Infrastructure sector posts second consecutive triple digit gain in October

• Approvals for green energy planning applications continue to go through the roof
• Approvals demonstrate the government’s commitment to green energy transition
• Residential contract awards are up 41% as housebuilding looks to growth.
• Commercial & Retail projects see a strong month for contract awards rising 189% to £1.1bn

Approval of infrastructure projects increased 298% in October, the second consecutive month the sector has posted triple digit gains. In September approvals were up 136%, according to construction analysts Barbour ABI.

The huge gains are driven by big movements in green energy projects. Five renewable energy projects, all over £100m in value, drove the October gain. Ossian Offshore Wind Farm 3.6GW is the largest of these projects at £3.6bn. In the previous month 700MW and 1000MW Battery Storage Projects in Scotland and the North East were behind the big numbers.

The UK’s largest infrastructure approvals in October were worth around £3.5billion and included:

• Ossian Offshore Wind Farm (3.6GW) - Scotland
• Stanlow HyNet Hydrogen Production Plant - North West
• Cottam Solar ProjectEast (600MW) - Midlands
• The Balk, Almholme - Solar Farm (49.9MW) and Energy Storage System - Yorkshire and Humber
• Bob Lane Battery Energy Storage System (264MW) - South East

Barbour ABI head of business and client analytics, Ed Griffiths said

“Another mega month for renewable energy approvals demonstrates the laser focus the Labour government has on driving through a green energy transition at all costs.

We’ve seen a string of massive approvals in recent months, including one of the largest solar farms on record. The government seems intent on leaving the flood gates open to these kinds of project, even as protests mount about their potential impact on the countryside.”

The wider construction industry saw 44% and 59% gains in monthly approvals. in September, brand new applications also appear to be following the trend with a 18% increase in infrastructure projects entering the planning system, led by a series of battery storage projects and wind farms.

[edit] Contract Awards boost for housebuilders and commercial developers

Elsewhere housebuilding saw some positive signs as the government searches for ways to meet a 1.5million homes pledge. Whilst the overall value of contracts awarded for construction projects have remained stable, residential saw its highest month since January 2023 soaring 41% to £2.5bn, helped along by two projects totalling £540m in the North West.

Commercial & Retail projects saw a strong month for contract awards rising 189% to £1.1bn after the worst month this year in September with three projects in London worth over £100m help the sector.

In general, awards in October saw a decrease of 36% to £6.5bn returning to normal after an inflated September.

Griffiths continued: “Although we have seen a decrease in contract awards from last month, given the high value that came from a small number of projects, it is more realistically another flat month for awards overall.

The government's recent budget offered little in tackling the major risks to the industry. In fact, in a labour-intensive industry like construction, labour costs will likely increase putting more pressure on SME's.

The reform to apprenticeships under the new Growth and Skills Levy has the potential to help reduce the skills shortages but focus on construction apprenticeships will have to be pushed by the sector itself. Housebuilding and Infrastructure were areas of promise.

However, the number of housing starts and finishes has increased in recent months possibly showing an increased confidence in the sector.”

-- Barbour ABI

--Barbour ABI 10:53, 18 Nov 2024 (BST)

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