‘Intense competition’ for UK power connections creating uncertainty despite growing infrastructure opportunities

Turner & Townsend is advising clients to focus attention on navigating the impacts of a lengthening ‘connection queue’, as electricity grid reform and investment simultaneously create infrastructure demand and market uncertainty.

The global professional services company’s Summer 2025 UK Construction Market Intelligence report (UKMI) predicts infrastructure tender values will rise at a faster pace than real estate in the coming years.  This is partly due to rising demand in the context of the government’s long-term infrastructure strategy and investment in the expansion of the national power grid.

Real estate tender price inflation (TPI) is expected to increase from 3.0 percent in 2025 to 3.5 percent in 2026.  Infrastructure inflation is predicted to stay at the higher rate of 4.5 percent in 2025, and rise to 5.0 percent over the next three years.

Material costs remain largely stable, and other inflationary factors such as the rising costs of employer national insurance contributions have been partially offset by the overall softening of construction demand.  Construction was the slowest growing sector of the UK economy in the first quarter of 2025, and total construction output stagnated in this period – ending three consecutive quarters of growth as activity across real estate softened.  Infrastructure-specific growth, however, experienced a significant jump – with new orders more than doubling (up by 127.8 percent).

This infrastructure growth is partly being driven by renewed emphasis on improving the grid network to power the new homes, hospitals, advanced manufacturing plants and data centres being built.  Recent soaring demand for connections has put the grid under significant pressure, with backlogs leading to long wait times.  National Grid’s own connections assistant tool shows that most new applicants will receive connection dates in 2036 or later.

Due to this, electricity connections are now often major considerations in project viability, on par with planning and funding.  The delays are one element creating market uncertainty, which must be carefully managed to avoid cost pressure as construction firms could otherwise look to ‘price in’ the increased risk.

Given the scale of this challenge, Turner & Townsend is calling on clients to prioritise power connections in their programmes early.  It is also advising businesses to consider approaches to mitigate the impacts of competition and get connected sooner.  These include ‘ramping up’ by using temporary, lower capacity connections at early dates, developing on brownfield land with existing cables, or exploring on-site power generation with flexible connections which allow excess energy to be exported to the grid.  In all cases it is vital to maintain strong dialogues with distribution network operators and stay engaged in the process.

Stephen Jenkins, Yorkshire Strategic Lead at Turner & Townsend, says: “Yorkshire is seeing a surge in infrastructure ambition, with demand for power connections rising sharply as the region accelerates its economic and industrial growth. But this momentum is being tested by the same grid constraints affecting the rest of the UK, adding complexity and risk to project delivery – we are experiencing this now on hospital, residential and data centre projects.

“To keep Yorkshire’s pipeline of development on track, we’re urging clients to engage early with connection strategies and explore flexible solutions. By staying ahead of the queue and managing uncertainty proactively, we can help ensure the region’s infrastructure ambitions are delivered on time and on budget.”