Keep your bank account and community warm and happy

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We have been lucky with a warmer than average winter so far, but as we enter a time of cold spells, energy market commentators warn of a corresponding squeeze on key supply and generation points, and possible outages and blackouts.

But there is hope for communities, and opportunities for rural landowners and farmers who act early to secure rewarding development projects. A combination of a restructuring of the renewable energy market (with the transitioning out of feed in tariffs (FITs)), and the progression and opening up of ‘Demand Response Projects”, means there are opportunities for land owners working with local communities in emerging renewable energy generation and storage projects.

Landowners can help in two ways: either renting land to developers for generation or storage; or providing access to grid connection points or the connection point itself, such as overhead power cables or a substation.

Demand Response Projects centre around battery storage sites, where rows of lithium- ion or lead acid batteries are housed in agricultural or industrial sheds, storing electricity either from the grid or generated by an associated renewable energy development (such as a solar PV site or a wind turbine on a farmer’s land). This is stored and then filtered back to the grid when demanded by users. The specialist storage buildings need to have a life span of 25 years. The building is usually built by the developer and can be agreed to be owned by the landowner at the end of that 25 year lease. Some energy storage providers, such as Tesla, even have outdoor rated systems that do not need to be housed in specialized containers.

Storage of power is a growing market where demand response capacity is expected to reach 1000MW by 2020. Demand for storage could apparently be up to 6,000 times this capacity (ie 8GW) by 2030 . The likes of Tesla ( all-electric car manufacturer now also energy storage manufacturer) are already supplying batteries which power whole islands and towns. Tesla’s mission statement is “to accelerate the world’s transition to sustainable energy”, and they are currently the market leaders in energy storage.

The CLA national conference last month (entitled “Rural Business 2030”) focussed on energy, and with low crop prices energy storage and generation are good revenue streams again.

There are the beginnings of a flurry of approaches to landowners by energy developers, who want to cash in on opening up energy storage markets. So if you are near an energy generation site, why not look to see if you can do storage, in a small building, which does not use large areas.

The average size of an energy- generation development is between 5MW to 100MW. These projects are underpinned by the Capacity Market Auction. This Auction is an annual event for contracts of up to 15 years awarded to new-build projects that demonstrate they can generate electricity as and when required to “smooth off” the peaks of energy demand.The next auction will be held in the autumn of 2017, so landowners (or farmers on long term FBTs (25 years or more)) to act now to take advantage of these opportunities.

Projects can be either community or solely owned, and need to be ‘ready to roll’ before you can enter the Capacity Market, with valid planning permission and grid connection secured. However, other associated opportunities can also be extrapolated out of reaching the grid connection which can make or break the viability of a project, and so can be the funnel to lucrative returns for landowners if negotiated properly. For example, the access to the grid connection has been the sticking point in many otherwise potentially successful sites. With no current compulsory purchase powers to acquire the access strips, landowners can potentially hold ‘ransom strips’.

Energy generation has been around for a while, but is worth a re think at present, Energy storage is relatively new, but the growth potential is huge.

 

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