Feature

Planning the future of renewables - storage legal issues to consider


Lee Gordon

Lee Gordon highlights some of the key legal issues relating to planning and construction work for renewable energy storage developments.

As solar and wind farms produce greater percentages of the UK’s energy requirements, there is a fundamental issue that will need to be addressed. By their very nature solar and wind energy production sites do not provide a stable and consistent level of output. When winds are high, turbines produce an excess of energy, when they are low very little. When the sun is up, solar panels produce in quantity, at night they of course produce little. Due to the way that energy is currently bought and sold, this type of production flow leads to deflated energy prices at times when energy production is at its highest. As the percentage contribution that renewables makes to overall supply increases, the scale of the problem increases.

There is little doubt that, with global warming such a key issue, increased renewable energy production must feature heavily in any future energy strategy. Onshore wind and solar developments have been very attractive to developers over the years as they are tried and tested and relatively straightforward to install. In contrast, other forms of more predictable low carbon generation, such as tidal, have traditionally been viewed in the UK as expensive and very challenging in terms of technology.

The grant of a development consent order earlier this year for the Tidal Lagoon Swansea Bay Project, hailed as the world’s first man-made energy generating lagoon, is encouraging. This promises the affordable delivery of 320MW of installed capacity and 14 hours of reliable generation every day - that is, if the strike price can be agreed with Government. The considerable benefits of delivering a world’s first do not come cheap, with a higher strike price reportedly sought than for Hinkley Point nuclear power station and offshore wind farms, though this is expected to reduce as more lagoons are delivered. The commencement of the project will be delayed pending conclusion of negotiations with government.

A question of effective storage

Despite facing their own considerable challenges, solar and wind farm development will continue to be an important part of the UK energy mix for the foreseeable future. The question then turns to how we can store or use renewable energy efficiently, particularly renewable energy generated from unpredictable sources. The quantities of energy involved can be massive.
One method of storing such vast amounts of energy currently is by pumped storage hydroelectricity, such as the 360MW Ffestiniog Pumped Storage Scheme in North Wales. However the opportunities to use this form of storage are limited. It requires specific geography to permit the upper and lower reservoirs to be built. This usually means that potential locations are in areas of natural beauty, which can lead to significant planning issues and opposition to their construction. Site selection and early engagement with key stakeholders is of paramount importance, but even so opportunities will be limited.

There are of course other options. For example Abengoa, a Spanish renewables firm, has a system that stores excess energy as molten salt and larger and more effective battery storage solutions are steadily coming to market. Then there is always hydrogen storage, which breaks apart water molecules using the excess energy in the grid and then burns the hydrogen when more is needed (see for example the advances being made by HyperSolar). Then there may well be options for battery storage in the not so distant future, though this technology is not quite ready for large scale commercial use yet. However, whichever method you chose, the development of any large storage scheme will inevitably meet legal challenges, both in planning and construction.

The development of renewable sources of energy at existing facilities, such as waste water treatment plants, provide opportunities for the efficient use of renewable energy, and we are beginning to see more of this from utility clients to power on-site equipment. For example, solar panels are often capable of being developed by statutory undertakers under permitted development rights at sewerage treatment works without the need for a full planning permission. Taking this a step further, there may also be opportunities for the storage of excess energy at existing sites. Such an approach is likely to be far less contentious in planning terms and more feasible compared to greenfield development.

Community concern priorities

In contrast, the development of major new storage facilities of the type mentioned above alongside major onshore wind turbine proposals or solar farms in open countryside are likely to be challenging. It is already becoming increasingly difficult for onshore wind development in the UK to secure planning permission and there is generally perceived to be less political will behind such developments.

The recent refusal by the Communities Secretary of State, Greg Clark, of REG Windpower’s planning application for just four turbines near Peterborough is a case in point. Of particular concern is that one of the reasons for refusal was that the proposal failed to have the community’s backing. This requirement was proposed in the Conservative Manifesto and introduced in June by way of Ministerial Statement. It is a new material consideration for planning applications for wind energy development. In summary, it provides that planning permission should not be granted unless the planning authority is satisfied that the proposal has addressed “the planning impacts identified by affected local communities have been fully addressed and therefore has their backing". This decision follows hot on the heels of an announcement by government of its intention to implement earlier cuts to subsidies for new onshore wind projects than previously proposed.

The decision further increases the amount of uncertainty for those pursuing planning applications for onshore wind developments. There will be very few onshore developments which do not generate significant local opposition. Careful site selection and pre-application community engagement will become increasingly important. Applicants should seek as far as possible to demonstrate that all relevant planning matters have been addressed and that residual local concerns are either not justified, relevant or contrary to the views of statutory consultees.

One potential positive from the June guidance is that planning authorities are encouraged to ensure that suitable areas for wind energy development are allocated clearly in Local or Neighbourhood Plans. As there are few local authorities which have up-to-date adopted local plans and even less which have allocated areas for onshore wind there is concern that this will act as a constraint in the short term. In the medium term, there will be opportunities for landowners and developers to seek to have their sites allocated through the local plan process for wind farm development or to target the acquisition of such sites which have secured an allocation. This will improve the prospects of securing planning permission, but in order to play such a long game industry would need to be convinced as to the prospects of an adequate return on investment, at a time when government has promised to cut future subsidies.

Legal definitions - generation or storage?

On the construction side, one potentially significant issue for major energy storage developments relates to an exclusion under the Housing Grants Construction and Regeneration Act 1996 (as amended). The Act grants significant rights relating to payment timetables, adjudication and the ability to suspend elements of the works. However there is an exclusion relating to: “assembly, installation or demolition of plant or machinery or erection or demolition of steelwork for the purposes of supporting or providing access to plant or machinery, on a site where the primary activity is – nuclear processing, power generation, or water or effluent treatment, or…” (section 105(2)(c) of the Act).

However, it is far from certain that this exclusion would apply to energy storage sites. Is the site really being used for “power generation” as opposed to power storage? If not then it falls squarely within the Act. So what does power generation really mean and how does it apply in this context?

The question is not simple to answer. As this is a fairly new problem, there is no significant case law that can assist in this area. If you were discussing water, you could say that the same water is held in a reservoir as is sent to a treatment plant and on to consumers. It needs to be treated at a water works and prepared for human consumption, but it does not change its basic state. However, electricity is not stored as electricity, but as some other form of potential energy (be it heat, chemical or gravitational potential). Therefore it has to be regenerated into electricity when you remove the energy from storage.

Even the most basic sources are unhelpful in this case. In English law, where a term is not defined, the words should be given their ordinary meaning. Generate is defined in the Oxford English Dictionary as “The production or creation of something”. However, when is the energy produced or created? Clearly it is produced at the power station, but is it produced again from storage? The answer would appear to depend on how you view the process.

If you take the whole energy cycle from power station to consumption as one process, irrespective of the intermediate steps, then the answer is that storage and release is not generation. However if production means the change of the form of energy from (say) heat to electricity, then the answer is yes, you are generating power at the storage site. Either of these answers is arguable. The answer may also be different if you consider battery storage, where no generators are required, as opposed to gravitational or thermal processes where turbines are required to create the electricity.

Practically the answer to the problem is simple. The best approach if you are building a power storage site is to make sure that your contracts are compliant with the HGCRA. That way if the site is not deemed to be excluded under section 105(2)(c), you are protected from claims that your contract is not compliant with the Act.

ABOUT THE AUTHOR

Lee Gordon is a planning law partner and Michael Bennett is a construction law associate, both at Weightmans LLP.

FURTHER INFORMATION

http://www.weightmans.com

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Energy storage including Fuel cells  •  Other marine energy and hydropower  •  Solar electricity  •  Wind power

 

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