Inside Infrastructure: What’s new in the UK market?

Welcome to the first in our new series of market updates for the Energy & Infrastructure sector. We are starting with the UK and we will be following this with regular insights covering key jurisdictions and developments relevant to the sector.  We have a schedule in mind but we also take requests! 

If you want to know more, just reach out to one of us or your usual Freshfields contact.

Richard & Jessamy

Hot Topics

We are observing five major themes in the UK ahead of any changes that may emerge from next week’s long awaited Multi-Year Spending Review:

1.  Focus on low-carbon generation: Notwithstanding an increase in political debate around net zero, including in respect of moving to regional electricity pricing, clean energy projects continue to propel the UK infrastructure sector. This is driven by the release in late 2024 of the Clean Power 2030 Action Plan (CP30) – the government's ambitious plan for delivering clean power by 2030, including through grid connection and planning reform, which will prioritise clean energy projects. Notably, CP30 re-designates onshore wind as ‘nationally significant infrastructure’. The Contract for Difference (CfD) scheme, as well as the National Wealth Fund and Great British Energy will continue to support clean energy projects, including £300m in funding for offshore wind supply chains in response to the issues faced by that sector in the past few years (see below), and a significant investment to crowd-in private funding for CCUS, the Sizewell C nuclear project, and Great British Nuclear’s SMR program.
2. Digital infrastructure and data centres: Driven by increasing energy consumption, the AI boom and desire for energy security, data centres are expected to receive significant investment. They have been designated ‘critical national infrastructure’.
3. Prioritising battery storage: Numerous Battery Energy Storage System (BESS) projects were developed or kicked off in the UK during 2024. The further development of BESS is scheduled to play a critical role for the nation to give effect to CP30, along with the ongoing expansion of the UK’s renewable energy capacity. Additionally, in April 2025 Ofgem launched the cap and floor scheme to encourage investment in long-duration energy storage (LDES) – this has also been provided for in the new Planning and Infrastructure Bill which is proceeding through Parliament. The first application window for LDES has now opened.
4. Upgrading transport infrastructure: Railways like the Transpennine Route, East West Rail and A9 Dualling are seeing significant upgrades, as Great British Railways prepares to be operational in 2026 and to bring back rail franchises into public ownership.
5. Ongoing issues for the water industry: The publication of the Independent Water Commission's review (the “Cunliffe Report”) yesterday calling for stronger regulation of the sector, alongside the news that KKR has walked away from a possible deal for Thames Water further spotlights the complex problems plaguing the sector.

 Latest infrastructure deals and opportunities 

1. National Highways has finally obtained development consent for the Lower Thames Crossing from the Transport secretary, following delays since 2009. The 14.3-mile, ca £9.5bn tunnel between Kent and Essex should improve connectivity between southern England and the Midlands and reduce congestion on the Dartford Crossing. Expected to start construction in 2026, it will be one of the UK’s longest road tunnels and is likely to be funded by a RAB model.
2. National Grid has launched the sale of Grain LNG, Europe’s largest LNG terminal. National Grid also just completed the sale of its renewables business to Brookfield Asset Management. 
3. Eni has achieved financial close on its £2.5bn debt package for HyNet carbon capture and storage (CCS), the CO2 transport and storage system for the HyNet industrial cluster in northwest England (one of the two Track 2 projects, aimed at establishing the UK’s carbon capture utilisation and storage (CCUS) sector). This means that the Liverpool Bay CCS project can begin construction, which will allow industrial firms to store their emissions in depleted gas fields in Liverpool Bay. These include Essar Energy Transition (EET) Hydrogen, which is developing the HPP1 project, the UK’s first large-scale low-carbon hydrogen production plant, to be integrated with the CCUS infrastructure of the HyNet North West cluster.
4. Ørsted will discontinue its investment into the Hornsea 4 offshore wind farm project, a 2400MW wind farm off the Yorkshire coast, citing rising supply chain costs, higher interest rates and risk profile. This follows Vattenfall’s decision to discontinue a 1400MW project in 2023. 
5. RWE is continuing with its proposed sale of a 50% stake in the Norfolk Vanguard West (NVW) and Norfolk Vanguard East (NVE) offshore wind farms, following recent minority divestments in offshore wind in Europe.
6. Harbour Energy is to review its support for the £200m Viking CCS project, citing difficulties stemming from government’s fiscal rules and regulations that have extended and raised a windfall tax first introduced in 2022. This comes after Harbour Energy had successfully obtained a development consent for the project earlier in the year. Viking CCS project in Lincolnshire and the Humber area was set to involve pipelines connecting emitters to the Theddlethorpe Gas Terminal and to the depleted Viking gas fields in the North Sea.
7. AXA IM Alts has acquired a 50% stake in Coalburn 1, a BESS project in South Lanarkshire, Scotland, expected to become Europe’s largest operational BESS facility. It is currently under construction, developed by Copenhagen Infrastructure Partners.
8. RWE and Dragon LNG have started development of the Milford Haven project in the South Wales Industrial Cluster - a first of its kind carbon capture and non-pipeline transportation project. 
9. Offshore Solutions Group and Crown Estate Scotland have signed a two year exclusivity agreement for areas of the Moray Firth for its future FLOW-park. The FLOW-Park will be the first in the global industry to provide temporary safe anchorage for floating offshore wind (FLOW) assets.
10. Transport Scotland has published a £205m procurement opportunity to dual a section of the A9 in Perthshire, as construction begins on the Tomatin to Moy section.
11. The National Wealth Fund has committed £600m to ScottishPower, alongside a consortium of banks, for the Eastern Green Link (EGL) Project, which will upgrade the Scottish power grid. This is particularly crucial to addressing curtailment issues as Scottish wind turbines are often turned off owing to the grid’s insufficient capacity thereby wasting both energy and funds. The investment is part of a larger £1.35bn financing package.

Legal update on the UK infrastructure landscape

Planning and Infrastructure Bill 

Currently working its way through Parliament, the Planning and Infrastructure Bill introduces several significant changes aimed at encouraging building and accelerating the approval and implementation of infrastructure projects (particularly nationally significant infrastructure projects (NSIPs) and those related to renewable energy). An Impact Assessment published on 6 May by the Ministry of Housing states that the Bill could boost the economy by up to £7.5bn over the next decade. Among other measures, it proposes:

 General

1. Reform to the nationally significant infrastructure project regime: Provisions changing consultation requirements aim to help developers of NSIPs obtain planning permission faster; notably, scrapping the consultation stage preceding an application for a development consent order (DCO) and reducing the number of judicial reviews available to oppose NSIPs from three to one. Additionally, national policy statements are to be updated at least every five years, to align with policies and legislation.
2. Acceleration of consenting process: The Bill provides greater power to the Secretary of State to permit local councils to set their own planning fees, as well as to Development Corporations to have more flexibility to build new communities. It also introduces a national delegation scheme, which would prescribe projects to be evaluated by local committees, and projects to be evaluated by officers.
3. ‘First ready, first connected’ system to replace ‘first come, first served’ in respect of electricity grid connection applications: The National Energy System Operator (NESO) and Distribution Network Operators (DNOs) will be required to prioritise projects which are ready to go and/or aligned with the Clean Power 2030 Action Plan. For more information, see below.

Specific

1. Long duration electricity storage (LDES) support scheme: The Bill includes provisions to encourage investment in LDES, as the scheme provides investors with a minimum revenue certainty (the 'floor' level) and a regulated limit on revenues (the 'cap' level) to avoid excessive returns. Profits above the cap must be shared by LDES asset owners.
2. Streamlining installation of EV charging infrastructure: By using permits instead of street work licences, these permits can be applied for online and will be approved within two to five days where the works are to take less than 10 days.
3. Extending commissioning period for electricity transmission system: A period for which an asset is allowed to transmit electricity without a generation licence is to be extended from 18 months to 27 months. This is intended to reduce the number of offshore wind farms needing to apply for exemptions when applying for licences to connect to onshore cables and substations.
4. Use of Forestry Estate for renewable electricity: Forestry authorities would be able to use or permit use of forestry land for generation, transmission, storage and supply of electricity from renewable sources.

 Grid connection reform

On 15 April, Ofgem confirmed its approval of NESO’s connections reform package (TM04+). This new approach to grid connection - ‘first ready, first connected’ (which is also supported under the Planning and Infrastructure Bill, discussed above) - is a marked departure from the old approach of ‘first come, first served’.

1.  Challenges with the old regime: The long connections queue contained many speculative or zombie projects, causing developers to wait up to 15 years for connections to the grid, causing delays in meeting decarbonisation goals and investment uncertainty. The grid’s capacity constraints and outdated infrastructure further exacerbated the queue problem. 
2. New regime: TM04+ involves a two-gate application process for both existing and new projects seeking to be connected. Gate 1 offers an indicative connection date and location, while Gate 2 provides a formal connection date and location. In order to get a Gate 2 offer (and therefore a formal place in the queue), projects must meet readiness and strategic alignment criteria. Notably, developers must be able to show that they (a) have land rights and are sufficiently progressed in their planning permission application; and (b) are strategically aligned with government policies (such as the Clean Power Action Plan 2030), are ‘significantly progressed’ (i.e. are scheduled for commission in 2026), or fall under specific categories of critical or innovative projects.
3. Impact: The new rules aim to reduce the size of the current queue and prioritise shovel-ready projects, addressing longstanding issues in connections delay. The higher barriers to entry and requirements to stay in the queue are meant to deter speculative projects. This reform is essential to meeting net zero goals by pursuing a smarter, more efficient connection process and supporting the deployment of renewable energy sources as well as encouraging investor confidence.

 Please get in touch if you would like more information or would like to discuss any of the above topics in more detail. 

And finally…. Real Asset or Fake News?

In the quest for greener energy some surprising sources are being trialled and harnessed. Amongst these science facts, is there one that is science fiction?

• Dance-nation: kinetic floor tiles that can turn the electric slide into electricity
• Waste-not: microbial fuel cell energy systems to transform our waste into heat for our homes
• Quantum hamster wheel: the ultimate in at home power generation…micro fuel cells, tiny paws, infinite power 
• Glow-up: synthesised proteins based on bioluminescent jellyfish to further illuminate solar panel manufacturing

If you think you have spotted the fake, please reach out …. there may even be a prize for the first correct answer received. We will publish the answer in our next post.