Investment Surge to Boost Utilities Construction

Posted by Glenigan on 30th July 2024 -

Glenigan’s new mid-year Construction Industry Forecast 2024-2026 sees an upturn in utilities construction work as key drivers behind the growth in civil engineering activity in coming years. After a 15% rise in the value of utilities starts last year, they rose by a further 13% in the first four months of this year, compared to a year earlier.
 

This trend should underpin a predicted 6% rise in overall civil engineering starts this year and a further 4% growth in 2025.

The new government has already moved forward with new initiatives which augur well for energy-related construction work. The removal of key planning hurdles which effectively served to ban onshore wind farms should revive activity in the sector both on new projects and on schemes to ‘re-power’ older sites with more efficient, larger turbines. Lincolnshire, East Anglia, Yorkshire & Humber, and Devon and Cornwall are expected to be among the areas targeted by onshore wind farm developers.

Glenigan data includes details on various onshore wind farm projects at the planning stage which may benefit from the new government’s approach. One is Dunwan Dam Wind Farm near Glasgow where plans have been submitted by Wind Estate (UK) for a £10 million scheme involving five wind turbines, each up to 200 meters ‘tip height’, where work could start next spring (Project ID: 24187569).

Green energy schemes

Chancellor Rachel Reeves newly announced plans to invest £7.3 billion in green tech and energy schemes such as hydrogen and carbon capture also bodes well for new construction prospects in the sector. The schemes, to be funded via a new UK Infrastructure Bank, will aim to attract significant private investment.

Again, Glenigan data provides details on significant early-stage projects in the sector which offer potential new work. For example, detailed plans have been submitted for the £1 billion North Lincolnshire Green Energy Park, which includes facilities for CO2 capture and hydrogen production and storage – amongst much else (Project ID: 20446708).

Elsewhere, Heidelberg Materials has signed a ‘statement of principles’ with the government’s energy department and is awaiting a final decision on a planned £400 million carbon capture facility at Padeswood cement works at Mold in Clywd (Project ID: 22129023).

Meanwhile, the Labour government’s plans to set up a new organisation, GB Energy, to channel investments worth £8.7 billion into renewable energy projects, should also generate new construction activity.

As things stand, Glenigan data highlights a series of existing opportunities in the sector. One is the £41 million Three Oaks Renewable Energy Park at Driffield in Humberside where detailed plans have been granted for a scheme involving ground-mounted solar panels and where work is due to start later this year (Project ID: 22403817).

New energy secretary Ed Miliband’s swift approval this month for the controversial £600 million Sunnica Energy Farm in Suffolk underlines the new government’s positive approach to developments in the sector. Work on the 2,500-acre solar farm is set to start next spring and will run for 24 months (Project ID: 19093653)

Meanwhile, the emphasis on renewable energy projects will be in addition to National Grid’s £24.8 billion planned investment program in its transmission network, designed to handle new generating capacity and growing electricity demand.

Splurge in water investment 

The flow of civils contracts on water-related utilities work is also set to strengthen in the light of plans outlined by the regulator Ofwat earlier this month. Whilst the level of investment is lower than the companies’ original plans, it still involves a huge capital spending package by the water companies worth £88 billion over the 2025-2030 period.

It involves £35 billion of investment to cut pollution and improve water quality; a trebling of the investment over 2020-2025. It also includes spending £10 billion to upgrade some 2,500 storm overflows to cut spills and £6 billion to improve river water quality with improvements at over 1500 wastewater treatment works.

The new package also involves work to progress nine new reservoirs and seven large-scale water transfer schemes. Meanwhile, the water companies will be required to replace around 8,000 km of water mains pipes – a five-fold increase on the current 5-year period.

Glenigan data highlights the major projects in the industry’s long-term pipeline. These include Thames Water’s £1.5 billion Abingdon Reservoir in Oxfordshire, where engineering designers have recently been appointed (Project ID: 93116493), and Anglian Water’s £2.2 billion Fens Reservoir, where public consultations are being reviewed (Project ID: 22326269).

Meanwhile, feasibility studies are being carried out on the £469 million Severn Thames Transfer Solution which involves a pipeline to send water from Lake Vyrnwy and the River Severn to London (Project ID: 23113631).