Introduction

Nearly a year on from our initial analysis of grid capacity across the UK, new data shows how the availability of power in the distribution network is evolving as the demand for connection capacity increases. While progress is being made through reform and reinforcement, data shows that the headroom capacity shortage persists. This shortage is increasingly shaping the pace and location of new housing, commercial, and industrial development, as power capacity remains a key constraint on planning and delivery.

In analysing the change in total headroom capacity across all primary substations, it is essential to consider how the demand for this available power capacity is evolving over time. The increasing pressure on the distribution network is most clearly reflected in the growing queue of demand connection applications. By examining both the supply of headroom at primary substations and the demand for new connections, it becomes possible to assess how effectively the grid is adapting to meet the needs of developers and the wider built environment.

According to the Energy Networks Association, the queue for new demand connections rose by 7 GW (30%) between April 2024 and June 2025, reaching 29 GW. To contextualise this, 1 GW could power up to 500,000 homes or around ten large data centres, highlighting the scale of projects competing for limited capacity. Meanwhile, available headroom at primary substations increased by only 2 GW (5%) from June 2024 to August 2025. This imbalance underscores how demand for new connections is outpacing the distribution network’s ability to expand capacity, reinforcing the need for innovation and investment to unlock the grid for future development.

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Spatial Analysis of Headroom Progress

As the gap between the supply of and demand for power in the distribution network widens, analysis provided by Grid IQ developed by Savills Earth, reveals that there is around 39 GW of available capacity at the primary substation level on the distribution network as of August 2025. A figure which has been largely unchanged (± 5%) over the course of the last two years. Given the seemingly consistent availability of capacity, what is happening at a granular level to maintain this?

1. Capacity increase in the South East

The UK Power Networks (UKPN) area, which includes large parts of London, has recorded an 11% increase in total demand headroom, equivalent to approximately 1 GW. UKPN indicate that this apparent uplift has been primarily caused by a change in their approach to assessing data. They have changed their approach to calculating peak demand, which has been updated to reflect network efficiency gains from embedded generation. For developers, this increase could improve connection prospects for new housing and mixed-use schemes in parts of London and the South East where power availability has long been a limiting factor for delivery.

Given that UKPN’s network hosts around 10 GW of embedded generation, with solar accounting for 26%, this change has reduced the summer demand peak and shifted it to winter. As a result of the updated calculation method, 13% more substations now record their peak demand in winter. Having a peak in winter increases headroom capacity because lower temperatures allow assets to operate with a higher firm capacity in comparison to summer temperatures. In the UKPN network area, firm capacity is 22% higher in winter than in summer, a seasonal uplift that increases network headroom.

For customers seeking a connection, this change in methodology offers a clearer and more realistic view of network asset utilisation. With a nationwide queue of 145 GW of generation and storage contracted to connect to the distribution network as of June 2025, having an accurate picture of asset utilisation allows customers to plan connections that use locally generated electricity where possible, reducing the need to draw electricity from the wider national transmission network and supporting overall grid efficiency.

In practice, this means demand connections can be designed to absorb embedded generation, helping to accelerate connections and unlock additional capacity. While UKPN has confirmed that, for now, the impact of embedded generation is typically excluded for connection planning purposes, this change in methodology does suggest a step towards better integrating embedded generation and demand into a more decentralised and efficient network model.

2. Capacity decrease in the Midlands and South West

The National Grid Electricity Distribution (NGED) network area has experienced a 14% decrease in headroom capacity over the period, equivalent to roughly 1.2 GW or 600,000 homes. Much of this reduction is concentrated in the West Midlands and South West, where strong development activity has increased demand on the network. In the West Midlands, a surge in the development of logistics and distribution hubs has absorbed much of the available capacity, reducing overall headroom. With a 30% rise in the supply of big box industrial units, according to research from Savills Industrial and Logistics, it is clear that new logistics and manufacturing developments are drawing significant power to support operations.

A similar pattern is emerging in the South West, where the development pipeline for logistics space has expanded by over 400%. Combined, the West Midlands and South West development pipelines are estimated to require around 28 MW of additional power capacity. The NGED area is positioned to attract further large-scale industrial, logistics, and data centre investment, supported by its strong transport links and planning environment. However, to maintain this growth, it will be vital for NGED to keep pace with rising demand and deliver timely grid connections to sustain momentum. For developers, persistent capacity pressure in these regions could delay planned industrial and logistics schemes, or require collaboration with NGED to secure connections by leveraging innovative methodologies.

This collaboration with DNOs is already emerging through planning initiatives such as Local Energy Advice Partnerships (LEAPs) and transitional Regional Energy Strategic Planning (tRESPS). These initiatives support the link between distribution connected demand and generation in network planning to promote the offering of co-located and flexible connections in response to network constraints. In practice, this means engagement with DNOs through these planning initiatives can empower the procurement of demand connections designed to absorb power from an existing or planned generation project, or demand connections designed to have a fluctuating import capacity which responds to network constraints.

3. Area of constraint, the B6 Boundary

The B6 Boundary marks the interface between the English and Scottish transmission systems and has become a bottleneck in the electricity network. It separates Scotland’s strong renewable generation base from the higher demand centres located in England. Currently, only two 400 kV overhead lines and one high voltage direct current cable connect the systems, limiting the transfer of power between the two regions. Over the period, headroom capacity in this area fell by 23%, or around 350 MW, highlighting growing pressure on this critical part of the grid.

The reduction in headroom here may reflect a market response to discussions around zonal pricing, a proposal that has since been rejected by the government. If zonal pricing had gone ahead, this region would likely have benefited from cheaper electricity prices due to its proximity to Scottish renewables, which may have encouraged developers to pre-emptively apply for demand connections in the region.

Despite the rejection of zonal pricing, the National Energy System Operator (NESO) continues to explore ways to encourage demand development closer to generation, aiming to improve system efficiency. Given its position along the Scottish border, the B6 Boundary will likely play a pivotal role in creating a more balanced and resilient grid, and future development and capacity planning in this region will be crucial to achieving that goal. For developers and investors, understanding these network pinch points will be key to identifying viable sites in the North of England and southern Scotland as the grid evolves.

Reformed Policy and Processes: A Look Forward

From April 2026, all users of the energy system will face higher Transmission Network Use of System (TNUoS) charges under the RIIO-ET3 price control period, which will remain in place until 2030/31. These increases are designed to fund the reinforcement and expansion of the transmission network, which transfers power across the national high voltage network and into the low voltage distribution networks, enabling the transition toward a more decarbonised and decentralised electricity system.

Fixed charges, in particular, could rise by as much as 100%. Since these charges are calculated according to a site’s import capacity, some site owners and occupiers may opt to reduce their capacity in order to lower operational costs. Site owners and occupiers who choose to reduce their import capacity would release this capacity back into the network, which would allow other developments to secure new or upgraded connections. With more than 210,000 non-residential sites currently paying low voltage standing charges through TNUoS, even small adjustments by a portion of these users could have a significant cumulative impact on the availability of headroom capacity across the network.

Connections Reform and Regional Energy Spatial Planning

The new UK connections reform led by NESO is set to fundamentally reshape how the country develops its energy infrastructure. At present, generation and demand operate largely in isolation aside from private wire schemes; they rarely interact during the connection process. NESO aims to change this by integrating demand into the spatial planning of generation assets, intending to design a more efficient network for the future.

Under NESO’s current connection and network design methodology, transmission connected demand will influence the allocation of new generation projects and associated reinforcement works. Looking ahead, NESO has indicated that the Regional Energy Spatial Plans (RESP), which are set to be released in late 2027, will play a key role in determining where and how new generation connections are allocated with regard to demand at the distribution level.

It should be noted that the impending full RESP package is being supported by the current tRESP process. The RESP will support the planning of generation and network assets at the transmission network level, drawing on planning activity at the distribution network level. Alternatively, tRESP, with the first iteration expected to be published in January 2026, is intended to support network planning at the distribution level. Therefore, the full RESP will incorporate distribution level planning in the strategic planning of the transmission network, while tRESP will incorporate distribution level planning in the strategic planning of the distribution network.

This marks a significant shift away from the traditional model, where network operators passively offer capacity and developers apply to secure it, towards a more strategic and collaborative approach in which demand actively informs grid planning and expansion. For developers seeking a demand connection, securing access to power will increasingly require early engagement in NESO’s RESP and tRESP planning processes, potentially adding time and cost uplift to project development.

Implications for developers

With capacity availability increasingly influencing site selection for new housing, industrial, and commercial projects, developers must now navigate an evolving capacity landscape presenting both challenges and opportunities. As headroom capacity continues to fluctuate across regions, early and proactive engagement with DNOs and NESO will be essential to secure connections.

The ongoing connections reform and forthcoming TNUoS charge adjustments highlight the need for developers to monitor each part of the network to identify and secure capacity. Developers who understand these changes and incorporate grid readiness into site selection, design, and investment strategies will be best placed to deliver resilient, future-proof projects in an increasingly capacity-constrained market.

Comment on Transmission Network Connection Queue Growth

Savills notes that transmission-level demand connections, which are increasingly sought by data centres, are outside the scope of this report. While the transmission queue has grown from 26 to 97 GW from April 2024 to June 2025, this report focuses on distribution-level headroom affecting residential and most other commercial connections.

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