CIH response to Ofgem’s end-to-end review of the connections process

Question 1a. Do you agree with the issues we have set out under Theme 1 - Visibility and accuracy of connections data and network capacity? Are there any other issues under this theme that we should consider or be aware of?

We broadly agree with these issues. The evidence that we can provide is indirect, but speaks to the importance of visible, accurate data being made available on network capacity, costs, and connections availability.

In our engagement with members, one frequently cited barrier is that substations are more commonly needed on smaller housing developments, especially due to the infrastructure requirements of heat pumps, solar PV, and electric vehicle charge points. Members have shared that this can add between £80,000 and £100,000 to the cost of a single development, affecting viability. The requirement for substations can also reduce the efficiency of the site layout, due to the space that is required. A second barrier we have encountered is the provision of three-phase mains connections adding significant unexpected costs to developments with heat pumps in their design.

In both examples, we do not think the connection cost is the real issue. Rather, it is that housing developers do not have sufficient knowledge of or visibility over the potential cost of connections (including, if necessary, a substation) early enough in their process. If this was provided, it would allow them to pre-emptively identify if a substation or three phase connections are likely to be required, and adjust their scheme design and/or cost profile accordingly. Doing this in advance is more efficient and less costly (at minimum, in terms of staff time) than having to adjust a development plan after a quote has been provided.

Consequently, we welcome the focus on improving the visibility and accuracy of connections data. We would add that this should be provided in a way that is easily accessible to local authorities, housing associations, and other housing developers.

Question 3a. Do you agree with the issues we have set out under Theme 3 - Requirement on networks to meet connection dates in connection agreements? Are there any other issues under this theme that we should consider or be aware of?

We cannot provide evidence on the majority of these issues, but one CIH member has made us aware of an example where they encountered a delay with substation energisation. This resulted in a 6 month delay to completion, handover, and occupation of the homes in the development.

Question 6a – Do you agree with the issues we have identified? Are there any other issues under this theme that we should consider? Please provide data and evidence to support your views if possible.

We agree with the majority of the issues identified by Ofgem under Theme 6. Research undertaken with our members on decarbonisation strategies in the social housing sector supports Ofgem’s conclusion that connection requests at lower voltages will increase this decade. Specifically, the latest wave of the government’s Warm Homes: Social Housing Fund (WH:SHF) includes a significant and generous grant offer to social housing providers to install heat pumps as part of their proposed retrofit programmes. We therefore expect the installation of heat pumps in the social housing sector to increase from 2025, leading to a parallel increase in connection requests to DNOs.

Our members have experienced some of the issues highlighted by Ofgem. In particular, some of our members have experienced inconsistencies in unlooping services. One member, working at a housing association with over 30,000 homes, told us that:

“On low-carbon technology we've got issues with the old grid infrastructure, so a lot of our properties are on looped services, which means they need de-looping and maybe new meters […] So there's a lot of work to do there and our DNOs are not really set up to do that so they give it to their small works teams. We get a quick design letter off and it's not really consistent. So there's a lot of work to do with our DNO before we even get the contractors in.”

Beyond the issues identified by Ofgem, we would like to emphasise the impact that delays to the connections process have on broader retrofit programmes in social housing. Retrofit programmes in social housing are highly coordinated and sequential, involving multiple stages from initial resident engagement, to surveys, to the phased installation of energy efficiency and other measures. Any delay or interruption to one part of the process for individual homes can have knock-on effects that, in the worst cases, can jeopardise the entire whole-house retrofit. This is especially true when the coordination of different actors is required, such as installers, surveyors, DNOs/DSOs, and energy suppliers. The previous government’s process evaluation of the Social Housing Decarbonisation Fund (SHDF) demonstrator also highlighted this, noting that “delays caused by the challenge of coordinating distribution network operation companies to relocate electricity and gas boxes in Fenland, and to move power cables affecting changes to roofing in Wychavon, also created significant delivery delays for these projects.” In its most recent evaluation of the SHDF Wave 1, similar issues were also highlighted: “delayed sign off on heat pumps and overhead lines for solar panels from DNOs caused […] delays in delivery.”

For example, the most prevalent issue we have been told about by our members is a lack of coordination between DNOs/DSOs and energy suppliers. As noted above, DNOs and energy suppliers are often required to undertake specific enabling works, in sequence, before the installation of energy efficiency measures and low-carbon heating technologies can proceed. One specific instance shared with us is where a meter box must be moved from the external skin of a dwelling. This requires the energy supplier and the DNO/DSO, one to remove and refit the meter, and the other to alter the service. However, in these cases, the energy supplier will only communicate with the resident (i.e. the account holder), and the DNO/DSO must be lined up to alter the service in sequence. In the example shared with us by a member, this was extremely challenging to coordinate effectively, leading to a delay and added cost in staff time to the retrofit of the home in question.

In contrast, we are aware of instances of good practice from DNOs that should be welcomed and replicated. In the Penderi Retrofit Energy Project in Swansea, 644 homes were retrofitted with innovative battery, solar, and smart control technologies. To undertake this project, Western Power Distribution (WPD) needed to upgrade and install new substations at a cost of £900,000. In other circumstances, this could have fatally affected the viability of the project. However, the project coordinator Sero was able to work closely with WPD to resolve cost and programme coordination challenges, which ensured the project was not delayed. Part of the solution was WPD agreeing to undertake the substation work at cost, which was linked to their commitment to facilitate renewables projects. Examples such as this show that closer collaboration and communication between housing providers and DNOs can lead to the effective resolution of challenges in retrofit projects, especially those involving multiple measures.

More generally, we have been told about issues requesting and receiving quotes, with members referencing the time spent waiting on the phone to DNOs/DSOs, and perceived delays in quotations being provided after a request has been made. These delays were described by our members as excessive, and as having significant impacts on their retrofit programmes. It was again noted by members that this can lead to additional costs that must be absorbed by the housing provider, such as issuing change requests or decanting residents to alternative accommodation. To be clear, these issues were experienced during the ED2 price control period.

Lastly, from the feedback we have received, it is clear that issues are widespread, and not restricted to one particular network area.

Question 6b – What are your views on our proposals designed to address these issues? Are there other proposals you consider would achieve the intended outcomes?

While we do not have a firm view on the relative merits of these exact proposals, we agree with Ofgem taking action to address the issues identified under Theme 6. To us, Proposals 6a, 6b, and 6c appear to be proportionate and beneficial ways to improve performance.

One proposal raised by a CIH member was for DNOs to offer a bespoke, business-to-business (B2B) solution for social housing providers to use. It was noted that without a B2B solution, every issue has to be raised as a separate job, which is then distributed to a regional planner who takes ownership of responding. However, given the geography of electricity networks, and that many social housing providers own homes across multiple network areas, this can mean multiple planners from different DNOs become involved in a single retrofit programme, which our members have found challenging to manage.

If a B2B solution was developed, one of our members noted they would happily pay for it, especially if it enabled them to have a single point of contact who could liaise directly with them, as well as with their equivalents at energy suppliers. In this context, it is noteworthy that another CIH member spoke highly of the Greater London Authority’s Infrastructure Coordination Service, which would broker discussions between utilities, networks, and developers to prioritise timelines and unlock capacity in the capital. This model may be worth further exploration and replication across the country.

Visit Ofgem's website for more information on the consultation.

For more information on our response please contact Matthew Scott, senior policy officer on matthew.scott@cih.org.