When asked whether housebuilders would be legally required to fit solar panels on new build homes, the Prime Minister’s official spokesperson replied, “Of course, we want to see solar panels on as many new homes as possible.”
This has seen various media outlets report that from 2027, solar will be mandated on all new build, with coverage requirements set at 40% of the property’s ground area.
The House Builders Association (HBA), the housing division of the National Federation of Builders (NFB) has been engaging diligently with the Government on this challenge since 2017 but has concluded that it needs to take a firmer stance on ensuring this policy ambition works in practice and insists that the development industry should not be paying for piecemeal upgrades to the grid, with uncertain connection timeframes eliminated.
Would you buy a home with a temporary connection to the grid? Would you spend £150,000 to go through the planning process, then not be able to sell a home because you can’t get a grid connection? Would you buy land knowing that your grid connection and reinforcement costs could spiral or be delayed?
These are the basic questions housebuilders ask themselves and the Government should consider. Add heat pumps, induction cookers and EV charging into the mix, particularly as councils feel comfortable writing policy which goes above Building Regulations, and you might find that not only can you not get a connection, but you now cannot afford that connection because it comes with reinforcement, such as substations.
In some cases, you may even need a substation on site with earthed grounding around it and so lose a housing plot.
The solution is simple. The grid pays for off-site connections; reinforcement works and infrastructure. The builder pays for the panels. Because new build will be electric and all homes are being electrified, the cost of connections and infrastructure works will be more than covered by a huge increase in new customers and profit in perpetuity. Under these circumstances, you could mandate a solar panel roof!
With some renewable connections delayed by eleven years and global demand for electrical infrastructure pushing up component prices, for example transformer prices have risen by 60% to 80%. It will be SME builders that will be hit the hardest if there is a broad requirement to mandate solar panels because every cost analysis we have seen to justify the policy ignores grid costs.
SME projects will be delayed, meaning debt servicing will wipe out profit. Home purchases will be delayed, which will have and already is having an impact on the buyer chain. Land appraisals will be worthless, which means profit margins are eliminated. Affordable housing levels will be reduced. Starter homes will not be viable. And builders will keep leaving the industry, as they just cannot afford to build.
As an example, one HBA member has a site of under 70 homes and in 2019 was told a substation was required to support their electrified homes. In 2023, they were told that they could make no connections until upgrade works not associated with the site were completed in 2025. A temporary connection was organised, not by the Distribution Network Operator (DNO), for a third of the properties but at a considerable cost.
The upgrade works still haven’t taken place without any indication of that timeframe, but the project should have commenced by now. If it does not commence – to only build a third of the homes – planning may need to be resubmitted if upgrades take too long. If the development commences on a third of the homes, the connection is still temporary and they will face charges and costs for not building the entire site, such as affordable housing delays and council tax charged on unbuilt properties.
They will also service their debt for far longer because selling just a third of the houses will not repay the loans to fund the project.
And this is a project with electrified heating but no solar panels. Mandating PV without understanding the grid costs and challenges will be another nail in the coffin for small and medium sized builders.
Moving away from the impact on SME’s, the grid will continue to see piecemeal capacity investment, which means when existing homes begin installing renewables, they will not be able to connect or will be asked to pay charges in the thousands or tens of thousands of pounds.
Electrification is happening but if it happens on the backs of developers, we will see more SMEs leave the industry and growth stunted because political expedience was put above strategy. The only fair approach is for the energy sector to pay for connections and infrastructure and the developers to pay for panels. Do that, and every new build roof could be one giant solar panel!
