Utilities

Utilities – Overview

While project-starts, main contract awards and detailed planning approvals performed poorly against last year’s levels, growth in starts and contract awards on the previous quarter provides a boost to the development pipeline.

Adding up to £917 million, utilities work starting on-site during the three months to March increased 35% against the preceding three months but stood 28% lower than a year ago. The quarterly growth was due to major (£100 million or more in value) project-starts which, at £365 million, advanced 53% against the preceding three-month period but were 56% lower compared with a year ago. Underlying (less than £100 million) work starting on-site fell 3% against the preceding three months on a seasonally adjusted (SA) basis but grew 23% compared with a year ago to total £552 million.

At £1,120 million, utilities main contract awards increased 28% during the first quarter of 2023 but were 32% lower than a year ago. The steep decline against the previous year was due to major project contract awards which, at £567 million, fell 15% compared with a year ago but grew compared with the preceding three months when there were no major awards. Underlying contract awards slipped back 36% (SA) against the preceding quarter and 44% against the previous year to total £553 million.

Utilities detailed planning approvals totalled £958 million during the three months to March, an 18% decline against the preceding three months and a 72% fall compared with a year ago. At £407 million, main contract awards increased 16% against the preceding three months but declined 87% compared with a year ago. Underlying detailed planning approvals added up to £551 million, a 16% (SA) fall against the preceding three months. More positively, underlying approvals increased 64% against the previous year.

Utilities – Types of Projects Started

Adding up to £349.5 million, power generation project-starts dominated the utilities sector during the first quarter of 2023 with the value having increased 350 times against the previous year. The segment accounted for 38% of the total value, largely due to the commencement of the £250 million Sellafield Steel & Cladding contract (Project ID: 21561313).

Accounting for 23% of the sector, sea & river management project-starts also experienced a 36% growth against the previous year to total £208.6 million. Sewerage project-starts totalled £117.4 million, having increased 35 times to account for a 13% share. In contrast, water (-14%), renewables (-46%), power distribution (-93%) and harbour/ports (-92%) project-starts fell against the previous year to total £36.9 million, £175.3 million, £7.8 million, and £0.7 million respectively. Unlike last year, there were no waste projects starting on-site.

Regional Analysis – Project-Starts

The North West accounted for 36% of utilities work starting on-site during the first quarter of 2023 with the value adding up to £326 million. The value grew almost 58 times against the previous year, which was almost entirely due to the commencement of the £250 million Sellafield Steel & Cladding contract (Project ID: 21561313). The East of England also experienced a relatively strong period, with project-starts experiencing a 59% increase against the previous year to total £68 million. The East accounted for 7% of the sector.

Totalling £196 million, the South East accounted for 21% of utility project-starts, making it the second most active region despite a 45% decline against a year ago. Further decline was prevented by the sewage treatment works in Guildford worth £115 million (Project ID: 19396557). Scotland also experienced a 67% slump compared with the 2022 levels, bringing the total value down to £109 million, a 12% of project-starts in the sector. Projects starting on-site in Wales fell 84% to total £59, accounting for 6% of the total value.

Utilities Project-Starts during the Three Months to March 2023

Regional Analysis – Detailed Planning Approvals

The North West was also dominant in terms of utilities detailed planning approvals, accounting for 35% of the sector. The region experienced a tenfold growth against the previous year to total £335 million, with growth largely boosted by the approval of the £300 million Darwen Energy Recovery Centre (Project ID: 19185939). Scotland accounted for 21% of the sector, having more than tripled against the previous year to total £205 million, making it the second most active region for approvals.

London totalled £116 million, a 12% share of all utility approvals, having increased more than 20 times compared with last year’s levels. This growth was predominantly due to the approval of a £107.01 million power station in Tower Hamlets (Project ID: 20374250). Northern Ireland also experienced a strong period, having tripled against the previous year to total £94 million, accounting for a tenth of consents in the sector. However, most areas of the UK performed poorly in terms of utilities project approvals, including the South West where the value fell 76% compared with a year ago. Due to this, the region accounted for just 4% of approvals, totalling £39 million. Accounting for a 3% share, the East of England experienced the steepest fall at 99%, bringing the value down to £33 million.

Utilities Detailed Planning Approvals during the Three Months to March 2023

Forecast Construction-Starts for Utilities

Note: Underlying projects are schemes with a construction value of £250,000 to £100 million.  Forecast updated in April 2023 p – provisional, f – forecast.
 Source: Glenigan