Why British factories are giving up on the grid - and leaving the country

You have a choice to replace it with another gas-powered model, locking in fossil fuel use for the next twenty years, or invest in a shiny electric alternative that follows the government’s net zero targets and promises lower long-term running costs. Such decisions will determine your site’s viability for an entire generation of assets.

Your business relies on one, maddeningly elusive question – “what will the new electricity connection cost?” So, you pick up the phone to your local Distribution Network Operator, the people who run the grid. They are polite, even helpful, but they cannot give you a straight answer. To get a real number, they explain, you must submit a formal application, committing significant fees and reserving capacity on the grid years in advance, long before you have board approval for the project. You cannot get the information needed to build a business case without effectively signing the contract to proceed.

So, you wait - and you pay - and you wait some more. Finally, months later, a £10m quote lands on your desk, it arrives with little explanation of what you are paying for, no breakdown of site-specific works versus general network reinforcement and no indication of whether the price will hold. The timeline is five years (your furnace needs replacing in two), so you walk away. The project never happens.

But no one knows you walked away. Our new report, Connection Costs: What Industrial and Commercial Businesses Are Afraid Of, has found a system where failure is engineered to be invisible. If a business looks at the connection process and gives up before even making a formal application, that project never appears in any official queue, report, or performance metric. The Distribution Network Operator’s backlog figures stay reassuringly clean, the regulator sees no systemic delay and the government does not count the lost investment.

In fact, the system’s performance indicators improve when discouraged projects stay away, the biggest failure mode of the connections process is defined out of the data and our network operators are inadvertently rewarded for being so difficult that customers give up before they even apply.

The real-world consequences are already landing on the balance sheets of British businesses. Our research uncovered a major manufacturer within a global group who received a £10 million UK connection quote and a five-year wait - they compared this to a sister site in Germany where equivalent works were indicated at around £2 million. Unsurprisingly, the UK project slipped down the capital queue, and the investment went to Germany.

Another energy-intensive business simply could not justify the risk and uncertainty of the UK system, choosing to electrify abroad rather than risk a domestic connection process that offers no reliable estimate of time or cost. All this means Britain is exporting its industry abroad. We are building clean power, but our antiquated connection system is preventing the factories from plugging in.

The regulator, Ofgem, must mandate total quote transparency, forcing operators to itemise every cost element and disclose the apportionment of shared assets. We need a national benchmark of connection quotes so customers can tell whether a £10 million quote is reasonable or a sign of systemic inefficiency.

Above all we must establish a mechanism for projects to signal their intent without formal application, ensuring their potential demand is counted in strategic planning. This change would transform our understanding of the challenge and hold the system accountable for the projects it deters.

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Dr Phil Nicholson is Research and Insights Lead at ADE: Demand, the UK’s largest non-profit trade body for organisations that use, manage and optimise energy demand.

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