A strong national infrastructure system has many facets, from providing comprehensive education, social care and healthcare to keep people happy and healthy through to delivering roads, water and energy to support the functioning of society and economic growth.

Richard Rees

Richard Rees

While property professionals have a role in the provision of all types of infrastructure, given the increased focus on UK energy security and the escalating urgency of fighting the climate crisis, our expertise in delivering energy infrastructure is increasingly important. We must take a leading role in ensuring projects from hydrogen power to district heating systems, from solar power to carbon capture and storage, are successful.

That role starts in bringing a broader pool of capital into the sector. Research suggests that $617bn (£496bn) has been raised over the past five years for infrastructure investment globally, with almost $150bn (£120bn) raised in 2022 alone. The UK doesn’t have a sovereign wealth fund, but we do have significant pension fund and insurance capital, much of which is already invested in parts of infrastructure.

Solvency II reforms (which govern the prudential regulation of UK insurance firms) will also free insurers to potentially invest more of their capital instead of holding it to cover their liabilities. It is anticipated that much of this money could be deployed into infrastructure projects: the Association of British Insurers says that “meaningful reform of the rules creates the potential for the industry to invest over £100bn in the next 10 years in… UK social infrastructure and green energy supply”.

The issue is that there aren’t currently enough projects of scale to invest in: projects tend to be small and piecemeal, frequently limited by land acquisition constraints and the current regulatory framework, which too often is a hindrance to innovative projects proceeding quickly. In 2020, the government introduced a 10-point plan for a ‘green industrial revolution’ by 2030, but currently it remains largely ambitions, with many projects caught up in long-term bureaucracy and/or being appraised on today’s costs without factoring in the benefits delivered in 10 to 15 years’ time.

Take, for example, the volume of Environmental Impact Assessments (EIA) required. While such scrutiny is necessary, it is ironic that such assessments often hold up the very projects that could ultimately benefit the environment in the long term. The government is consulting on whether changing from EIA to Environmental Outcomes Reporting will accelerate planning: while this would be a radical change, the consensus is that it will improve project delivery, while still protecting the environment.

“Looking at new renewable energy projects, National Infrastructure Commission research in 2020 found that £350bn needed to be invested to electrify heating by 2050.”

Elsewhere, where different public interests (or government departments) conflict, a solution could be an independent regulator of regulators to oversee the delivery of the 10-point plan. They could act as facilitator when projects are held up by political issues or misaligned objectives, increase investor certainty and bring about the whole-system changes that are embodied in the government’s net zero targets.

Looking at new renewable energy projects, National Infrastructure Commission research in 2020 found that £350bn needed to be invested to electrify heating by 2050. Essential to this is investing in alternatives, such as electrolysis, but – crucially – making existing transmission infrastructure fit for purpose. This includes adding new supergrid transformers and substations, which require land and space for new apparatus, and reconducting overhead lines.

The average UK electricity transformer is 63 years old, so improvements will take significant time and investment, but only by updating and extending this infrastructure will we be able to upscale renewable energy generation on the scale we desperately need. The same principles also apply to ports: to make sure offshore wind grows further, our ports require upgrading and future-proofing to cope with the volume and scale of the components that will need to pass through them.

These are just a few of the areas that require our attention – once a project has finance and consent, that’s only the start of the story. I haven’t even touched on the next stages of construction, ongoing management and assessment, maintenance and eventual upgrading – all need careful consideration to deliver the infrastructure we need. Renewable energy infrastructure addresses the ‘energy trilemma’: reducing carbon emissions, lowering energy costs and securing UK supplies. It also delivers job creation, economic growth and social value. The property industry must use its expertise to deliver as many projects as quickly as possible.

Richard Rees is managing director of Savills UK