Practical Planning Reform Is Needed to Cut Business Energy Costs
High energy prices are constraining business competitiveness, and timely action is required. British businesses find themselves faced with wholesale prices for the coming winter that have risen to their highest level in almost four years, while non-commodity charges and standing charges continue to increase.
The government has announced that it will remove VAT from household electricity bills, but no comparable help is on the horizon to help businesses manage the cost of energy, even though the CBI has indicated that electricity prices for UK businesses are up to 45% higher than in other G7 countries.
Volatility in global energy markets, including instability in the Persian Gulf, the continuing conflict in Ukraine and wider geopolitical uncertainty, underlines the importance of improving the UK business’s energy resilience and reducing exposure to external shocks.
It would materially improve domestic energy security for businesses if we had a policy environment that enabled faster, more practical progress towards access to renewable power. Net zero has become a contested and unhelpful term, and many businesses are suspicious of it because it has often been used in ways that have not translated into visible benefits or confidence. However, access to their own secure renewable supplies, separate from any attainment of abstract net zero targets, would make a huge difference to the energy security and peace of mind of many CEOs.
In order to facilitate access by businesses to renewables, changes to the planning system would be helpful, as its pace and complexity can be a hindrance to schemes.
The Department for Energy Security and Net Zero was, prior to the change in government leadership, consulting on a new permitted development right in England that would let wind turbines be installed by businesses without a planning application. The proposal covers turbines up to 30 metres tall with a rotor swept area up to 200 square metres, giving a capacity of roughly 50 kilowatts. The consultation closed on 10 June, and feedback to it is currently being analysed. Businesses will be watching closely.
Whilst this consultation is welcome, it is unlikely that this scale of energy production will help the majority of businesses.
Consideration should therefore be given to enabling larger-scale electricity generation for British businesses. Permitted development rights could be extended to cover larger turbines or offsite solar that supply businesses behind the meter. This would provide direct power while reducing exposure to grid connection delays, network operator queues and network enhancement constraints. Rather than limiting ambition to 50kW, the policy objective should extend into the 1–2MW range where appropriate. Such a move would of course require careful framing, including clear conditions on where larger installations could proceed under delegated or permitted rights.
Greater delegated rights should also be considered for private wire connections between businesses and new or existing offsite wind or solar generation, helping firms avoid prolonged delays while waiting for grid connection offers, with behind the meter connections.
The tax system could also be used more effectively to encourage onsite battery storage. This would help businesses smooth power costs, reduce exposure to peak-use charges and enable smart exports where grid capacity allows.
The UK needs British businesses to thrive to drive job creation, economic security and growth. Energy costs are strangling the ability for businesses to flourish. We need Government to enable and allow businesses to take more control of their energy supplies to help cut down cost fluctuations, provide better energy security and allow businesses to grow.
