to upgrade Britain’s aging transmission network.

“Under the ‘Great Grid Upgrade’ in England and Wales, there are 550km of new transmission lines required to be built this decade, with the costs of implementation estimated at over £16 billion,” said Trethowan. “This is currently expected to be delivered by NGET via 17 major grid projects, including six new subsea projects. A further £35bn of investment is planned during the 2026-2031 period. In Scotland, similar grid upgrade programmes are being deployed with a capital value of between £35-40bn. Other deep grid reinforcements are hoped to be delivered through the long-awaited CATO regime, which is expected to launch by the end of this year to deliver, though a competitive tender process, new, high-value and separable grid assets. The successful CATOs would receive a project-specific licence and be paid through a 35-year tender revenue stream.”

Critchell added: “There is a dual need here – long-term modernisation and increase in grid capacity and short-term improvements to the grid connections process. It seems GB Grid’s role will be more focused on the former, and its work should complement what is planned via the CATO regime.”

“While greater capacity and modern infrastructure should support grid connection for businesses and projects in future, there is an immediate need to address the problems with the Gate 2 application process for grid connection. Although GB Grid is a welcome development overall, it is not clear from today’s announcements if it will have a direct role to play in improving the connections process in the shorter term,” she said.