Auction scarce grid connections and let firms build their own power links

## Summary Firms that want a grid connection in congested parts of Great Britain would bid for it at auction instead of waiting in a queue, and would lose any capacity they did not use within 24 months. Businesses could also build their own power lines to nearby generators and pay for local grid upgrades themselves. Together these changes should speed up investment in factories, data centres and generation, which raises growth. ## Objective Connection queues delay viable projects by years. Speculative applications hold capacity they never use, and firms cannot easily bypass the grid even when a generator is close by. The policy would raise business investment by bringing forward projects that depend on a connection. It would also lower electricity costs, affecting prices and productivity, by recycling auction proceeds into lower network charges and allowing cheaper private supply. ## Measures 1. **Connection auctions.** The National Energy System Operator (NESO) would designate constrained zones, assumed at about 25 to 35 transmission and distribution areas. In those zones, new and released connection capacity of 1MW or more, for both demand and generation, would be allocated by six-monthly sealed-bid, pay-as-clear auctions with an Ofgem-set reserve price. Ofgem would regulate the process and NESO and the distribution network operators (DNOs) would administer it. Projects already holding Gate 2 offers would keep their positions. 2. **Use-it-or-lose-it.** Winners would have to reach a defined construction milestone within 24 months. Otherwise the capacity would return to the next auction, and the winner would forfeit a deposit of 10% of its bid, assumed at £10,000 per MW minimum. 3. **Recycling proceeds.** Net auction proceeds and forfeited deposits would be ring-fenced and used to reduce Transmission and Distribution Use of System charges in the following charging year. 4. **Private wires.** Businesses could build, own and operate private wires to generators within 10km, for up to 100MW, without a supply or distribution licence. This would replace the current 5MW class-exemption ceiling and would cover GB only. 5. **Self-funded reinforcement.** Firms could pay for, and use accredited contractors to deliver, grid reinforcement needed for their connection. Network operators would have to approve designs within 3 months. Ofgem would set a statutory deadline and compensation for delays, and the assets would be adopted by the network operator. ## Timing and phasing - **2027-28:** Legislation would be passed. NESO would designate zones, and Ofgem would consult on the auction rules and reserve prices. - **2028-29:** The first auction would be held in April 2028. The private-wire exemption and the 3-month approval duty would take effect from April 2028. - **2029-30:** Auctions would continue twice a year. - **2030-31:** The first use-it-or-lose-it returns would occur from April 2030, and the second wave of zones would be designated. - **2031-32 to 2032-33:** The regime would be in steady state, with a review in 2032. ## Cost and financing All figures are cash terms, in £bn, on top of the March 2025 baseline. | | 27-28 | 28-29 | 29-30 | 30-31 | 31-32 | 32-33 | |---|---|---|---|---|---|---| | Exchequer cost | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | | Auction proceeds recycled to network charges (assumed) | 0.0 | 0.2 | 0.4 | 0.5 | 0.5 | 0.5 | - The policy needs no public funding. DESNZ design costs, below £0.01bn, would be absorbed within the existing departmental settlement. - Ofgem and NESO running costs, assumed at about £0.015bn a year, would be recovered through licence fees and network charges. - Auction proceeds are assumed to sit within the regulated network revenue framework and to be fiscally neutral. If the ONS classified them as government receipts, they would score as equal receipts and spending. ## Delivery **Legislation.** - Clauses in an Energy Bill would be introduced in 2027 to give NESO and Ofgem auction and revenue-recycling powers and the statutory approval deadline. - An amended Electricity (Class Exemptions from the Requirement for a Licence) Order would be made under section 5 of the Electricity Act 1989. - Changes would be needed to the Connection and Use of System Code (CUSC) and to DNO licences. **Responsibility.** DESNZ would own the policy. Ofgem would regulate, and NESO and the DNOs would deliver. **Main risks.** - Bid prices could deter smaller firms. - Firms might game milestones. - The auctions could interact with Gate 2 and the Clean Power 2030 plans. - Network operators may lack capacity to meet approval deadlines. - Private wires could raise safety and consumer-protection concerns. - Network costs could shift onto remaining grid users. - Legal challenge from existing queue holders is possible. ## Relation to the baseline The March 2025 forecast includes no specific adjustment for connection reform. Ofgem approved NESO's Gate 2 "first ready, first connected" reform in April 2025, after the forecast was finalised. It is now existing policy and should be treated as part of the counterfactual. Baseline electricity prices reflect Ofgem price-cap and network-charge assumptions current at March 2025. Only the following should be analysed as additional: - auction allocation - the 24-month milestone - recycling of proceeds - the expanded private-wire exemption - self-funded reinforcement

The proposal would auction scarce grid connection capacity in 25 to 35 constrained GB zones from April 2028. It would also add a 24-month use-it-or-lose-it rule, recycle about £0.2bn to £0.5bn a year of proceeds into lower network charges, raise the licence-free private-wire limit from 5MW to 100MW, and let firms pay for their own grid reinforcement. Gate 2 'first ready, first connected' is already in the counterfactual, so only these extra elements are scored. They are mapped to three policy levers: total gross fixed capital formation (IF), and through it business investment (IBUS), rises by up to ≈0.45% from 2030 after a small pause in 2027; trend output (TRGDP) is ≈0.03% higher by 2032; and the consumer prices index (CPI) is ≈0.01% lower by 2031, net of cost shifting. Real GDP (GDPM), total imports (M) and total hours worked (HWA) are exogenous in this version of the model, with the change in inventories (DINV) as the expenditure residual, so the judged output, import-leakage and employment effects are imposed on those variables too. There is no direct Exchequer cost, so the fiscal effect comes entirely from the extra activity, net of full-expensing relief on the new investment.

### Interpretation The proposal would replace first-come queuing for new and released grid connection capacity of 1MW or more. It would apply in roughly 25 to 35 transmission and distribution zones in Great Britain that NESO designates as constrained, using six-monthly sealed-bid, pay-as-clear auctions from April 2028. Winners would have to reach a construction milestone within 24 months or return the capacity and forfeit a 10% deposit. Net proceeds, assumed to rise from ≈£0.2bn to ≈£0.5bn a year, would cut transmission and distribution use-of-system charges in the following charging year. Firms could also build private wires of up to 100MW to generators within 10km without a licence, up from a 5MW exemption today. They could fund and deliver their own reinforcement, and network operators would have to approve designs within three months. The baseline is the OBR's March 2025 forecast rolled forward to 2032. It treats Ofgem's April 2025 approval of the Gate 2 'first ready, first connected' reform as existing policy, so much of the gain from clearing speculative applications is already in the counterfactual. Only the incremental elements are scored: price-based allocation, the 24-month milestone, recycling, larger private wires and self-funded reinforcement. Legislation would pass in 2027 and the measures would bite from April 2028. The OBR model has no variable for grid connections, so the policy is mapped to the closest exogenous levers. The main one is total gross fixed capital formation (IF), which feeds business investment (IBUS) one-for-one through the investment identity. IF is raised by ≈£65m a quarter in volume terms from 2028Q2, about 0.1% of business investment. That rises to ≈£300m a quarter (≈0.45%) from 2030, then eases to ≈£275m (≈0.40%) in 2032 as some projects that were merely brought forward would have connected anyway. A small dip of ≈£15m a quarter is applied through 2027, because new applicants in zones likely to be designated would wait for the first auction. Two smaller levers capture supply and prices. Trend output (TRGDP) is raised by ≈0.03% by 2032 for the larger capital stock and better use of scarce capacity. The consumer prices index (CPI), which drives the consumer expenditure deflator (PCE), is shaded down in three steps from April 2029 to April 2031, reaching ≈0.01% for the net effect of recycled network charges. Real GDP (GDPM), total imports (M) and total hours worked (HWA) have no equations in this version of the model, and the change in inventories (DINV) is the expenditure residual, so an IF shock on its own would be booked as lower inventories rather than higher output. The judged effects on output, imports and employment are therefore imposed on GDPM, M and HWA directly. The proposal states that auction proceeds would sit inside the regulated network revenue framework, so no public spending or receipts variable is shocked directly. The classification risk this carries is noted separately. The proposal's table shows £0.2bn recycled in 2028-29, but recycling 'in the following charging year' after an April 2028 auction implies bill cuts from April 2029, so the costing follows the second reading. ### How it works through the OBR model 1. **The policy relaxes a quantity constraint rather than cutting the price of capital.** In the OBR investment block, the desired capital stock (KSTAR) is set by KSTAR = exp(log(MSGVA) − 0.4 × log(COC) + 2.43). Here market-sector gross value added (MSGVA) captures demand and the user cost of capital (COC) captures taxes and financing costs. A connection reform does not change the corporation tax rate, allowances or interest rates that make up COC, and auction bids would if anything add slightly to project costs. Its effect is that projects firms already want to build can start sooner. The impulse is therefore imposed directly on investment, which in this version of the model is an identity off total investment, rather than routed through the cost of capital. Intuitively, a developer with finance and a site but no connection date is not short of incentive; it is short of a plug. 2. **Earlier connections lift business investment by up to ≈0.45%, after a small pause in 2027.** Because IBUS = IF − GGI − PCIH − PCLEB − IH − IPRL, each extra pound of total investment is an extra pound of business investment. The costing assumes ≈£1.5bn a year of extra cash investment at the 2030-31 peak, against a baseline of ≈£330bn. It comes from three sources: data centres, batteries and solar co-located on 100MW private wires; electrification projects that win auction capacity ahead of weaker holders; and reinforcement that firms choose to fund rather than wait for. About half is genuinely additional and half is brought forward from later years, which is why the uplift eases to ≈0.40% by 2032. In 2027 business investment dips by ≈0.02%, because applicants would rationally wait for the auction rather than join a queue about to be replaced. 3. **A large share of the spending leaks abroad through imports.** The model weights total investment's import content at MIF = 0.234 × IF. Transformers, switchgear, battery cells, solar modules and data-centre servers are more import-heavy than average, so the costing assumes ≈35% of the extra spending is imported. That leaves a direct demand boost to output (GDPM) of ≈0.03% at the peak: the 0.45% rise times business investment's ≈10% share of GDP times the ≈65% that stays at home. Total imports and GDPM are both exogenous in this version of the model, and DINV = (GDPM + M − SDE) − CGG − CONS − VAL − IF − X takes up any gap, so this leakage is an analyst adjustment rather than an equation result: M is raised by ≈35% of each IF step, ≈£105m a quarter at the peak, and GDPM by the remaining ≈65%. 4. **A bigger capital stock gradually raises potential output.** The market-sector capital stock (KMSXH) evolves as KMSXH = IBUSX/1000 + KMSXH(−1) × (1 − 0.022), so each quarter's extra investment adds to capital while 2.2% a quarter wears out. By the end of 2032 the cumulative addition is ≈£4.5bn, ≈0.2% of the market-sector stock. With a capital share of ≈0.3 that would lift potential output by ≈0.06%. The costing roughly halves this to ≈0.03% of trend output, for two reasons: new generation partly displaces capacity already in the Clean Power 2030 baseline, and data-centre IT kit depreciates fast. It does add a small allocative gain, because capacity would go to the highest-value users rather than the earliest applicants. Real GDP is ≈0.05% higher by 2032: roughly 0.03 percentage points from demand for the investment itself and 0.02 points from the larger productive capacity. TRGDP feeds only the output gap (GAP = GDPM / TRGDP × 100 − 100) in the model, so this supply-side increment is also written into the GDPM shock, which reaches ≈£360m a quarter in volume terms in 2032; the part not matched by extra consumption, ≈£100m a quarter by 2032, is absorbed by the inventories residual. 5. **Households gain modestly through jobs, wages, wealth and slightly lower bills.** Consumption (CONS) responds to real household disposable income (RHHDI = 100 × HHDI / PCE, where HHDI is household disposable income). The short-run elasticity is ≈0.10 and the long-run elasticity in the error-correction term ≈0.44, plus smaller wealth terms. Extra market-sector output lifts market-sector employment (EMS) and the wage bill. Equity prices rise with nominal GDP in the model, nudging up household financial wealth. From April 2029 recycled proceeds cut network charges, and households keep ≈£0.12bn a year net by 2032. Together these raise RHHDI by ≈0.04% and consumption by ≈0.02% by 2032. The build is slow because wages lag output and consumption closes only about an eighth of its gap to the long-run level each quarter. 6. **The labour market tightens only slightly because these projects are capital-intensive.** The employment equation for EMS has a short-run elasticity of ≈0.17 to lagged MSGVA and a unit elasticity in the long run, but in this version of the model it drives the wage bill rather than unemployment. Total employment comes from ETLFS = 1000 × HWA / AVH, where HWA and average weekly hours (AVH) are exogenous. Grid batteries and data centres employ few people per pound once built, and much of the construction uses specialist contractors who are already in short supply. A useful rule of thumb is that unemployment falls by roughly a third to a half of the demand-driven rise in output, known as the Okun relationship. On that basis HWA is raised by ≈0.11 million hours a week from 2029Q1, or ≈3,500 more people in work, so the unemployment rate (LFSUR) is ≈0.01 percentage points lower from 2029. The supply-side part of the output gain does not lower unemployment at all. 7. **Consumer prices edge down as network charges fall, net of cost shifting.** The consumer expenditure deflator follows CPI through PCE/PCE(−4) = CPI/CPI(−4). Electricity carries a CPI weight of ≈2.7%. Households' ≈£0.2bn gross share of the recycled £0.5bn trims domestic bills by ≈0.6%, worth ≈0.016% on CPI, with a little more as firms pass on part of their ≈£0.3bn saving. Several forces push the other way. Generators would build their auction bids into Contracts for Difference strike prices. Private-wire users would stop paying some network and policy costs, shifting them onto other bill payers. CPI has no equation in this version of the model, so these offsets are netted off by judgement before the shock is applied: the CPI index, ≈150 on a 2015 base, is cut by 0.006, 0.006 and 0.003 points in April 2029, 2030 and 2031 as proceeds build, ≈0.010% in total. A slightly tighter labour market does lift pay through the −0.0096 coefficient on the change in unemployment in the private sector average earnings equation (PSAVEI), the Phillips channel, but that wage pressure does not feed back into CPI here. The net effect is a PCE level ≈0.01% lower from 2030. 8. **Monetary policy and the gilt market have nothing material to react to.** Bank Rate (R) is held on its baseline path. The output gap moves by ≈0.02 percentage points and inflation by ≈0.01 points, both well inside what the Monetary Policy Committee would look through. Borrowing is slightly lower rather than higher, so there is no extra gilt supply, and the 20-year gilt yield (RL) is unchanged to two decimal places. The effective rate on bank lending to companies (RIC), which feeds the cost of debt in the user cost of capital, is also unaffected, so there is no feedback to investment through financing costs. ### Key assumptions - **Counterfactual baseline:** the OBR's March 2025 forecast, rolled forward from early 2030 to 2032 at ≈1.7% real growth and ≈2% CPI inflation. Gate 2 'first ready, first connected' is treated as existing policy. Nominal GDP is ≈£3.4tn in 2030 and ≈£3.8tn in 2032, and public sector net debt (PSND) is ≈£3.6tn (≈95% of GDP) at the end of 2032. - **Business investment base:** ≈£330bn a year in cash terms by 2030 and ≈£360bn by 2032 (≈9.5% of GDP), or ≈£66bn a quarter in volume terms. - **Investment impulse:** −0.02% in 2027, then +0.10% at end-2028, +0.30% in 2029, +0.45% in 2030-31 and +0.40% in 2032. That is ≈£5.2bn of extra cash investment over 2028-2032; this is analyst judgement, not an OBR equation. - **Shock mechanics:** the IF entries are cumulative increments in £m a quarter in volume terms. They give levels of −£15m (2027), +£65m (from 2028Q2), +£200m (2029), +£300m (2030-31) and +£275m (2032). M follows at ≈35% of each step, reaching ≈£105m a quarter at the peak. GDPM is raised to −£10m (2027), +£45m (from 2028Q2), +£135m (2029), +£205m (2030), +£280m (2031) and +£360m (2032) on a base of ≈£670bn to £715bn a quarter, and HWA by ≈0.11 million hours a week from 2029Q1. TRGDP rises in three steps of ≈£70m a quarter to ≈0.03%, and CPI is cut in three steps to ≈0.010% net. - **Additionality and bring-forward:** about half the extra investment is genuinely additional, covering projects that would otherwise not happen or would go abroad. The other half is brought forward from 2033 or later, which is why the uplift eases in 2032. - **Import content of the extra investment:** ≈35%, above the model's 23.4% weight on total investment, because grid equipment, batteries, panels and servers are largely imported. It is imposed directly on M because total imports are exogenous. - **Supply-side gain:** a capital share of ≈0.3 applied to a ≈0.2% larger market-sector capital stock. This is roughly halved for displacement within the Clean Power 2030 baseline and fast IT depreciation, giving ≈0.03% on trend output by 2032, with depreciation at the model's 2.2% a quarter. - **Recycling and bills:** proceeds of ≈£0.2bn, £0.4bn and then £0.5bn a year are recycled with a one-charging-year lag, cutting bills from April 2029. Households receive ≈40% of the reduction, and ≈40% of their gain is offset by private-wire cost shifting and Contracts for Difference pass-through. - **Capital allowances:** ≈60% of the extra investment qualifies for full expensing at the 25% main rate of corporation tax. About a quarter of that relief is deferred because claimants have no taxable profits yet. - **Monetary-policy reaction:** Bank Rate (R) is held on the baseline path and the 20-year gilt yield (RL) does not move. - **Delivery profile:** legislation in 2027 and the first auction in April 2028. Private wires and reinforcement take 12 to 24 months to build, the first use-it-or-lose-it returns come from April 2030, and the regime reaches steady state in 2031-32. Transformer and switchgear lead times and network operators' engineering capacity cap the pace. - **Fiscal treatment of proceeds:** treated as within regulated network revenues and fiscally neutral, as the proposal states. There are no Barnett consequentials because this is GB-wide regulation with no England-only spending. Almost all the uncertainty sits outside the OBR model, in the size of the investment impulse: how many projects would connect sooner than they would under Gate 2. That judgement has a wide range. If Gate 2 and the Clean Power 2030 connection reforms already clear most of the queue, or if equipment and engineering bottlenecks rather than allocation are the binding constraint, the incremental impulse could be close to zero. If 100MW private wires unlock a wave of co-located data centres, it could be double the central case. Output, receipts and the borrowing saving scale almost in proportion to this single assumption, so a range of roughly zero to −£2.5bn on cumulative borrowing is plausible. The bring-forward share matters next: if more projects are merely brought forward, the 2032 effect is smaller and more temporary. The import share, the supply-side haircut and the capital-allowance take-up each move cumulative borrowing by ≈£0.1bn to £0.3bn. The price effect is too small for its uncertainty to matter for the macroeconomy, although the household bill gain could vanish if private-wire cost shifting turns out larger than assumed. How auction proceeds are classified is a separate, binary risk to the fiscal presentation rather than to the economics. By contrast, the in-model relationships used here are comparatively firm: the investment and inventories identities, the 2.2% quarterly depreciation rate, the consumption and earnings elasticities and the link from CPI to PCE. ### Headline results Output (GDPM) is essentially unchanged in 2027, when the only effect is a ≈0.02% pause in business investment as applicants in prospective zones wait for the first auction. From 2028 the profile builds steadily. GDPM is ≈0.01% above baseline at the end of 2028, ≈0.03% by 2030 and ≈0.05% by 2032, equivalent to ≈£1.9bn of extra annual output. Business investment (IBUS) leads, peaking ≈0.45% above baseline in 2030-31 as private wires and self-funded reinforcement start to deliver. In the same period the first use-it-or-lose-it returns pass capacity to stronger projects. Investment then eases to ≈0.40% in 2032 as part of the boost proves to be projects brought forward rather than new ones. Consumption (CONS) lags behind, rising by ≈0.02% by 2032 as wages, employment, financial wealth and slightly cheaper electricity feed gradually into spending. The unemployment rate (LFSUR) is ≈0.01 percentage points lower from 2029, a small effect because the new projects use more capital than labour. The consumer expenditure deflator (PCE) is ≈0.01% lower from 2030 as recycled proceeds trim network charges, net of private-wire cost shifting and Contracts for Difference pass-through, and the 20-year gilt yield (RL) does not move. The slow, back-loaded shape reflects the delivery timetable as much as the economics. Nothing can connect under the new rules before the first auction in April 2028, private wires and reinforcement take 12 to 24 months to build, and the regime reaches steady state only in 2031-32. Beyond the horizon the investment uplift would keep fading as brought-forward projects drop out. The larger capital stock and better use of grid capacity would still leave a lasting, if small, gain in the level of output.

### Costing the policy - **Gross static cost:** £0.0bn. The proposal needs no Exchequer funding, so there is no mechanical change to public sector net borrowing (PSNB). DESNZ design costs of under £0.01bn would be absorbed within the department's existing settlement. Ofgem and NESO running costs of ≈£0.015bn a year would be recovered through licence fees and network charges. Auction proceeds are treated as fiscally neutral, as the proposal assumes. - **Capital-allowance cost on extra investment (full expensing):** +£0.6bn, adding to borrowing. Most of the ≈£5.2bn of extra business investment over 2028-2032 is plant and machinery that qualifies for full expensing, so firms deduct it from taxable profits upfront at the 25% corporation tax rate. The cost is trimmed because some developers have no profits to shelter yet. - **Demand feedback (IT / NIC / VAT on extra activity):** −£1.25bn. The investment-led rise in output adds ≈£3.4bn to nominal GDP over the horizon. At an average tax content of ≈37%, that brings in extra income tax, National Insurance, VAT and corporation tax. - **Supply-side receipts feedback (higher potential output):** −£0.4bn. The larger capital stock and better allocation of grid capacity add a further ≈£1bn to nominal output in 2030-2032. It is taxed at the same ≈37%, including business rates on new data centres and plants. - **Debt-interest saving (lower debt):** −£0.05bn. Borrowing is slightly lower from 2029, so there is slightly less debt to service at an effective rate of ≈4%. The 20-year gilt yield (RL) is unchanged, so there is no interest-rate effect on top. - **Net cumulative PSNB change:** −£1.1bn over 2027-2032. This is the sum of the rows above. Borrowing is ≈£0.5bn a year lower by 2032, about 0.01% of GDP: a small self-financing gain rather than a meaningful source of fiscal headroom. ### Debt path There is no upfront cost and the receipts gains build slowly, so public sector net debt (PSND) barely moves until 2029. It then falls below baseline by ≈£0.2bn at the end of 2029, ≈£0.6bn by the end of 2031 and ≈£1.1bn by the end of 2032, tracking the cumulative fall in borrowing. The baseline is ≈£3.6tn of debt, ≈95% of nominal GDP of ≈£3.8tn in 2032. On that base, the lower debt alone would cut the debt ratio by ≈0.03 percentage points (£1.1bn ÷ £3,800bn). A larger denominator adds to this. Nominal GDP is ≈0.045% higher: real GDP is up 0.05%, slightly offset by lower prices. On a 95% ratio that takes off a further ≈0.04 percentage points, so PSND/GDP is ≈0.07 percentage points lower in 2032. The denominator effect is larger than the debt effect here, as is typical of growth-led measures with no upfront cost. On the OBR's standard assumptions the proposal is mildly self-financing: it costs the Exchequer nothing directly and improves borrowing by ≈£0.5bn a year by 2032. The gain is too small, and too dependent on the uncertain investment response, to bank as headroom against the fiscal rules. If the ONS classified NESO's auction proceeds as public receipts, the lag before recycling could flatter debt by up to a further ≈£0.5bn without changing the underlying position.

### Overall pattern By 2032 households in aggregate would be ≈£0.25bn a year better off, ≈£9 a household. About £0.12bn comes from lower network charges once cost shifting is netted off, and ≈£0.14bn from higher profits reaching UK pension funds and shareholders. Most of the direct effect falls on businesses rather than households. Connecting firms would pay ≈£0.5bn a year in auction bids, passed back to all network users, while gaining years on their connection dates. A few hundred landowners would also see their sites become more or less valuable. In cash terms the gain rises with income, from ≈£5 a year in the poorest tenth to ≈£25 in the richest, because shareholdings are concentrated at the top. As a share of income it is almost flat at ≈0.02%, because the bill saving is a similar cash amount for every household, so the measure is broadly neutral. Borrowing would also be ≈£0.5bn a year lower by 2032, so once the public finances are counted the average household is a small net gainer, with no deficit-financed cost to pass on. ### Who gains - **Landowners near existing generators:** a one-off wealth gain of ≈£800,000 each for ≈250 households, ≈£0.2bn in total, not an annual income. Land within 10km of a wind, solar, gas or nuclear site would become usable for a 100MW data centre or factory on a private wire, so its value could rise far above farmland levels. The gain is concentrated on a few estates and farms, part of it would otherwise have gone to sites elsewhere, and planning permission is still needed to realise it. - **Households with private pensions or shares:** ≈£9 a year, ≈0.02% of income. Earlier and better-allocated projects would raise the profits of energy, infrastructure and data-centre firms. Only about a third of these reach UK households because many of the firms are foreign-owned, and most of it arrives through pension funds. - **GB households paying electricity bills:** ≈£4 a year, ≈0.01% of income. Recycled auction proceeds would cut network charges by ≈£7 a household by 2031-32. About £3 of that would be clawed back, because private-wire users would stop paying some network and policy costs and generators would pass their auction bids into Contracts for Difference prices. ### Who loses - **Landowners relying on future queue positions in constrained zones:** a one-off wealth loss of ≈£125,000 each for ≈400 households, ≈£0.05bn in total, not an annual income. Under first-come queuing, whoever held the land and the application in a congested zone could capture the scarcity value of a connection. Auctions would hand that value to all network users through recycled proceeds, although sites already holding Gate 2 offers would be protected. ### Paying for it and bond markets - **Future taxpayers:** a gain of ≈£15 a household a year, ≈0.03% of income. Borrowing would be ≈£0.48bn lower in 2032, because the extra activity raises receipts by more than the full-expensing relief costs. Dividing ≈£0.48bn by ≈29 million households gives ≈£16.5, shown as ≈£15 after rounding. This is an ongoing annual amount, not a one-off or a total over the horizon. - **Future taxpayers (lower debt):** public sector net debt (PSND) would be ≈£1.1bn lower by the end of 2032, or ≈£38 a household. That is a one-off total that future taxpayers would no longer need to service or repay. - **Mortgage borrowers:** £0 a year. The 20-year gilt yield (RL) does not move in the macro results, so nothing feeds through to new or refixed mortgage rates, and the bond-market effect is negligible. Under the fiscal rules this small saving would eventually be banked or handed back. If it funded a broad-based tax cut, higher-income households would gain most in cash terms because they pay most tax. Because the measure lowers rather than raises borrowing, financing it creates no hidden future losers. ### Across the income distribution The decile figures run from ≈£5 a year (≈0.03% of income) in the poorest tenth to ≈£25 (≈0.02%) in the richest. The bill saving is spread almost evenly at ≈£4 a household. Since the 2022 targeted charging review, the residual network charges that recycling would reduce sit mainly in standing charges, so the saving is worth proportionally more to low-income households. The profit gain is heavily concentrated in the top two deciles, which hold most directly owned shares and the largest private pensions. Together these leave the gain as a share of income almost flat across the middle and top, with a slightly larger proportional gain at the bottom. The averages hide the largest individual effects, which are changes in wealth rather than income and are not in the decile figures. A few hundred landowning households, mostly wealthy if not always high-income, would gain or lose six- or seven-figure sums in land value. Low-income households with high electricity use, such as those on storage heaters, would gain little more than average because the cut works through standing charges. Workers in electrical contracting and grid engineering may see some extra hours or pay that these static figures do not capture. ### Caveats The figures rest on three incidence assumptions. Households receive ≈40% of the cut in network charges; ≈40% of that gain is offset by private-wire cost shifting and Contracts for Difference pass-through; and about a third of extra company profits reach UK households. The business share of the bill cut is not allocated to households, except through the very small fall in consumer prices in the macro results. These are static first-round effects. They exclude the small second-round gains in jobs and wages and the negligible interest-rate effects. The land-value figures are judgements with wide ranges that depend on how many co-located sites are developed and on planning decisions. The estimates lean on the ONS Effects of Taxes and Benefits on Household Income, the Living Costs and Food Survey for electricity spending, Ofgem network-charge data and ONS statistics on the ownership of UK shares.