UK energy reform: impact on real estate and construction companies

As the UK accelerates its transition to net zero, the energy sector is undergoing its most ambitious transformation in decades. At the centre of this shift are the government’s updated Clean Power 2030 Action Plan (CP2030) and a comprehensive reform of the national grid connection system, both announced in April 2025. 

CP2030 aims to ensure that clean energy sources generate at least 95% of Great Britain’s electricity and match total annual demand, while the grid reforms aim to eliminate bottlenecks that have hindered timely project deployment. Together, these initiatives are designed to enhance energy security, reduce consumer bills and support economic growth through investment in clean energy infrastructure.

So, what does this mean for real estate and construction?

Reliable access to clean energy, and the ability to connect to it efficiently, is becoming essential for development. For an industry already facing planning delays and infrastructure constraints, the reforms could unlock new opportunities, free up stalled land and reshape how and where investment flows.

This shift is already being felt in industry sentiment. In our recent Real Estate 360° survey of over 200 real estate and construction businesses, 41% believe UK infrastructure will improve in the coming years, reflecting growing confidence that clearer policy direction and targeted investment could spur growth. 

Overall, 57% of respondents highlighted energy as the top infrastructure sector to prioritise to support the UK’s economic and net zero initiatives. Energy security and connectivity are vital for real estate and have been a considerable barrier to development. Policies and plans such as the Clean Power 2030 Action aim to facilitate investment and accelerate progress.

Clean Power 2030 Action Plan: driving renewable energy expansion

The CP2030 plan is driven by three core objectives:

1. Energy security: reduce reliance on volatile fossil fuel markets.
2. Economic growth: stimulate investment and job creation in clean energy sectors.
3. Climate action: cut emissions to meet the UK’s net zero targets.

These objectives are targeted to drive significant increases in capacity across clean energy generation, as illustrated in the table below looking 10 years ahead. 

Table 1: Department of Energy Security and Net Zero (DESNZ), key 2030 gigawatt (GW) capacity targets. Top 4 sources shown on table, other clean energy sources and targets here.

The plan anticipates £40–50bn in annual investment from 2025 to 2030, which provides an exciting opportunity for private sector participation as:

• Projects aligned with CP2030 targets will be prioritised in the grid queue.
• Projects exceeding 2030 targets but within 2035 ranges may still connect early if capacity allows.
• Substitutions between adjacent regions are permitted to address over- or under-supply.

The plan also includes detailed regional allocations (zoning) for solar, onshore wind and batteries to ensure balanced deployment, optimise grid utilisation and avoid overconcentration of generation in specific areas.

UK grid connection reform: what developers and landowners need to know

The UK’s electricity network is key to delivering CP2030 and accelerating the UK’s net zero ambitions. However, the UK’s grid connection system has been overwhelmed, with over 739GW of projects in the queue and more than 1,700 new applications submitted in 2023–2024 — far exceeding the system’s capacity. The National Energy System Operator (NESO), with Ofgem’s oversight, is implementing a new gate-based process to prioritise viable, strategically aligned projects.

Key features of the grid reform strategy:

• New queue model: this system will transition from “first-come, first-served” to “first-ready, first-needed.”
• Gate-based process: projects must meet specific readiness criteria to progress and avoid blocking the queue.
  • Gate 1: indicative connection offers.
  • Gate 2: firm offers based on readiness and strategic alignment.
• Strategic criteria: projects must align with CP2030 targets or hold Contracts for Difference (CfD), Capacity Market contracts or planning consents.
• One-off reassessment (G2WQ): existing projects currently in the queue will be re-evaluated under new criteria to remove speculative applications.

These reforms aim to unlock investment and accelerate the deployment of clean energy projects. Ofgem expects that raising entry requirements and aligning capacity with CP2030 will release approximately 500GW of capacity in the UK network. This would cut the size of the queue by around two-thirds, creating opportunities to increase the volume of generation and demand projects that are both ready and needed.

What are the implications for developers and investors?

• The action plan aims to provide greater certainty. Projects with Gate 2 offers will be prioritised for financing, while Gate 1 offers are non-binding, limiting early-stage funding certainty. More granularity will follow in relation to regional plans and pipelines, which developers will need to consider when making investment decisions.
• Grid connection slots may become tradable, influencing project valuations and investment strategies.
• The plan will bring more clarity on land use. Currently, significant land is tied up in ‘zombie’ projects; the action plan could unlock and free up this land for development opportunities.
• To release the additional energy capacity, a construction project pipeline exceeding £500bn is estimated. This has been a driver for M&A activity to gear up capacity and secure supply of businesses with certain renewable contracting expertise. An infrastructure pipeline of this scale also offers opportunity for private capital investment.

Looking ahead: what the energy transition means for the UK

The UK’s coordinated reforms to grid access, strategic energy planning and long-duration storage investment represent a bold and necessary step toward a decarbonised electricity system. By aligning infrastructure development with national climate goals, the UK is creating a more efficient, resilient and investor-friendly energy landscape. These reforms will be instrumental in delivering clean power by 2030 and achieving net zero by 2050. Crucially, they also create new foundations for real estate and construction activity, particularly in areas previously held back by grid constraints or uncertainty around energy access. The upcoming Gate 2 announcement, expected in September, could signal the beginning of the next energy investment wave, unlocking new development opportunities across the UK.

At RSM, we understand the implications of these reforms and their impact on your investments. We would be delighted to discuss the implications in more details.

If you would like more information, please contact Terence Amako.