The dream for any government, of any political persuasion, is to take action that encourages economic growth, but which does not involve additional taxation or spending. With the Bill, the Government has hit on an idea that aims to achieve this. Admittedly, by changing planning laws there will be winners and losers, but to achieve the energy transition numerous businesses are committing to, assets need to be built. In response to the question “Does the energy transition need more regulation or less?”, the Government has clearly decided that “less” is the answer, at least in respect of planning.
In numerous key speeches prior to the Bill's introduction, the Government has emphasised that its enactment is central to the achievement of the Government’s Plan for Change milestone of fast-tracking 150 planning decisions on major infrastructure projects by the end of the current Parliament. The Bill is also vital to support delivery of the Government’s Clean Power 2030 target (see our previous bulletin) by accelerating the completion and grid connection of low-carbon energy projects. The Government’s aim to deliver a reformed “pro-growth planning system” seeks to counter lengthy consenting times for nationally significant infrastructure projects, reported in a National Infrastructure Commission April 2023 report to have increased from 2.6 to over 4 years between 2012 and 2023.1
Whist the proposed reforms extend to housing and commercial development as well as transport infrastructure, in this bulletin we take an initial look at the Bill in the context of energy and related major infrastructure projects.
The Bill
The substance of the Bill consolidates a number of proposed reforms over recent years, including key recommendations from Lord Banner KC’s Independent review into legal challenges against Nationally Significant Infrastructure Projects (NSIP). We focus on measures relating to: (a) reforms to the NSIP regime; (b) streamlining environmental approvals; and (c) other specific energy infrastructure reforms.
NSIP reforms
The Bill aims for a NSIP regime that delivers infrastructure projects faster. Among other measures, it provides for streamlined consultation requirements for projects: (a) removing the requirement to consult with ‘Category 3’ persons2 during the pre-application stage; (b) amending the application acceptance requirements so that the Planning Inspectorate may take a more proportionate approach in determining whether to examine an application and enable minor changes to be made in advance of a decision; and (c) introducing a new duty on consultees and local authorities to have regard to guidance issued by the Secretary of State in relation to how to engage with a NSIP project.
These changes sit alongside new requirements that National Policy Statements (NPS), the policies against which infrastructure applications are assessed, must be updated at least every five years. The Government is currently conducting a process to ensure the NPS policy framework necessary to deliver Clean Power 2030 infrastructure is in place.
The Bill provides that the potential number of development consent order (DCO) judicial reviews will be reduced from three to two, or to one for cases deemed “totally without merit” at an oral permission hearing (OPH). Claimants currently have up to three attempts to obtain permission: (a) in writing before the High Court; (b) at an OPH before the High Court if permission is refused at the written stage; and (c) at a hearing before the Court of Appeal if permission is refused at an OPH. The Bill provides for the written stage to be eliminated, with claims proceeding directly to an OPH. With one permission attempt, there would be no right of appeal if permission is refused. These changes follow findings in the Banner review that, since 2008 when the NSIP regime was introduced, only four of 137 DCO decisions were ultimately set aside on judicial review.
Streamlining environmental approvals
The Bill provides for the establishment of a Nature Restoration Fund (NRF) creating an alternative approach for developers to meet certain environmental obligations faster and at a greater scale, by pooling contributions in the NRF to fund larger strategic interventions.
The Bill also provides for an NRF-funded delivery body (Natural England or another body) to establish Environmental Delivery Plans (EDPs), determining standardised levels of environmental mitigation needed for certain protected sites or species and how these actions support nature recovery. Developers may act in accordance with an applicable EDP rather than undertake their own assessments (to the extent the EDP applies to the project's environment).
EDPs will have a six-week challenge window, and it will not be possible to challenge an individual project on this basis at the grant of planning permission stage. The delivery body establishing itself as fair and effective in its activities will be key.
Other energy infrastructure changes
The Bill aims to deliver a more efficient and predictable system for energy infrastructure projects by way of the following changes:
- Reforming electricity grid connection, including replacing ‘first come, first served’ (which gives little value to how ready a project is) to ‘first ready, first connected’, and prioritising low-carbon projects needed for the Government’s 2030 target. In announcing its February 2025 consultation on connection reform enablers, Ofgem confirmed that it was minded to accept this change and the Government claims in a pre-Bill press release that the wait for new grid connections will be cut by up to seven years.
- Establishing a new ‘cap and floor’ scheme to support investment into long duration electricity storage (LDES) projects which are critical to balance the grid network with the addition of intermittent renewable generation. In its consultation response in October 2024, DESNZ confirmed that the scheme would proceed and has now published with Ofgem a Technical Decision Document with details on how it will operate, with Ofgem planning to award first contracts in the first half of 2026.
- Modernising planning rules for clean electricity infrastructure in Scotland, such as onshore wind farms and pylons, reducing inefficiencies and delays. Further reforms on the Scotland side will align with these.
- Establishing a bill discount scheme for those living closest to new electricity transmission infrastructure. People living within 500 metres of new pylons will receive discounts of up to £2,500 over 10 years. Separately, new community funds guidance will set out how developers should ensure communities hosting transmission infrastructure can benefit.
- Extending the generator commissioning period for offshore electricity transmission from 18 to 27 months. This has the aim of reducing the number of offshore wind farms needing to apply for an exemption to this requirement when applying for licences to connect to onshore cables and substations. This answers a long-term request from developers given the practical difficulty of meeting the 18-month milestone.
- Replacing street works licences with permits to accelerate the rollout of electric vehicle charging points.
- Allowing forestry authorities in England and Wales to bring forward development proposals for renewable generation projects on the land they manage. These authorities will then be able to sell the resulting electricity.
Next Steps
It is important to note that the Bill forms just part, if a key part, of the Government’s wider planning reforms, as well as its clean power/net zero goals and other initiatives to boost investment in critical infrastructure and support economic growth. We have discussed these measures in previous bulletins and further significant changes in these areas are likely, particularly following the Government’s recent January 2025 commitment to deliver a new 10 Year Infrastructure Strategy, providing more certainty for supply chains and helping to unlock private investment.
Of course, these reforms alone may not deliver the Government’s goals and targets for 2030 and beyond, with many other factors being key, from interest rates and market incentives to effective supply chains.
We will continue to monitor UK energy and infrastructure developments. In the meantime, please contact your usual A&O Shearman contact for further discussion, or the named contacts on this bulletin.
Footnotes
1. https://nic.org.uk/studies-reports/infrastructure-planning-system/
2. People or organisations who might be entitled to make a relevant claim for compensation if consent is granted.