GUEST COLUMN:
Richard Little
PNZC Director
RWE Generation UK
Wales is facing an increasingly stark challenge: we are rapidly running out of grid capacity at the very moment we need it most.
Across the board, from industrial electrification, green hydrogen production, batteries and EV infrastructure, plus the latest appetite for huge data centres, the demand for electricity is surging. Far from enabling the transition, our underdeveloped grid transmission system is slowing it down. For RWE and many others, the implications are now very real. We are seeing multi-hundred-million-pound projects stall, timelines slip, and, most worryingly of all, we are starting to see investment capital priorities quietly redirected elsewhere.
For decades, grid has evolved through an incremental approach to planning and investment, but that model is no longer fit for today’s energy ambitions. The push towards electrification is no longer a policy vision, it’s a commercial and industrial reality. From manufacturing to mobility, from domestic heating to clean hydrogen, the demand for electrons is skyrocketing. But Wales, especially South Wales, is hitting a hard stop.
Major investors like RWE, with decades of commitment and billions already invested into Wales’s energy future, are now seeing connection dates for new projects that are a decade away, and even previously agreed new connections sliding by 6 to 12 months. These aren’t minor projects, they are potential investments of hundreds of millions of pounds into battery storage, the hydrogen economy, and decarbonisation options for heavy industry. And when timelines shift unexpectedly, the ripple effects extend across procurement, supply chains, local employment, project economics, and loss of customer confidence. That kind of disruption is enough to derail a project business case completely.
One of the key dynamics here is the sudden explosion of demand from data centres, particularly along the M4 corridor. These facilities are, of course, a key part of the UK industrial strategy, and are now clearly defined as future critical infrastructure. They are also attractive commercially, offering strong returns for landowners and investors.
However, left un-managed, data centres will consume hundreds of megawatts of future grid capacity across South Wales, potentially locking out alternative long-term industrial development, including strategic investments in clean energy infrastructure. As an example, despite RWE creating its own microgrid-style connection for a major energy project, the reality of the current connection queue is there are simply no available megawatts until the end of 2034, effectively a decade away.
When a company with the means to build its own grid infrastructure is being told to wait nearly a decade, not because of technical barriers, but because the capacity has been consumed elsewhere, this becomes a serious problem for Wales.
Every delay at the grid level translates into delayed contracts for manufacturers and installers, disrupted timelines for local suppliers, and paused recruitment plans across the supply chain. We go back to market, we re-phase procurement, we re-evaluate project economics. This costs time, money, and often the confidence of investors.
We’re now in a global race for clean energy investment. Capital is mobile. Skills are mobile. If we can’t provide certainty and infrastructure then we lose the race, not just to other UK regions, but to other countries entirely.
National Grid, to their credit, are battling with an extraordinary challenge. They face immense pressure from every direction and have the un-enviable task of delivering the largest infrastructure upgrade for generations. The UK Government know this and have established the National Energy System Operator (NESO) to take a more strategic view of the UK’s longer-term needs. Their work starts now with Grid Reform, queue reprioritisation, and the Connections Accelerator recently announced in the UK Industrial Strategy. These initiatives will initially prioritise connections for the most developed and shovel-ready projects, followed by an overlay of a more strategic view of the energy and industrial mix we believe we need in the medium term. But there are only so many ways to re-prioritise the existing supply capacity before major investment is required.
There is a very clear role for Government here.
Government must ensure that the long-term trajectory of the critical infrastructure mix, from electrical energy to hydrogen networks and data centre capacity, is understood and managed via empowered organisations such as NESO. With many years of grid investment ahead, governmental oversight of priorities and phasing is essential.
There is also a critical role of Government to clearly communicate the need to the wider public, establishing without doubt the potential benefits of grid investment, and the very real negative impacts of failing to do so.
In Wales the situation is even more difficult.
There has been a long-standing political position in Wales that pylons can be avoided by undergrounding electrical infrastructure. The public have been led to believe that, despite undergrounding being circa five times as expensive, somehow project investment will still flow to Wales, and that the resultant jobs and supply chain benefits will still be captured, all without increasing the cost of energy to the consumer. That reasoning simply doesn’t stack up.
We urgently need a Wales-wide strategy that aligns infrastructure priorities with the wider UK nations. That includes:
- Clear national planning policy that recognises the strategic importance of grid capacity.
- A much more pragmatic narrative on targeted undergrounding, where the benefit is most valuable aesthetically.
- A clear vision, aligned with UK Government strategy on the future energy mix, including the growth trajectory of heavy demand-side requirements such as data centres.
- A clear communication to the UK Government and the National Energy System Operator of the need for accelerated upgrades to the major transmission links that are currently inhibiting investment in Wales.
- A major effort, supported by already-willing investors, to resolve the Mid-Wales transmission issue that is currently preventing Wales from accessing its energy resource.
Without immediate action in these areas Wales risks losing out on major industrial investment, including the proposed decarbonisation investment of current industry, because of grid congestion. South Wales, once a net exporter of electricity, is now a net importer, and the impact on the wider industrial base is clear.
The projects we’re trying to build aren’t theoretical, they’re entirely achievable, but they are being pushed into the future, or out of Wales entirely because of a system that hasn’t kept pace with the step change in ambition.
Regardless of individual beliefs over decarbonisation, if Wales is to participate in the upcoming multi-billion-pound wave of UK industrial investment, then we must treat grid capacity as the critical national priority it is.
Gridlock isn’t just a technical problem, it’s very much an economic problem that underpins the next generation of high-skilled, valuable jobs across Wales.
