LONDON – In the countryside of Cambridgeshire, a British semiconductor start-up was ready to expand beyond its lab and open a manufacturing base.

But the company’s ambitions came with unexpected costs to bring enough electricity to the new site. The potential bill? £1 million (S$1.7 million).

The company, Paragraf, makes chips using graphene, or ultra-thin carbon. Its devices can be used to check for defects in electric vehicle (EV) batteries to prevent fires, or work in quantum computers.

After acquiring the site in 2023, Paragraf made plans to ramp up its weekly manufacturing capabilities from tens of thousands of devices to millions.

But the cost of increasing the power supply to the location, a result of years of underinvestment in Britain’s electricity grid, is diverting money – and time – from hiring and equipment purchases, said Dr Simon Thomas, Paragraf’s chief executive officer.

“Our biggest kind of advantage when you’re a company like ours is the pace you can move,” he said.

Delays are not just affecting what can be done now, they are also “affecting how successful you’re going to be in the future”, he added. “It’s extremely frustrating.”

Up and down the country, complaints about the lack of investment in Britain are reaching a crescendo after more than a decade of low economic growth and wage stagnation.

There is an “overriding sense of things not working” in the economy, said Mr Raoul Ruparel, the director for Boston Consulting Group’s Centre for Growth and a former British government special adviser.

This includes a lack of affordable housing, weak public services including transportation, and long hospital waiting times.

With the British economy expected to essentially flatline in 2024, two ideas to reignite it have stood out: accelerate electrical grid upgrades and make it easier for new construction to win planning approval.

Analysts and lawmakers hope that these initiatives can unlock investment in infrastructure, cut carbon emissions and deliver much-needed productivity growth.

Tackling the logjams

The problem is substantial: In the past five years, the number of applications to connect to the electricity grid – many of them for solar energy generation and storage – has increased tenfold, with wait times of up to 15 years.

The underinvestment is restricting the flow of cheap energy from Scottish wind farms to population centres in England and adding to the delays for those with high power needs, such as laboratories and factories.

Laws that give the local planning authorities considerable power are blamed for Britain’s shortage of housing and blocking the construction of pylons needed to carry electricity from offshore wind farms. Residents’ objections to noisy construction and changes to the landscapes have been a stumbling block.

Planning and grid connections are the very basics on which everything else builds, Mr Ruparel said. A functioning grid that delivers reliable low-cost energy and a planning system that allows all types of infrastructure to be built are “fundamental to having a productive economy and having a more efficient economy”, he added.

Planning and grid connections, once relatively niche interests, have taken on mainstream importance. At the opposition Labour Party’s recent annual conference, Mr Keir Starmer, the party leader, promised to “bulldoze” through Britain’s “restrictive” planning system and get the electricity grid moving “a lot faster” if he wins the race for prime minister in the next general election, expected in 2024.

Chancellor of the Exchequer Jeremy Hunt said planning and grid reforms are two of the most crucial changes in the latest budget update for reviving growth.

At Paragraf, which was spun out of the University of Cambridge six years ago, “we want to go faster than some of the infrastructure will let us”, said Dr Natasha Conway, the chipmaker’s research director.

The company, with about 120 employees, makes sensors that are used to measure magnetic fields. Attracted by the Chips Act, which provides subsidies to semiconductor makers, it had considered setting up production in the United States. In the end, though, Dr Thomas chose to stick to Britain and establish a domestic manufacturing business.

“Graphene was isolated and invented here in the UK,” he said. “Are we just going to let all of the value go somewhere else?”

But securing enough electricity has not been easy.

After months of searching for a site that would come with the power the company needed, Dr Thomas said, he settled on a warehouse 16km from the lab that would need power upgrades. Rather than wait for an upgrade arranged by the local council, the company moved ahead by paying a grid operator to install a connection to the main grid.

That solution will allow work to get started sooner but carry costs coming to £1 million, including the price of upgrades to the first lab, the company said. Paragraf expects to have initial production under way by the second half of 2024, about 1½ years after getting the site.

In November, the government announced measures to speed up planning approval for major projects and impede Nimbyism. The moves will, among other things, give communities financial benefits for approving grid infrastructure projects in their area and shake up the first-come-first-served queue for grid connections to remove stalled projects.

The plans have been welcomed by the National Infrastructure Commission (NIC), which advises the government. Many of the reforms are plucked from the commission’s own recommendations, but the group wants the government to go further in compensating people when important projects such as housing developments or electricity transmission facilities are built nearby.

The country needs to overcome a “desire to maintain a chocolate box image of Britain, which is nice for tourists coming in and looking at the quaint old villages”, said NIC chair John Armitt. “There has got to be more to Britain in the future than that.”

The inability to get major projects built – such as the government’s decision in October to cut a key part of a planned high-speed rail line, citing delays and overspending – affects “the view of investors as to whether or not the UK is a worthwhile place to come”, Mr Armitt said.

Also, Britain needs more investment: The NIC estimates at least £70 billion a year in the 2030s, an increase from an average of about £55 billion a year over the past decade.

Rules discourage investment

One way the British government turned off investors was by changing planning measures in 2015, and tightening them further in 2018, so that a single objection could upend a planning application – effectively banning onshore wind in England.

Mr John Fairlie, who was a consultant in the wind industry at the time, is currently a managing director at AWGroup, a land development and renewable energy company that recently had an onshore wind turbine up and running in Bedfordshire, in the east of England, that will generate enough electricity to power 2,500 homes. Due to planning restrictions and grid connection delays, the project took seven years to complete.

In the past few months, “policy has changed, but it has not changed enough”, he said.

The turbine, which had been in the planning process as rules were tightening, was able to win approval in 2017.

Since then, the main source of delays has been securing a grid connection. Advancements in wind energy technology allowed the company to install a more powerful turbine – which needed a bigger grid connection.

“It just takes a long time to achieve that,” Mr Fairlie said.

In 2024, the turbine will be used to directly power an EV charging station, and the company is planning more projects where it builds housing developments that are powered directly by local renewable energy sources, avoiding the grid encumbered by delays.

As Britain seeks to escape from a long stretch of slow growth and lost productivity – while meeting targets to reduce carbon emissions – companies, economists and other experts say the government urgently needs to commit to these reforms.

There is a lot of acknowledgment of the problems, NIC’s Mr Armitt said.

The country is “great on ambition” but not turning it into action, he added, which is particularly concerning around net-zero emissions goals.

“(What is) increasingly becoming the fear of many people is that we’ve set ourselves some tough targets, and as long as you’re 10 years or so away, well, it’s too easy to kick the can down the road,” he said. NYTIMES