How landowners can diversify in the absence of subsidy support
By Paul Spackman – (4 min read)
Subsidies have given the renewables sector a great boost over the past two decades and although cuts to financial support for onshore wind and large-scale solar have slowed the recent pace of development, opportunities for landowners to diversify income streams still exist.
New technologies such as large-scale battery storage are increasingly coming to the fore and falling costs, for solar in particular, have helped mitigate cuts to support, keeping both developers and investors interested.
Indeed, the UK’s first solar farm to be built without subsidies was officially opened in Bedfordshire last autumn, marking a significant milestone for the renewables sector. Anesco’s 10MW solar farm is co-located with 6MW of battery storage, which was key to making the project viable without subsidies.
Other subsidy-free solar farms are being developed, as are projects to install new battery storage systems alongside existing wind farms for balancing power supplies to the grid (so-called enhanced frequency response services). One high profile example of this is Vatenfall’s partnership with BMW, announced last year, that will see battery storage added to the Swedish power company's operational wind farms. The largest battery system will be at the Pen y Cymoedd wind farm in South Wales.
Other developers are also actively looking for sites that are suitable for battery storage or short term operating reserve (STOR) standby generators for grid balancing – traditionally diesel gensets, but now mostly gas powered units. Any sites that are close enough to parts of the electricity grid (and the gas grid for STOR generators) with spare capacity are reported to be in strong demand, which is good news for landowners.
In many areas limited electrical grid capacity remains the biggest barrier for any new energy development, so landowners with sites that meet developer requirements are likely to be in a strong negotiating position.
Choosing the best options of your land
What works for one technology or location may not necessarily be suitable or viable in another, so it’s important to consider all options. Any project must be tailored to the current and future requirements of the business and the local grid constraints.
For example, with renewables such as solar and wind, the focus is on available export capacity to the electricity grid, but remember that battery storage requires both import and export capacity to be available, whereas gas or diesel STOR backup generators require export only.
If you are interested in exploring these opportunities, it is worth discussing with your developer whether they are viable options for your site. Even if your developer has not considered these options, they may be willing to work in partnership with a new developer to realise the opportunity. You could also consider instructing your solicitor to check whether your existing lease agreement enables you to pursue these opportunities independently. If given the green light, you’re in a position to instruct your land agent to approach developers well-versed in these areas who can explain how your site can benefit.
The energy sector is changing all the time as technology advances and equipment costs fall. Ongoing decarbonisation of power supplies and electrification of transport will undoubtedly create further opportunities, and as the UK switches away from the dominance of large power stations to a more decentralised energy sector, some landowners will be well placed to benefit.
Despite the removal of subsidy support, there are opportunities to consider in this rapidly changing market, and as a UK landowner you are in a very strong negotiating position.
Paul Spackman is a freelance writer and former Deputy Business and Renewables Editor at Farmers Weekly.
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