The recent acceleration in the development in battery storage technology,
coupled with the fall in availability of renewable incentives has meant that a
lot of focus is being given to co-locating battery storage alongside solar or
wind energy developments. While this may be seen as a natural addition to an
existing renewables project, co-location is not the simple proposition it first
seems. This briefing looks at a few of the key areas from the legal side which
will need to be considered.
Real estate rights
Whilst battery storage facilities may be relatively small in nature compared
to the renewables development itself, rights to place batteries on the land will
still be needed. Land rights granted by the landowner to the renewables
generator may be limited to a particular form of development such as solar or
wind and variations to, or new leases etc. may be required prompting
renegotiations.
Planning permission
Many have started to look at existing planning permissions to see whether
battery storage could fit within the scope of the existing renewables
development permission. Alterations to an existing planning permission can,
however, trigger unwanted consequences such as prejudicing the Renewables
Obligation accreditation of the solar or wind project. The battery might be
viewed as an extension to the generating facility which may, in itself, push the
combined installation above a certain capacity requiring further or different
consenting routes. If the battery storage solution is better treated as a
separate installation a separate planning permission will be required. This in
turn, impacts on timescales for obtaining planning and quite possibly,
milestones delivery timescales under Ancillary Services contracts, such as
National Grid’s Enhanced Frequency Response (EFR) tenders.
Shared grid
Part of the rationale for co-locating battery storage will be to maximise the
use of the grid capacity at the site and the connection arrangements that exist.
Requirements under the EFR tender, or the storage design, may mean that the grid
needs to be enhanced or adapted. Rights to share grid capacity and
infrastructure may also be needed. The solar or wind project and its funders may
object to the grid connection being prejudiced or threatened in any way. Grid
arrangements need to be considered if the battery storage is to be viewed as a
separate development and this, in turn, links with the design of metering
solutions at the site(s).
Renewables support
It is likely that the existing renewables project will be accredited under
the Feed-in Tariff or Renewables Obligation. The continued ability of the
renewables installation to receive these benefits is crucial and overriding. If
the battery storage facility prejudices that in any way, it will be seen as
counterproductive. Much of this will depend on where the battery storage is
situated and how the battery metering can be separated from the renewables
facility. The battery will have the ability to draw brown power from the
network.
PPA
There will almost certainly be an existing Power Purchase Agreement (PPA) for
the renewables facility. The PPA offtaker will have entered into that contract
having modelled the generation and ROCs. The offtaker will question the logic of
allowing a battery facility to take electricity generation from the renewables
facility, if it prejudices the amount of electricity or the ROCs it receives
under the PPA.
Bank Consent
Many renewables projects are project financed. If a renewables project is
performing well and repaying the debt why would the bank consent to changes to
the project, to permit battery storage, if there was any risk whatsoever that it
would hinder or interrupt the generation from the renewables facility?
Project Insurances
The renewables project will have a variety of insurances in place. The
battery storage plans will almost certainly, need to be declared to the insurers
and their views taken into account.
EFR tender
Assuming all of the above can be overcome, the storage developer may need to
continually monitor whether the battery storage project, it’s consenting, land
rights, connections etc. mean that it is still able to meet all of the criteria
and milestones to win any ancillary services contract from National Grid.
The above are just a number of examples of the issues associated with
co-locating battery storage on existing renewables sites. The logic for
co-location is strong and the availability of sites where this can be utilised
must be plentiful.
However, these are not simple projects and those going into them need to
consider properly the risks.
Ultimately, with storage in its infancy and the technology developing fast,
batteries pose a real opportunity for the UK energy market, but many of these
hurdles have yet to be overcome by the regulators and by developers. If you
require any further help or assistance please contact Ross Fairley or any of
Burges Salmon’s energy team.