For many UK businesses, power has become a strategic consideration affecting investment, resilience and growth. Rising electricity costs, decarbonisation targets and increasing pressure on the electricity network mean occupiers must balance affordability, security of supply and sustainability: the three pillars of the energy trilemma.

Private wire (PW) renewable energy schemes offer a practical solution by supplying electricity directly from nearby generation assets. They can provide long-term price certainty, reduce exposure to network charges, support carbon-reduction objectives, and create additional value for both landowners and developers. The economic case is becoming increasingly compelling, as Figure 1 shows. Over the past 20 years, annual CPI change has averaged +2.9%, whereas electricity price change has averaged +9.5%.

PW installations offer a potential solution for several reasons:

• Protection from wholesale electricity price volatility because a set price for electricity is guaranteed by the renewable energy generator.

• Non-commodity charges, the costs of transporting energy, maintaining the grid and funding government environmental schemes, can be reduced, particularly when battery storage is included.

• Renewable generation directly connected to an energy user makes it easier to track carbon savings, aiding Scope 1 and Scope 2 decarbonisation efforts.

• Renewables and battery storage enhance power flexibility, allow load shifting, and may let businesses expand without upgrading grid capacity.

Private wire hotspots

PW viability changes with location, network charges, land availability, planning constraints and local electricity demand. As a result, some regions offer stronger opportunities than others. The pricing of electricity from a main supply is a postcode lottery as it varies based on Distribution Use of System (DUoS) charges. Each Distribution Network Operator (DNO) sets its own rates, and costs are recovered through standing charges or variable tariffs (see Figure 2). In some regions the variable charges are not applied, such as North Scotland and South England, whereas in others, such as North Wales and Southwest England, they make up a larger portion of a bill.

Regional DUoS charges play a significant role in project economics. South Scotland scores highly due to strong site availability and above-average DUoS costs, although project sizes remain restricted by network rules (see Figure 2). Southwest England also performs strongly, combining fewer constraints with a large pool of potential sites. While North Wales and Merseyside offer fewer opportunities, their higher DUoS costs can still create attractive PW propositions.

A virtual industrial estate

Identifying suitable locations is only the first step. Savills Research has modelled a hypothetical industrial estate and assessed how different occupiers respond to PW opportunities.

The commercial success of a PW scheme depends on the characteristics of the electricity consumer connected to it. Occupiers with large, predictable electricity demand profiles typically create the strongest business case, particularly where rising network charges and future electrification requirements increase the value of locally generated power.

The regional structure of the energy bill is another key indicator. The industrial estate was simulated on the outskirts of Warrington, across two sites in different DNO regions with vastly different DUoS charging structures.

The western site, located in the North, faces among the highest DUoS charges in the UK, while the eastern site is within the Northwest region where variable DUoS charges do not apply.

The next decision is which asset stands to benefit from PW renewables the most.

On this estate there are four units planned, each with its own electricity connection:

• 1,500 sqm of chilled retail space.

• 25,000 sqm of warehouse space.

• 60,000 sqm of chilled storage.

• 20,000 sqm of manufacturing.

The estate exhibits several characteristics that make it suitable for PW development:

• Land: Adjacent land is available for renewable generation.

• Cable route: No major infrastructure barriers exist between generation and demand.

• Planning: Solar development is viable and environmental constraints are limited.

• Electricity costs: Higher local electricity costs increase the value of PW generation.

The table below considers the optimal renewable energy option for each unit on the virtual estate. When considered in isolation, the chilled retail space and warehouse demands are too small to justify a PW connection. A smaller rooftop solar PV system would suffice in both cases.

The units with larger energy demand could benefit from solar PW, although the manufacturing occupier has applied for the British Industry Competitiveness Scheme (BICS) and the Energy Intensive Industries (EII) discounts, which may weaken the case for a PW scheme. Savills has considered the benefit from a PW for this occupier based on their exclusion from or inclusion in these electricity discount benefits.

Large electricity users such as chilled storage and manufacturing can benefit from PW generation where rooftop solar alone cannot meet demand. A 5.5 MW solar scheme can supply around one-third of the chilled storage facility's electricity demand, delivering annual savings of around £205,000. However, for manufacturing occupiers receiving BICS and EII discounts, PW may increase rather than reduce electricity costs.

The preferred option for chilled storage was an 8.5 MW solar and battery system, increasing renewable supply to 50% of demand while reducing peak import requirements. This creates sufficient electrical capacity to support future EV charging without requiring costly grid reinforcement. The manufacturing site would stand to gain significantly less from battery storage due to the BICS discount and batteries increasing the PPA rate.

PW is becoming an increasingly important tool for businesses seeking affordable, reliable and lower-carbon electricity. While viability depends on factors such as demand profile, network charges, land availability and planning constraints, successful schemes can provide long-term price certainty, increase project value and support future electrification. As pressure on the electricity network continues to grow, PW offers a practical route to unlocking development and supporting the transition to a lower-carbon economy.

Get in touch with our Energy Infrastructure team to find out how we can help you.