Read more about: Article, Green Goals,
29 June 2022
The Green Steve’s series is a collaboration between Sharpe Pritchard Solicitors and energy & climate change consultant Stephen Cirell to assist local authorities to understand the energy market, identify opportunities and provide practical guidance as to how to engage more in the green agenda. In this second paper in the series, we look at the topical area of identifying and progressing a
renewable energy project.
Most local authorities now either have declared a local climate emergency or have developed climate change strategies in any event. This activity normally involves the calculation of the authority’s carbon footprint, the choice of a target to reach a position of net zero carbon and the development of an action plan. In simple terms the three stages are: choose the target; identify the broad direction of travel; and then choose projects that form the steps along the way.
Climate change action plans will cover a wide area of activity related to greenhouse gas emissions. The general hierarchy in energy is, firstly, to reduce your energy use; then, to improve your energy efficiency (to squeeze as much value as possible from each unit of energy you do use); and, finally, to identify new sources of energy that are renewable. As a result of this, many authorities have focussed more strongly on the emissions reduction elements of their plans, rather than the renewable energy potential.
However, there are a number of reasons why authorities should not neglect the identification of renewable energy opportunities. The first is that they have considerable assets in the form of land and buildings. Secondly, they have access to low-cost capital (as discussed below). Finally, where new renewable generation can be created, then the carbon value of this can be offset from the authority’s carbon footprint, which will be an essential part of reaching a net zero position.
Solar has been a great success story in the UK since around 2010 when the Government first introduced financial incentives. Prior to this, there had been virtually no proper solar PV development, only experimental schemes dotted about. The introduction of the Feed in Tariffs changed all that.
There was an explosion of interest in solar, which has led to a position today where there is around 15 GW (i.e. 15,000 MW) of solar capacity fitted. Over a million homes now have solar panels on their roofs; many commercial and industrial buildings have solar power to reduce their operating costs; but the majority are land-based installations or solar farms as they are known. Originally, these were developed with the benefit of financial incentives, but since their withdrawal around four years ago, all projects now have to be subsidy free (albeit the CFD is available for certain solar projects).
A solar farm is an area of land that is covered in solar panels fitted on racking, with a connection into the electricity grid and potentially battery storage in addition. This is a well established technology offering low and acceptable development risk, evidenced by the very high level of private sector investment in this area.
But there are less than 20 local authorities in the UK that own and operate a solar farm. In comparison to the total
amount of solar development completed, this is a staggeringly low amount
Assuming that a local authority wants to follow the solar farm route, the first thing it has to decide is which way to do it. The vast majority of the projects that have gone forwards (or are in planning) are under the developer route, but some authorities are now considering the investment route.
The investor route means buying an asset. An example is Forest Heath District Council in Suffolk where the Council purchased a fully completed and operational solar farm in Lakenheath in 2016 for a cost of £14.5m. This was merely an asset purchase the same as any other but carries with it the environmental benefits and a positive return on capital. The reason that most Councils don’t go this way is that the majority of the profit has been extracted from the deal by the time the asset is acquired.
There are a series of steps in any development project and a solar farm will progress in a similar manner:
As is always the case in local government, planning the project properly is essential. It also has to be in harmony with the Council’s overall policies, strategy and action plans.
Of more practical significance is that a local authority can buy in all of the help it needs on such a project, from concept and strategy through financial, legal and technical services to construction and maintenance.
Of those authorities that have embarked on a solar farm project, many have not reached the end of the transaction. There are various reasons for this, but the following is a selection:
Unrealistic timeframes: a solar farm project is likely to take 12 – 18 months for most projects, more where it is complex (such as former landfill sites). The time has to be taken to do it properly;
Grid connection problems: the grid is a real issue in the UK and this is an essential ingredient of a project. DNO’s can be hard work and their jargon is sometimes hard to understand. Councils need to persevere and develop a relationship with the DNO to find sites that can connect up (as well as ensure its consultants can support it);
Planning problems: planning consent is essential so choose the right sites. Some are more problematic, such as sites in the Green Belt (although this might be changing). Planning also takes time – allow at least 12 months for this;
Choose your advisers well: development companies offering free advice are to be avoided. A local authority needs advice from consultants experienced in delivering the client side of a transaction. If it’s free, you generally get what you pay for!
Tenancy problems: County Councils seeking to develop their farm estates have found that tenants can be hard to shift. Different types of tenancies provide different defences to possession applications and specialist advice may be necessary;
Inadequate procurement processes: a key part of the process, resource has to be available to do this. Procurement also takes time and effort to get right and must be legally compliant;
Insufficient client side resources: the Council has to undertake the internal processes necessary to deliver a project. If it lacks this client side resource there will be problems;
Inadequate financial modelling: modelling needs to be prepared using extensive industry knowledge in order to be accurate. Plenty of inhouse efforts have failed for this reason. Where a CfD is being relied on time must be left for the auction process;
Inadequate communications strategies: generally support for solar farms is very high (over 80%) but the public need to be reassured about the Council’s plans and how they benefit the area. Time spent on comms is well spent to avoid unnecessary opposition from a small minority causing political problems;
Care with specialist areas: former landfill sites, agricultural areas, floating solar etc will all be more difficult and can take longer.
It is imperative that local authorities intending to go down the solar farm route learn from the experience of others. This is crystallised in the practical advice featured below.
These are both mentioned in the problem areas section above but merit further consideration as they are the two most crucial elements of any project (known a ‘dealbreakers’).
Planning consent is always harder than you anticipate. In our view the local authority has to be exemplary in its own applications or it risks damaging its reputation as the regulatory body. All the necessary steps must be taken from pre planning inquiry, through screening to preparation of all the necessary reports (which might include breeding birds,
archaeology, visual assessment etc).
It is essential that any planning application makes the case as comprehensively as possible. As a result, often Councils use external planning consultants for this. A strong application will confirm that the outcome of the planning application – if successful – would be.
It seems fair to assume that most local authorities will be aware of solar PV and will generally support it as an important renewable energy source. However, if the local authority wants to progress a solar farm project, there are basic issues that should be addressed.
These will include the following:
No one said it was easy to complete any development transaction in local government. Notwithstanding this, those authorities that have built solar farms all say that the hard work was worth it. Their only regrets seem to be that they did not build three or more sites out instead of only one!
It is also clear from experience that as authorities move forwards on solar schemes they become both more confident and more capable. In one authority a housing scheme led to a solar project on its civic buildings. This was followed by construction of its first solar farm and then a second project after that. As the Members see the business case being delivered and positive movement forwards on the environmental side, they become much more bullish for further projects.
This has been seen in leading areas such as Nottingham and Bristol City Councils but also in Districts such as Telford & Wrekin and in smaller areas, such as Wrexham CBC in North Wales.
There is no reason why many more solar farm projects should not come forwards developed and operated by local authorities. This makes it curious as to why so few have been developed to date.
This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any of the issues raised in this article, please contact us today by telephone or email enquiries@sharpepritchard.co.uk.
