For more information, contact:
Peter Feehan
Partner
Turning the lights on at Ebbsfleet Garden City
The Ebbsfleet Garden City scheme, one of the largest housing projects of its type in Europe, was originally granted planning consent back in 2002. Over 15 years later it had delivered just 65 of the planned 15,000 homes.
The project had stalled, partly due to the difficulties in attracting housing developers without the right utility infrastructure in place. A fresh approach was needed.
The challenge
Utility provision at city scale presents a problem in some countries. In the UK regulatory restrictions prevent electricity network operators from passing on the capital cost of infrastructure expenses "ahead of need". Network operators will not usually forward fund the network. They will only invest if there is a need to connect a third party. This has been a major inhibitor to new housing and infrastructure provision in the UK.
This dilemma prompted the UK government to set up the Ebbsfleet Development Corporation (EDC) in 2015. This would help accelerate delivery of the Garden City by establishing the right utilities infrastructure.
EDC wanted to provide developers with an "oven ready" site that could deliver housing at pace and scale. The only way to do this was to:
- Find a mechanism which would allow forward funding of the electricity infrastructure;
- At the same time create a legal mechanism to recover the investment.
Pinsent Masons was tasked with finding an answer.
Nicola Coppen
Utilities lead at EDC
I was very impressed with Pinsent Masons. They were very professional and efficient. They gave us confidence that what we were asking them for was on the right route and where we had changes and a couple of curve balls came in, it did not throw them off.
The solution
We used an innovative two pronged approach to secure the deal. First, the team worked with UK Power Networks and the UK government to ensure that previously untested legislation and established principles in the Electricity Act 1989 could apply to EDC. This would enable it to recoup its funding. This model also needed to be reconciled with relevant electricity network codes and electricity industry practice.
This process, and our discussions with the Infrastructure Projects Authority, produced a positive result. The primary legislation was amended, unblocking the issue and ensuring other bodies would be able to consider this approach in future.
Secondly, the team negotiated a contractual approach with UK Power Networks, which echoed the recovery mechanism under the legislation. This ensured that EDC will recoup its funding, via one mechanism or the other.
This was a trailblazing project, with many interested parties and advisors working across multiple workstreams. We used efficient and effective project management techniques to ensure that all activity was coordinated and stakeholders had access to the right information at the right time.
Impact
In July 2017, following approval from regulator OFGEM, EDC signed a groundbreaking deal with UK Power Networks to:
- Invest in the electricity infrastructure;
- Supply up to 15,000 homes and the new city centre over the next 15 years.
The key issue the firm unlocked was finding a solution to bring forward the investment "ahead of need". Certain routes to achieving this, which have been blocked since the privatisation of the UK energy sector in 1989, have been unblocked as a consequence of our work.
The UK government has openly stated that without the framework devised by Pinsent Masons, many future strategic infrastructure projects in the UK would not come forward within the committed timescales.
Further, our solution is now being used as the blueprint for delivering utility infrastructure across all major UK projects.
This firm has subsequently been asked to assist on similar UK developments including: Cambridge and Peterborough Combined Authority on key Mayoral housing infrastructure projects Manydown and Wisbech Garden City.
