Bumps in the Road to Net Zero

Despite some developers withdrawing from a recent contract round, prospects still look good for landowners looking to cash in

Several renewable companies have terminated fixed price contracts awarded by the UK Government relating to onshore energy projects output prices, sparking concern that renewables development has peaked.

This is not the case, renewables developers are hungry for more sites across Scotland and they are also prospecting for onshore wind sites in England.

Developers withdrew from over 600MW of Contracts for Difference (CfD), citing inflation and increasing costs of raw materials.

Cancelling these contracts amount to bumps in the road, because the UK Government’s commitment to reach net zero emissions by 2050 requires a quantum shift in the way we generate power. Green energy production remains a growth sector and will be for many years to come.

With this in mind, for the next round of CfD, the government is likely to offer more attractive rates that will incentivise investors to develop.

Developers are also now seeking to lease land for at least 35 years, some 50 years. Tens of megawatts of generation on pieces of unused land can lead to hundreds of thousands of pounds of annual rent for businesses.

Rental income paid by third-party developers and operators for onshore wind farms, solar parks and battery energy storage systems of reasonable scale will alter the financial landscape of most landowners – and it will span more than a generation.

To date, the majority of onshore wind farm development has been in Scotland and Wales, however, I am aware that several developers are prospecting for sites in England.

There is optimism amongst some developers that either a change in Westminster and subsequent government policy, will enable large-scale onshore wind development down south. This could create significant opportunities for English landowners, most likely in the north and west, where the land is less densely populated and there is better wind resource.

Renewables and energy developments can only be achieved if developers can get a connection to the national electricity grid network.

The grid is undergoing a massive overhaul and expansion with the electricity licence holders – National Grid, ScottishPower, Northern PowerGrid, etc – under a great deal of pressure to reinforce and upgrade the electricity network. It means more landowners will be affected by the drive for green energy, with the installation of electricity infrastructure across their land.

Anyone faced with the opportunity to lease land for energy development, or facing compulsory electrical infrastructure works, should seek professional advice as soon as possible to maximise opportunities or compensation.

Source: Insider.co.uk