Developers frustrated by power delays

Industrial developers are waiting for up to two years to secure Western Power connections to their projects, prompting calls for the government to act.

Connection times to the state-owned utility have blown out since 2020, when COVID pressures exacerbated an already heated construction market.

Western Power has told developers they would face wait times of more than 21 months for complex commercial projects; an increase from just four months in 2019.

While the state-owned utility has improved wait times for power connections to land development projects, industrial projects are still being hampered by delays.

Realside Ovest chief executive Julie Drago, who is one of the state’s largest private industrial developers, said the situation was the worst she had ever seen it.

“It is not getting any better,” Ms Drago told Business News.

“We’re waiting for up to two years to get connected.”

She said for every project her company was currently constructing, the building was finished before a connection to the electricity grid was in place.

In some instances, Realside Ovest has installed generators to get tenants through the early phases of their lease.

“We are burning that much diesel … [because] … our projects have generators on site,” Ms Drago said.

Ms Drago pointed to a $15 million project in the Henderson industrial precinct, Orion, that had been built using generator power, with a connection promised a month after project completion.

“We can build a whole project in two years and still not have power,” she said.

“It’s an absolute joke.”

Electrical Consultancy WA director Michael Anile, who works with a large portion of the state’s industrial developers, said in some cases tenants were walking away from projects.

“The biggest concern is it is stifling business growth in WA,” he said.

“People are signing leases on properties, but they are falling through because they can’t get a power upgrade within a reasonable timeframe (three to six months) or … they are running generators for months at a time, burning fossil fuels in a time when we are meant to be decarbonising the environment.” 

Mr Anile has been in the industry for 15 years and currently has about 250 applications with Western Power. 

He said a key issue at the state-owned utility was a lack of resources and the fact it was not proactive enough.

“They should have been working on this in 2021,” Mr Anile said.

“They are reactive, they are not proactive.”

He added that Western Power did not realise the scale of the issue when it came about, and instead “thought it was a blip” that would dissipate.

“They thought it would go back [to normal], but it hasn’t,” Mr Anile said.

He added that when he joined ECWA in 2019, it took about four months to obtain a grid connection.

“I don’t know if that’s reasonable now, because of how super charged the market currently is, but six to 12 months is reasonable because this aligns with completion times of new buildings” Mr Anile said.

“We are building buildings quicker than we can get power.”

Land projects

The state government recently introduced an initiative to fast-track power connections for land developments, by outsourcing some work to the private sector.

The program, implemented in February, was welcome news to the residential development sector.

Urban Development Institute of Australia WA, which helped formulate the reforms, said the new clearance pathways were successfully reducing wait times for grid connections.

“The early signs have been encouraging and we understand that between November 2023 and March 2024, land development jobs in progress in the Western Power system decreased from 494 to 210, which is almost a 60 per cent reduction,” UDIA WA chief executive Tanya Steinbeck said.

“In the context of a housing supply crisis in Western Australia, we are pleased with the positive progress that has been made to date, and we look forward to seeing the full extent of the benefits in time as new applications are being lodged and work through the system.”

A Western Power spokesperson confirmed UDIA’s numbers, stating that the utility had made “significant progress in improving timeframes for land development applications for connecting to the network”.

“We’re committed to continual improvement and accelerating the application process where safe and within required network standards to ensure valuable housing supply is progressed as quickly as possible,” the spokesperson added.

Opposition energy spokesman Steve Thomas called for the initiative to be extended to commercial and industrial developments.

“Excessive red tape isn’t just affecting residential connections; it is also having a significant impact on commercial connections and there is an urgent need for improvements for this sector as well,” he said.

“It needs to be expanded, if not completely across the board, then for the vast majority of the approvals process.”

Speaking to Business News, Mr Thomas said the issue was not likely to subside anytime soon.

“I don’t expect these pressures to ease in the next few years,” he said.

Property Council of Australia WA Division interim executive director Emily Young agreed that the government should expand its fast-track program.

"While we have seen improvements to connection times for land projects, works for major projects such as industrial estates are still experiencing significant delays,” she said.

"We are working with Western Power and our members to understand number of impacted projects and ways to reduce delays.

"Our industrial estates are critical to our state’s economy, and making sure they are power to meet demand is crucial." 

Ms Young added that, based on the Property Council’s projections, Western Australia needs about 1.3 million square metres of industrial space by the end of 2026.

“Making sure sites can come to market, with power and service connections is essential to meeting future demand," she said. 

A state government spokesperson said the strength of the state’s economy translated to a high demand for power connections.

“With that [economic] strength comes challenges, … as evidenced by the annual number of customer development connection applications received by Western Power more than doubling on pre-pandemic levels,” the spokesperson said.

The government noted its work with the UDIA on accelerating land supply, as well as a doubling of Western Power’s connection team’s staff numbers.

“Application volumes have begun to decrease, and service times are expected to ease towards the end of this year,” the spokesperson said.

They added that Western Power was “pursuing improvements to the transmission-connected major customer connection process.”

“It’s expected those improvements, which will include enabling customer-led design and construction of required infrastructure, will assist in reducing connection timeframes once they have been fully implemented,” the spokesperson said.

“Commercial developments tend to be complex projects and the time between an application being lodged and the issuing of a customer’s access offer is about 18 months.

“Western Power advises these timeframes – which can also vary depending on a project’s complexity, overall demand, and network dependencies – are discussed with customers when making their applications.”