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By Eshe Nelson
Reporting from London and Cambridgeshire, England
In rural Cambridgeshire, a new British semiconductor company is poised to expand beyond its lab and open a production base. But the company’s ambitions came with unforeseen costs to bring enough electrical power to the new site. The future bill? A million pounds.
Paragraf makes chips based on graphene, an ultrathin carbon. Their devices can be used to detect faults in electric vehicle batteries to prevent fires or to run quantum computers. After obtaining it in 2023, Paragraf planned to develop its weekly production ranges 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 Simon Thomas, Paragraf’s chief executive.
“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 you can do now, it’s 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 peak after more than a decade of low economic growth and wage stagnation.
There’s a “prevailing sense that things are working” in the economy, said Raoul Ruparel, director of the Boston Consulting Group’s Center for Growth and a former special adviser to the British government. This includes a lack of affordable housing, weak public services, and added transportation and long wait times at the hospital.
With the economy expected to stagnate this year, two concepts have emerged to revive it: speeding up upgrades to the power grid and making it less difficult to get approval for plans for new construction. Analysts and policymakers hope those projects can unlock infrastructure investment, carbon emissions and generate much-needed productivity growth.
The challenge is significant: in the last five years, the number of applications for connection to the electricity grid, many of which fear the production and storage of solar energy, has increased tenfold, with waiting times of up to 15 years. The lack of investment limits the transport of reasonable power from Scottish wind farms to England’s population centres and increases delays for those with gigantic energy needs, such as laboratories and factories. Laws that give local governments ample power to make plans are blamed for Britain’s housing shortage and the blockage of the structure of the pylons needed to transport electricity from offshore wind farms. Residents’ objections to noisy structures and landscaping adjustments are a hindrance.
Planning and network connections are the foundation on which everything else rests, sir. A functional network that provides reliable energy at low cost and a planning formula that allows the structure of all types of infrastructure are “fundamental to having a productive economy and a more efficient economy,” he added.
Planning and network connections, once specialized interests, have taken on a dominant importance. At the annual convention of the opposition Labour Party this fall, Keir Starmer, the party’s leader, vowed to “tear down” Britain’s formula of “restrictive” plans and get the grid up for power. “much faster” if he wins the race for prime minister in the general election. The upcoming general election, scheduled for 2024. La development of plans, and network reforms were two of the most important adjustments in the latest budget update to bring it to life. boosting growth, said Jeremy Hunt, Chancellor of the Exchequer.
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 Natasha Conway, the chip maker’s research director.
The company, which has about 120 employees, manufactures sensors used to measure magnetic fields. Lured by the CHIPS Act, which provides subsidies to semiconductor manufacturers, he settled in the United States. But in the end, Mr. Thomas decided to stay in Britain and set up a domestic production company.
“Graphene was isolated and invented here in the U.K.,” 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 with the electrical power they wanted, Mr. Thomas moved to a warehouse 10 miles from the lab that would need an electrical upgrade. Instead of waiting for an upgrade organized through the city hall, the company paid a grid operator to install a connection to major networks. The solution will allow work to start up sooner, but will incur costs of £1 million ($1. 27 million), adding the value of upgrades to the first lab, the company said. Paragraf expects initial production to begin in the second half of 2024, about a year and a half after securing the site.
In November, the government announced measures to speed up planning approval for major projects and impede NIMBY-ism. The moves would, 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.
These projects have been welcomed through the National Infrastructure Commission, which advises the government. Most of the reforms stem from the commission’s own recommendations, but the organization needs the government to approve more to compensate other people when primary projects such as housing developments or power projects. Streaming services 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 John Armitt, the chair of the commission. “There has got to be more to Britain in the future than that.”
The failure to execute primary projects – such as the government’s resolution in October to scrap a key component of a planned high-speed rail line, leading to delays and overspending – is weighing on investors’ “prospects on whether the UK is a hot spot”. “Coming soon,” Armitt said.
And Britain needs more investment: The commission estimates at least £70 billion per year in the 2030s, an increase from an average of about £55 billion per year over the last decade.
Notably, the UK government deterred investors by converting planning measures in 2015 and then tightening them further in 2018, so a single objection could thwart a planning application, thereby banning onshore wind in England. John Fairlie, representative in the wind industry at the time.
Mr. Fairlie is currently a managing director at AWGroup, a land development and renewable energy company that recently got an onshore wind turbine up and running in Bedfordshire, in the east of England, that will generate enough electricity to power 2,500 homes. Because of planning restrictions and grid connection delays, the project took seven years to complete.
In months, “politics has replaced, but it hasn’t replaced enough,” Fairlie said.
The wind turbine, which was in the planning due to stricter rules, managed to gain approval in 2017. Since then, the main source of delay has been getting a connection to the grid. Advances in wind power generation allowed the company to install a more resilient turbine. , which required more connection to the grid. ” It takes a long time to get there,” Mr. Fairlie said.
Next year, the turbine will be used to build an electric vehicle charging station, and the company plans additional projects to build subdivisions powered by local renewable energy sources, thus preventing the grid from becoming congested with delays.
As Britain seeks to emerge from a long era of slow expansion and lost productivity, while still meeting its targets to reduce carbon emissions, businesses, economists and other experts say the government will have to urgently focus on such reforms.
“There’s lots of acknowledgment” of the problems, Mr. Armitt said. “We’re 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,” he said, “and as long as you’re 10 years or so away, well, it’s too easy to kick the can down the road.”
Eshe Nelson is a reporter based in London, covering economics and business news for The New York Times. More about Eshe Nelson
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