Renewing the grid, green homes and clean tech

Renewing the grid  
  
Clean energy remains a cornerstone of the UK government's strategy, as outlined in the Invest 2035 strategy and Clean Power 30 Action Plan. Central to this is the UK grid network, which is undergoing significant reform.  
  
The NESO connection reforms, as discussed here, aim to address long-standing criticisms, with the first phase close to being underway. Those with distribution generation projects can soon submit documentation for 'Gate 2 Readiness,' potentially accelerating their connection timelines. Transmission project applications are due to open in July, with outcomes of both expected in September and connection offers issued in Autumn.  
  
The outcome of these 'windows' will be to provide more clarity on the number of 'feasible' and ready projects in the queue, bring forward connection dates, and provide developers with a clearer picture of installation capacity over the next decade, as well as highlighting where there may be the opportunity for more investment.
     
Additionally, Ofgem's approval of a modification to raise the threshold for requiring a Transmission Impact Assessment (TIA) from 1 MW to 5 MW impacts 337 projects, totalling 682 MW. This change is expected to streamline smaller projects, reducing connection times and development risks, therefore, more sites of this size will likely enter the fray.  
  
"Raising the TIA threshold will significantly streamline 'smaller' grid-connected schemes providing a greater direct impact on the decarbonisation progress of the UK grid network and will particularly support local community projects," notes Charlie Singer of Knight Frank's Renewables team. "We are starting to see increased appetite from developers for projects of 5MW due to the removal of TIA as at this level there is the opportunity to benefit from economies of scale and more notable returns, which were not possible at the previous 1MW threshold. In tandem, these are more likely to be appropriate sizes for private wire arrangements with high-consuming offtakers such as industrial estates and airports, and we are noticing an uptick in these."
     
Are English homes getting greener?  
  
As a property researcher, I find the English Housing Survey to be a fascinating read, offering a valuable data source for understanding housing trends in England. As well as information about people's housing circumstances, including tenure and affordability, it provides insights into the condition and energy efficiency. The latest cut of data for cut of data for 2023/24 reveals progress, but challenges remain.  
  
A quarter of homes have primary heating systems over 12 years old, and 52% have systems between 3 and 12 years old, providing a significant opportunity for upgrades.
     
One option, pushed by the government, is to install a heat pump, though take-up has so far been low. According to the English Housing Survey, just 1% of dwellings in England used a heat pump, or 276,000. Rural areas have seen higher take-up at 8%, likely reflecting the higher proportion of houses and additional space available to homeowners. According to the latest MCS data dashboard, almost 56,000 heat pumps were installed across England & Wales in 2024. In England, installations were up by 50% year-on-year. Part of this may be due to the rise in adoption of The Boiler Upgrade Scheme (BUS), with almost 23,000 redemptions in 2024, according to the latest statistics, nearly double the year before. The government also just announced the removal of the planning restriction to be one metre from a neighbour's property.  
  
However, the pace of adoption must accelerate to meet the Climate Change Committee's (CCC) targets of 450,000 installations annually by 2030 and 1.5 million by 2035. The CCC stresses the importance of aligning installations with natural replacement cycles, as we highlight here. Yet, without legislation mandating low-carbon replacements, progress may stall. Political resistance to do so may be evident as The Times noted in an article, as the subject of heat pumps has become politicised, so much so that the BBC cancelled a Happy Heat Pump podcast. This highlights the need for greater public understanding and skills development for greater uptake.
     
What will it cost?  
  
Cost remains a significant barrier. While the median cost of air-source heat pumps has fallen, the change is marginal - from over £13,000 to around £12,000. Ground source heat pumps, in contrast, have risen in price to nearly £29,000, both exceeding the £7,500 BUS grant. The CCC report highlighted heat pumps' cost and benefits, stating, "Depending on the level of policy support, a typical household will experience somewhere between £100 in savings to £150 in additional costs per year, on average, from 2025 to 2050."  
     
Holistic retrofitting is key to maximising cost savings. For example, heat pumps, when done as part of a fuller suite of upgrades, such as this deep retrofit in London or Octopus' zero bills initiative, which is now being trialled in existing homes, demonstrate the potential for targeted retrofits to have greater savings – in both cases zero energy bills. More technology is looking to solve this issue with start-up Senze, which measures real-time data from a home to map a property's thermal and energy performance. Using this information, smaller and more targeted retrofitting measures can be identified to improve the efficiency of homes. Although the number and location of the pilot projects are not confirmed, they reveal average savings per home of £113.9 on fuel bills each year and 1.29 tonnes of CO2 saved annually, for an average of £4,890 of capital retrofit costs.  
  
This cost may be lower than we previously estimated using EPC improvement measures due to the much-talked-about pitfalls of EPC calculations, particularly the overstating of energy consumption. A Sunday Times study a few years ago, through a company called CarbonLaces, found that EPCs overstated energy use by almost double. The gap was particularly present for those with lower ratings, where, for example, those rated G were only a quarter of the estimate on the EPCs - 151 Wh/m2/yr compared to 656 Wh/m2/yr estimated. The recent consultation on reforming EPCs seeks to overcome some of these issues. Data and holistic thinking will be key, but there will also need to be supportive policy to enable wider spread action - the Government's Warm Homes Plan in summer will be one to watch.

Powering clean tech through property
 
The UK's net-zero economy expanded three times faster than the broader economy in 2024, a trend that shows no signs of slowing. This rapid growth is reflected in the global recognition of UK innovation, with nine UK-headquartered companies featured in TIME's world's top 250 greentech companies for 2025. Central to this is the clean tech sector, with 3,600 active companies -up from just 1,000 a decade ago, according to Beauhurst data. A recent Bloomberg article highlighted how this could be accelerated with more clean tech companies potentially seeking to incorporate in the UK and Europe, given the US policy direction.

Real estate supports this expansion, providing spaces tailored to the sector's diverse needs, from offices to specialised facilities like vertical farms and laboratories. Sustainability is a top priority, with clean tech companies seeking buildings with strong environmental credentials, energy efficiency, and on-site renewable energy capabilities.
    
The clean tech sector's sustained growth, bolstered by supportive government policies and continued investment, presents a significant opportunity for the real estate industry. Demand for specialised, sustainable spaces will only increase as the sector evolves.

What else am I reading?

The link between health factors and office rents in the US, green building materials are gathering momentum from the new European coalition 'Buy Better to Build Better' to Microsoft buying green cement (although they may not use this), architects demand sustainability criteria from building suppliers including embodied carbon, and can regenerative farming escape the ESG backlash?