Energy boost is needed in Scotland | Property Week

Currently, the legal process to document the appropriate rights for gas and electricity services to site can cause extreme delays in what is already a complex logistical and regulatory process. This is because Scottish developers must grant land rights for every piece of land that cables will run across or that apparatus, such as substations, will be situated on. This burdensome two-step process can also grow in complexity the more that third parties, such as landowners or banks, are involved.

The process begins with the developer and affected third-party landowners granting land rights to an independent distribution network operator (IDNO). It is the role of the IDNO to develop (with help from an independent connection provider, or ICP), own, operate and maintain the apparatus that serves the new development.

The administrative burden of this process is undoubtedly causing delays to developments

The IDNO then acts as an intermediary between the developer and the direct network operator (DNO) – which in Scotland is either Scottish Power or SSE – and grants onward land rights to the DNO. This is an intensely scrutinised process as the DNO must be satisfied that they are not opening themselves up to risk relating to the development site.

The administrative burden of this process is undoubtedly causing delays to developments, and conversations are ongoing to find ways to resolve this issue. For example, in England and Wales, the introduction of ‘incorporated rights’ has gone some way to streamline the process, as DNOs can rely on the rights granted by the developer in favour of the IDNO. In England, it is also more common for DNOs to waive the requirement for rights to be granted over roads subject to a Section 38 agreement, something that is not currently the case in Scotland unless adopted by the local authority.

The Scottish government could also take inspiration from the telecoms industry, which has mechanisms in place to install apparatus should a landowner refuse to engage with the formal rights process. This means that projects can continue to move forward regardless of approvals and it incentivises parties to engage. While perhaps heavy-handed, developers may argue there is precedent in other areas that could be drawn on in reform discussions for the housing industry.

Improving outcomes

While the conversation ramps up, developers should consider what they can do now to improve outcomes in a process that can feel frustrating. First of all, they should confirm the location of any apparatus at the earliest possible stage. This means developers can engage with the IDNO and DNO sooner. However, they should bear in mind that any changes to the site layout once submitted, in terms of design or conveyancing, will require fresh due diligence, potentially causing more hold-ups.

Third-party involvement should also be minimised wherever possible to keep the process moving forward. If they can, developers should place apparatus within their ownership or adopted areas. If this is not possible, engaging with third parties at the earliest opportunity is advised to avoid any issues or resistance further along in the process.

Finally, developers should consider document negotiation early on and bear in mind that DNOs are highly risk-averse. Any deviations or amendments from the DNO-approved IDNO documentation could have a significant impact on the proposed timetable, and therefore only essential or site-specific changes should be made.

While the path to getting services to sites in Scotland is currently complex, the national conversation is gathering pace. By understanding the changes made to legislation in England and Wales and seeking successful examples of change from other industries, all parties can work together to combat the housing crisis.

Nicky Grant is legal director at law firm Shakespeare Martineau