Connection uncertainty stalls factory electrification

ADE: Demand has warned that British factories are abandoning electrification projects before they reach the formal grid-connection queue because businesses cannot establish credible connection costs and delivery times early enough to make major equipment investment decisions.

The problem becomes particularly acute when a furnace, boiler, or other process asset approaches the end of its operating life. An industrial company then has a finite window in which to choose between replacing the equipment with another fossil-fuelled unit or investing in an electrical alternative whose power requirement may depend on substantial network reinforcement.

ADE: Demand’s research finds that businesses often cannot obtain a useful range for connection cost early enough in that decision. If the network work is still uncertain when procurement has to begin, the company can face a relatively predictable gas replacement alongside an electrification option whose infrastructure price and delivery date remain unresolved.

The result can be abandonment before a formal grid application is submitted. That distinction creates a measurement problem: projects that enter a queue and wait for several years appear in connection statistics, while industrial demand that investigates the process and decides not to proceed is largely invisible. Falling queue numbers can therefore coexist with investment being deterred before it reaches the queue.

For factories, the timetable is governed by production equipment as much as by energy policy. An ageing furnace cannot necessarily continue operating until a network reinforcement is ready, while procurement, design, civil work, installation, and production shutdowns all have to be coordinated around a replacement programme. A connection date that arrives after the existing asset must be retired is not merely inconvenient; it can make the electrical option commercially unusable.

That creates a different problem from much of the generation and storage connection backlog. A renewable developer may be able to move a project schedule while network capacity is reorganised, although the financial consequences can still be considerable. An operating manufacturer has customers, production schedules, and equipment whose condition imposes a deadline independently of the grid process.

Replacing the asset with gas can then lock the next investment cycle into fossil fuel for many years. Industrial furnaces and boilers are long-lived pieces of capital equipment, so a connection failure at one replacement point can postpone the next practical opportunity for electrification into the following decade.

Distribution networks sit at the centre of many of these decisions because industrial sites are commonly connected below transmission voltage. Large new loads can nevertheless trigger reinforcement higher up the system, creating dependencies between the distribution network operator, transmission infrastructure, and the National Energy System Operator before the customer receives enough certainty to commit capital.

The private-site work can also be substantial. Electrification may require new transformers, switchgear, substations, protection systems, cabling, metering, and modifications to the factory’s internal electrical network alongside the process equipment itself. Those investments have to be designed against an assumed import capacity, making uncertainty over the external connection difficult to separate from the rest of the engineering programme.

ADE: Demand is calling for credible indicative cost ranges earlier in the process and greater transparency over how connection charges are calculated. Earlier information would not guarantee a cheap connection, but it would allow an industrial business to compare technologies against an approximate infrastructure requirement before spending heavily on a project that may later prove uneconomic.

The organisation also wants deterred demand recognised in performance measures. A network process judged only by submitted applications has little visibility of projects lost during early engagement, even though those abandoned investments affect future electricity demand, industrial decarbonisation, and network planning.

That missing demand can also distort forecasts. Electricity-system planning increasingly assumes substantial growth from industrial electrification, transport, heating, data centres, and other new loads. If factories expected to contribute to that growth instead install another generation of gas equipment, future demand will arrive differently from the scenarios used to justify network investment.

The findings add to a wider connection-reform programme already under way across Britain, but they shift attention towards the customer side of the queue. Removing speculative generation projects and accelerating viable renewable connections will not, by itself, resolve the uncertainty faced by a manufacturer trying to determine whether an electric furnace can be connected before its current equipment fails.

The practical test is therefore whether useful information moves earlier in the investment cycle. Industrial users need to know the likely scale of reinforcement, an indicative cost, who is responsible for delivering the work, and whether the required capacity can be available before the replacement deadline. Accuracy can improve as engineering studies progress, but a process that supplies certainty only after the capital decision has passed is too late.

ADE: Demand’s findings expose a part of the connection problem that conventional queue statistics can miss. Some industrial electrification is not waiting behind thousands of other applications; it has already disappeared. Measuring those decisions, and providing enough early cost and timetable information to prevent avoidable abandonment, is becoming as important as accelerating the projects that remain visible in the queue.