Grid demand to surge as heat pumps and electric cars gain traction
SMEs will leave the housebuilding sector if the government goes ahead with requiring new builds to have solar panel roofs from 2027, warns the National Federation of Builders.
- Extra estimated costs of £4,000 per home
- Building an electric substation costs at least £50,000
- Delays in grid connection could wipe clean developers’ profits
Solar panel requirements on all new build homes will see costs soar
Mandatingsolar panels for the roofs of most new homes by 2027 will escalate building costs and is another ‘nail in the coffin’ for SME developers, warns the National Federation of Builders, NFB.
The Government sees the change as essential to meet itsgoal of decarbonising the electricity grid by 2030 and reducing average energy bills by up to £300.
A housing, communities and local government ministryspokesperson said: “We have always been clear that we want solar panels on as many new homes as possible because they are a vital technology to help cut bills for families, boost our national energy security, and help deliver net zero.”
Greater use of solar panels features in the forthcomingfuture homes standardsto be implemented later this year. The standards areaimed at a major shift in building regulations to reduce carbon emissions from new homes.
But the NFB has said this will be pricey for housebuilders with project grid connection delays, and the cost of connecting to the grid running into tens of thousands of pounds.
NFB policy and market insight head Rico Wojtulewicz said: “SME projects will be delayed, meaning debt servicing will wipe out profit. Land appraisals will be worthless, which means profit margins are eliminated. And builders, especially smaller ones, will keep leaving the industry, as they just cannot afford to build.”
He warned that many councils would “feel comfortable” about writing policy that goes above building regulations,which could mean developers footing £50,000 bills to pay for substations.
“The development industry should not be paying for piecemeal upgrades to the grid, with uncertain connection timeframes,”saidMr Wojtulewicz:
Finance brokers Hank Zarihs Associates said development finance lenders were worriedthat the extra costs would make it more difficult for SME housebuilders to make a profit.
Grid demand to surge as heat pumps and electric cars gain traction
Electricity demand is set to steadily increase as people switch from gas fired boilers to heat pumps, install induction cookers and buy electric cars.
The Government said its planning and infrastructure billwill reform electricity network connections and improve the connections queue supporting its target to build1.5m new homes by 2029.
Ithopes the new bill will interact with changes in the national planning policy framework to cut delays so smaller residential developers can compete offering more competition.
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