Energy
ISSUE 18 | SUMMER 2019
MATTERS
Battery storage: The key to the energy revolution n n n n n
Offshore wind gets a major boost Farewell to FiT Keeping the lights on after Brexit Better broadband in the Borders Benefits of anaerobic digestion
WELCOME
CONTENTS
Rising to the power challenge
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WElcOME to Energy Matters issue 18.
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The transition to electric-powered transport is gaining traction, now supercharged by a Government commitment to end sales of new conventional petrol and diesel cars and vans by 2040. Battery technology will have to make big strides to meet this need, not only in transport, but also in an electricity distribution grid that’s increasingly reliant on renewable energy sources. We talk to the man responsible for driving battery innovation in the UK to meet these daunting challenges.
Power planning: getting consent for grid-scale storage.
Joanne Plant looks at how forward-looking businesses are addressing their energy needs by co-locating battery storage with on-site generation from renewable sources, and discusses some of the planning issues involved. The Feed-in Tariff scheme has ended after a decade. Galbraith advisers John Pullen and Gareth Taylor review the legacy of an incentive aimed at encouraging investment in renewable energy generation and reflect on what the loss of the subsidy means to the UK’s wind sector. The new communications code was meant to deliver much improved digital services but, more than a year on, progress has halted due to differences between landowners and phone companies. We are delighted to have merged with land Factor, the rural estate management company with offices in Northumberland and cumbria, land Factor is also particularly strong in forestry. Both firms operate across the border and by joining forces, we shall provide enhanced services across a wider geographic area. The combined skills are already delivering greater breadth and benefit to the clients of both businesses under the Galbraith brand. Mike reid, head of energy
GALBRAITH is a leading independent property consultancy. Drawing on a century of experience in land and property management, the firm is progressive and dynamic, employing 240 people in offices throughout the UK.
FiT farewell: legacy of the subsidy that kick-started renewables.
7 Flame-out: Government goes cold on wood-burners.
8 Drive on: the innovators leading Britain’s battery revolution.
10 Technology keeps investors happy with wind power. Turnaround: ministers get behind offshore turbines.
Utilities and landowners link to maintain electricity supply. AD: old technology finds new roles.
14 Showtime! Come and see us for a chat.
15 Forward together: Galbraith merger means clients benefit.
16 In touch: village connects with high-speed broadband. Calling waiting: mobile revolution stalls pending legal clarity.
18 Connected: grid maintenance key to new energy sources. Current renewable energy subsidies.
Galbraith provides a personal service, listening to clients and delivering advice to suit their particular opportunities and circumstances. Follow us on Twitter: @Galbraith_Group @Galbraith_eNrGY like us on Facebook: facebook.com/ GalbraithPropertyConsultancy
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The UK’s departure from the European Union brings challenges, but we should be looking at our energy security anyway, says Mike McWilliams.
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Keeping the lights on in post-Brexit Britain
Energy Matters is produced by Allerton Communications, london, and designed by George Gray Media & Design, St Andeux, France. © cKD Galbraith llP.
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Brexit was meant to have happened by now but hasn’t. Had we left the eU, would your lights still burn, or would you be reading this by candlelight? For a while Great Britain – the UK apart from Northern Ireland – was largely self-sufficient for electricity and gas. However since 2004 gas production has progressively fallen short of demand, such that now we import a huge 55% of our gas, mainly from Europe. We also import about 5% of our electricity. There are plans to increase our dependence on Europe for electricity; in some scenarios up to 25% of our peak demand could be supplied from Europe by 2030. While this makes sense from a trading perspective, it reduces our system security. There is a range of political, technical and climatic conditions that could affect both Europe and GB, leading to supply shortfalls in both regions. For example a large persistent high pressure over the North Sea would bring extreme cold conditions causing a surge in gas and electricity demand, potentially leaving insufficient gas supply for electricity generation. This occurred in March last year when the Beast from the East struck. Fortunately the high pressure remained over Scandinavia, bringing strong winds and plentiful wind generation to UK and Northern Europe. Also we still had 10GW of old coal generation that was able to bail us out.
We may not be so lucky when the next Beast strikes. If the wind drops, we are short of gas, have no coal (all gone by 2025) and little nuclear, we will be dependent on our friends across the channel to meet the supply gap. However they may be in a similar predicament. Germany is shutting down its nuclear and coal plants; France seems likely to reduce nuclear generation from 75% to 50% and Belgium is phasing out nuclear and subsidising new gas-fired generation. If Europe is short of electricity, can it cut off supplies to GB? Technically, yes it is possible, and it will need to be done. Twenty-five countries of Europe are part of a synchronous system. If there is a shortfall of electricity supply in one region, the system frequency drops from 50 Hz across the whole grid. This happened for two months in early 2018 when a supply imbalance in Kosovo reduced the frequency by 0.1%. While this was inconvenient, with cooker clocks from Athens to Zaragosa losing six minutes, a larger imbalance could trigger a collapse of the whole 25-nation grid. GB has its own synchronous area and is insulated from disturbances in Europe, being interconnected using direct current cables. This means we set our own frequency, and collapse of the European grid would not affect ours. It also means there is no need for Europe to balance supplies on the GB grid.
The island of Ireland has its own synchronous grid, with free-flowing cross-border electricity exchanges managed under a single electricity market, so there is no need for a “backstop” solution. On the gas front there are ructions in Europe. Germany is determined to proceed with Nord Stream 2 (NS2), angering the US and many neighbours who argue it will reduce the existing gas transit fees for Ukraine and Poland, and make it easier for Russia to cut their gas supplies. Sceptics say that the US wants to sell more lNG to Europe, which will not be economic if NS2 proceeds. Most agree that NS2 will increase Europe’s dependency on Russian gas, diminishing our supply security. With the UK at the end of the gas pipeline, our supplies will be first to go.
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With the UK at the end of the gas pipeline, our supplies will be first to go.
A Brexit at the start of spring would have been preferable to avoid energy supply disruptions, leaving us six months to sort out trading with Europe. But with our departure now due in June – or October, we have little time, let alone any certainty, to achieve this. So, will the lights go out after Brexit? Almost certainly yes, but not because of Brexit, and not immediately. Mike McWilliams is Head of Energy at CEBR, the Centre for Economics and Business Research.
galbraithgroup.com | energy Matters | Summer 2019 | Page 3
Farewell to FiT The legacy: 850,000 installations and 6GW of generating capacity A key incentive to invest in renewable energy projects has ended. John Pullen reviews the legacy of the Feed-in Tariff.
For nearly a decade the UK Feed-in tariff (Fit) provided an incentive to construct small-scale renewable energy generating schemes. Following its closure to new entrants on April 1, now is the time to review how it changed the UK electricity network and ask: did the UK ‘get FiT’? FiT was established in 2010 as a Government incentive to invest in renewable-energy technologies. The scheme gave a guaranteed price for electricity generated, based on a scheme’s generation capacity, with a further export payment for electricity supplied to the grid. The rate of subsidy depended on the technology used. By the end of the scheme, more than 850,000 installations had been accredited and more than 6GW of
generating capacity added to the network at a local level. By capacity, the vast majority (80%) of the installations were solar PV, with wind (12%), hydro (5%) and anaerobic digestion (3%) accounting for the remainder. Not surprisingly, with solar taking the lion’s share, England (80%) followed by Scotland (13%) and Wales (7%) had the greatest contribution. combined with large scale projects, renewable energy now accounts for a third of UK electricity generation, up from around 5% when the FiT was introduced in 2010. With nuclear energy holding steady at nearly 20% of generating capacity, fossil fuel generation has fallen from around 75% to less than 50% over the same period. By the end of the decade, renewable sources are likely to overtake fossil fuel for annual electricity generation. There are now many digital apps that will show how each generation type contributes to the energy mix and anyone can see what technology is providing their electricity in read-outs that are accurate to the half-hour.
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coupled with the simultaneous advance of smart meters, consumers are more aware than ever of how they are then using that power. Just less than 5GW of solar PV panels were installed under FiT. As these operate only during daylight hours, there may be those that argue that they have done little to contribute towards the daily demand of around 40GW. However, the 800,000 properties on which they have been installed are now acutely aware of their individual generation and consumption balance. Those houses and schools will contain the engineers, policy makers and house builders of the future. If the FiT accomplished anything, it helped to achieve a much greater understanding of how electricity is actually generated and consumed and for that alone, it was certainly a success.
john.pullen@galbraithgroup.com 01463 245 372
tHe support mechanisms for evolving renewable technologies were designed to diminish over time as the costs of production fell and technological improvements occurred.
Wind: Making the sums work without subsidies
But with the FiT closing for new projects it’s appropriate to ask: does wind remain economically viable in a subsidy-free world?
What does wind look like in a post-FiT world? Gareth Taylor reports
Wind is the most productive renewable energy technology in Scotland, comprising 7.8GW from onshore schemes in 2018 (71 per cent of total renewables) and 628MW from offshore generators. Boosted by high average wind speeds, Scotland produces 59% of its electricity from renewables and is on target to reach 100% by 2020, with most of it likely to come from wind power. The lowest fruit was picked first and many schemes reduced their capacity to maximise income from FiT. The majority of unbuilt projects tend to be those with more complexities and constraints or waiting for grid capacity. However, as wind – and turbines – have become the norm, some schemes are becoming viable (and likely to gain consent) if re-worked to have fewer but larger and more powerful turbines. Although the grid connection cost remains unaltered, this can significantly reduce infrastructure expenses.
Even here, some developers are exploring the possibility of constructing, owning and operating their own grid connection. Technology is making some installations more efficient. As we reported in Energy Matters issue 17, extending a turbine rotor blade can increase production by up to 7% with a payback period of one to three years, using existing infrastructure and with minimal environmental impact. The industry has seen a contraction in the number of medium-sized developers as bigger players acquire the expertise and capital required to unlock prospective sites. And developers who are innovative in their approach are making complex schemes work. Galbraith is currently involved in schemes with developers who are both collaborating with multiple stakeholders to secure rights and using other developers’ existing infrastructure and access tracks.
Developers are also negotiating harder for access and land rights – another indication of cost cutting. While they are still looking to put new sites under option, developers are budgeting to rent at about half what they were offering under the FiT scheme. Meanwhile, the first generation of turbines is nearing the end of its lifespan or planning consent, and some developers are in the early stages of ‘repowering’ sites, taking advantage of the improved generating capacity of turbines which have evolved over the past 20 years. In a post-FiT world, investment in wind will continue, but the sums must add up, schemes will have to be more carefully designed and the public will have to get used to bigger turbines.
gareth.taylor@galbraithgroup.com 0131 240 6962
galbraithgroup.com | energy Matters | Summer 2019 | Page 5
Energy storage: making the planning process simpler Industry has responded positively to planning rules for the emerging energy storage sector but, as Joanne Plant reports, moves are afoot to make grid-scale projects more straightforward.
eNerGY storage is set to play an increasingly important role in enabling grid networks to balance fluctuations in the supply and demand of electricity and to stabilise power frequency, as noted in Energy Matters issue 15. last September saw the opening of Scotland’s first utility-scale battery storage scheme – a 20MW facility in Broxburn, West lothian – in a move that industry hopes will pave the way for an energy storage boom. The facility is said to be the fastest of its kind in the country and is able to respond to the grid in milliseconds. co-locating battery storage with on-site generation – from renewable sources – is also becoming increasingly popular with businesses. With the cost of batteries falling all the time, many firms are seeking to invest in the technology to reduce their carbon footprint and their reliance on the grid while saving on energy bills.
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co-locating battery storage with on-site generation – from renewable sources – is becoming increasingly popular with businesses.
For storage projects with a generating capacity up to and including 50MW in Scotland, planning permission is sought from the relevant local planning authority. For schemes with a generating capacity of more than 50MW, planning consent is sought from the Scottish Ministers under the Electricity Act 1989. In England, a different consenting regime is in place. In this respect, large-scale energy storage projects with a capacity of 50MW or more are currently determined under the centralised Nationally Significant Infrastructure Projects (NSIP) regime, while smaller schemes are determined by local planning authorities. The NSIP process comprises six key stages of assessment and typically takes 15 months to reach a decision. The Department for Business, Energy and
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Industrial Strategy (BEIS) recently published ‘consultation on Proposals Regarding the Planning System for Electricity Storage’, proposing that a new capacity threshold for co-located nonwind generation and storage projects be established. In cases where the capacity of the nonwind generation and storage elements of a project are less than 50MW individually, but over 50MW in combination, the proposals would be determined by the relevant local planning authority. If either the storage or the non-wind generation element exceeds 50MW individually, then the proposals would still be determined under the NSIP regime. Similarly, the NSIP threshold for standalone energy storage projects remains at 50MW. The response from industry has been generally positive, as the proposed change should make the process of securing planning permission for colocated grid-scale storage more straightforward and efficient. The Renewable Energy Association however, considers that more can still be done to facilitate storage deployment by expanding permitted development rights. The current consultation only applies to projects in England. However, given the wealth of generation that could benefit from co-location with storage in Scotland and the benefits to constrained grid networks, it is possible that the Scottish Government may in future seek to amend the thresholds north of the Border too.
joanne.plant@galbraithgroup.com 0131 240 3030
A burning issue for wood fire users
It is hard to know whether this has been exacerbated by recent policy. The Renewable Heating Incentive 5, announced in the UK in 2011, significantly increased demand for wood fuel and has revolutionised the renewable heating sector. This in turn has helped to bring smaller, neglected woodlands into management, with the domestic market for logs helping to fund woodland improvement for smaller owners.
The Government is cracking down on woodburning stoves, but how will this affect renewable heating and the emerging wood fuel industry? asks Denis Torley.
This growth of course is very positive for the wood fuel industry, but will the clean Air Strategy and supporting legislation threaten this market?
i, For oNe, was clutching my pearls in dismay at recent reports of an imminent ban on woodburning stoves, both as a forester and a rural dweller who relies on firewood as a primary source of heat. Was this yet another chimera born from unfounded urban anxieties?
It seems that the quality of wood fuel plays an important role in air quality in both existing and new appliances. For example, burning wet wood is inefficient as it demands a lot of heat to boil off the water before appliances can give out the proper level of heat. The latest models of stoves burning dry wood will produce a fraction of the particulates of an open fire burning wet logs. Thankfully the Government has noted this in its publication. Properly seasoned wood should have a moisture content of 20% or less. One politically easy measure could be to ban the sale of the
The reports arise from the recently launched clean Air Strategy, which has some surprising, and alarming, numbers behind it. The strategy aims to reduce the estimated 36,000 annual deaths blamed on breathing polluted air. Experts warn that woodburning stoves and open fires are now the biggest source of outdoor particulate omissions, at 38%, compared with 16% from industrial processes and 12% from road transport. The UK Government wishes to reduce particulate emissions by 30% by 2020 and 46% by 2030, with an estimated saving of £5.3 billion a year from 2030. Air pollution is increasingly understood as the single greatest environmental threat to human health, with the most vulnerable being hardest hit. Woodburning stoves, and the fuel they use, will come under greater scrutiny. The UK government seems ready to legislate to ensure that only the most efficient stoves and cleanest domestic fuels will be available for sale. Air quality is a devolved matter and the Scottish Government is currently reviewing its strategy, looking at how to further mitigate the impact of air pollution. It seems likely that this review will come to similar conclusions as the UK strategy. About 10% of UK homes (2.5 million) have an open fire or a wood-burning stove. The government seems ready to pass on the powers of any enforcement ban to local authorities. Urban areas look most at risk. It is estimated that between a quarter and a third of all of london particulate pollution comes from domestic fires. In January 2018 they contributed half of such emissions in some areas of the capital, according to Kings college research. Rural areas are considered at lower risk both from pollution and subsequent enforcement. According to the Stove Alliance Industry, domestic stove installation has been running at close to 200,000 a year. Anyone with stoves which have been approved for use in smoke control areas, or who has an “eco design ready” model, would appear to be still able to use it. While stove technology has improved greatly, and continues to improve efficiency in clean burning, it is thought only 12% of existing domestic stoves conform to the latest standards.
wood that does not have the “ready to burn logo” from Woodsure, a woodfuel certification scheme. This may see a reduction in availability of poorer quality logs. It would however place a burden on small log providers to become “Woodsure approved”, at a cost of £400. Such a ban may also see an increase in demand for briquettes or heat logs made from timber coproducts. These have a moisture content of about 8%. Some firewood providers are also investing in having their product kiln dried to ensure that its moisture content falls below 20%. Those of us who rely on firewood have long understood the benefit of using the driest logs, both for heat production and ease of maintenance of stoves and flues. It is also an approach supported by fire brigades everywhere. Wood fuel is an important and growing source of domestic heat and should continue to be an importance part of the energy mix. The use of this fuel does have its issues, and perhaps in time the burning of wet wood will be considered an anti-social activity given the health risks. In the meantime it looks as if both appliances and fuel will continue to be regulated and therefore consumers, both urban and rural, should look to quality both for efficiency and wider health benefits.
denis.torley@galbraithgroup.com 01463 245375
galbraithgroup.com | energy Matters | Summer 2019 | Page 7
How British technology aims to drive the battery revolution To cut carbon emissions and provide energy to keep the lights on, minsters are backing battery innovation. Gareth Taylor reports.
MoveS to cut air pollution and reduce our reliance on fossil fuels have suddenly become even more controversial than they were. First the Government announced plans to ban new petrol and diesel cars by 2040 by ensuring they’re ‘zeroemission’, prompting an outcry among petrol and diesel enthusiasts. Then came news that Honda is to close its UK vehicle manufacturing plant, potentially costing thousands of jobs. Brexit uncertainty, a long-term fall in global car sales and new EU diesel emission rules have been variously blamed but most agree Honda’s decision is a further signal the tide has turned for fossil fuel-powered transport. Electric vehicles are the future. The UK is committed to reducing greenhouse gas emissions by 80% from 1990 levels by 2050 – England accounts for four fifths of current emissions and Scotland, Wales and Northern Ireland the rest.
made. Renewable energy capacity overtook that of fossil fuels in the UK for the first time between July and September, according to Imperial college. The capacity of wind, solar, biomass and hydropower reached 41.9GW, beating 41.2GW from coal, gas and oil-fired power plants.
supports research, training and analysis for innovation in electrochemical energy storage. Focusing on automotive technology, ministers hope the advances achieved will translate into other transport modes such as aerospace and rail. Four initial research projects, involving 20 universities and 30 industry partners, have been awarded £42m – to look into extending battery life, battery system modelling, recycling and reuse, and next-generation solid-state batteries.
That progress will stall without major technology improvements, so ministers are intent on turning the UK into a battery powerhouse. In July 2017 the Government launched the Faraday Battery challenge, part of the ‘Industrial Strategy challenge Fund’, investing £246m to address the productivity gap in a growing market worth an estimated £5bn in the UK and £50bn across Europe by 2025.
For Ian Ellerington, the institution’s Head of Technology Transfer, batteries can do more than address Britain’s long-term energy needs – they can be a catalyst for the country’s industrial revival.
They also established the Faraday Institution, a charitable trust that
“The world is approaching a tipping point and the electric vehicle is
To achieve this we’ll need to switch reliance from fossil fuels to renewable sources. However, wind, sun and tidal energy are by nature unreliable, and ministers are relying on energy storage to even out the peaks and troughs and guarantee supply. It’s a big ask – present-day battery technologies are nowhere near able to fill these gaps. That said, major advances have been
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This presents an enormous opportunity, not only to make renewable energy to work for everyone, but also to restore Britain’s leading position in auto manufacturing. Ian Ellerington, Head of Technology Transfer, Faraday Institution
becoming the preferred transportation alternative to the internal combustion engine, on the grounds of efficiency, cost, and environmental footprint,” he said. “car battery prices are falling in real terms, driven by volume manufacturing in response to consumer demand, with one-year waiting lists. This presents an enormous opportunity, not only to make renewable energy work for everyone, but also to restore Britain’s leading position in auto manufacturing, while providing the innovation needed to integrate electric vehicles into the energy distribution system.” lithium-ion batteries, with their high energy density and adaptability, have revolutionised electronics. In 1990 the Atomic Energy Research Establishment at Harwell, near Oxford, licensed the technology to Sony of Japan for its camcorders. Since then, li-ion has become the preferred cell for electric vehicles (EVs), mobile phones and the on-board electronics in jetliners. Aside from consumer electronics, batteries are also crucial for the reinvention – yet to come – of power generation and distribution, financial services, healthcare – in fact most activities in the new economy. cars will play a big role in electricity distribution by acting as mobile storage units, with drivers recharging when
demand and prices are low, and being paid to feed power back into the grid at peak times, said Mr Ellerington, an engineer who led the Government’s energy innovation programme before becoming its Head of Disruptive Energy Technologies and Green Finance Innovation. But he is less certain about how and where land-based “battery banks” will be located to ensure continuity of supply to Britain’s homes, hospitals, businesses and schools once the last coal-fired plants are gone. The Harwell-based Faraday Institution, named after the 19th-century scientist Michael Faraday, who pioneered the technology behind electric motors, has brought together scientists and industry partners with the aim of reducing battery cost, weight, and volume; improving performance and reliability; and developing ‘whole-life strategies’ from mining to recycling and second use. ‘Round 2’ projects, to be launched by the Faraday Institution later this year, embrace yet bigger challenges such as electrode manufacturing and
alternative cell chemistry beyond lithium-ion batteries. Batteries are currently unable to cope with the peaks and troughs of grid-scale energy supply meaning Britain continues to rely on natural gas which combines high energy density with low emissions, hence the determination to find alternatives before our reserves run out or we become over-reliant on potentially unstable sources abroad. “Batteries are really good at coping with peaks and troughs of four to five hours but are as yet nowhere near able to cope with days, months or seasonal shifts. That remains far more difficult to engineer cost-effectively,” said Mr Ellerington. “I’m not too worried as we have natural gas, but longer-term, we’ll need alternatives that provide similar flexibility,” he said, adding that heat storage was also a challenge, with demand for heat and electricity for transport approximately matching.
gareth.taylor@galbraithgroup.com 0131 240 6962
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Offshore wind to power one third of UK by 2030 A fresh Government commitment aims to secure the UK’s place as world leader in offshore wind power. Gareth Taylor reports. tHe Westminster Government has announced a ‘Sector Deal’ for offshore wind that guarantees long-term investment to generate 30GW a year of electricity by 2030 – one third of the UK’s power demand. As part of their ‘Industrial Strategy’, ministers aim to make the UK a global leader in renewable energy. A new Offshore Wind Growth Partnership will invest £250 million to support a predicted fivefold increase in global exports to £2.6 billion. A sector target has been set to boost the amount of UK content in homegrown offshore wind projects to 60%, so a £557 million pledge in July 2018 for further clean power auctions over the next 10 years will directly benefit local communities ‘from Wick to the Isle of Wight’, underpinning 27,000 jobs, according to an announcement on March 7. The £557 million will be available to developers via contracts for Difference auctions. These guarantee the price a developer receives for electricity generated, by topping up to a ‘strike price’ if revenues fall short, and recouping investment when the market exceeds the strike price. Because the ‘reverse’ auctions are competitive, the scheme gives stability to investors while protecting consumers. A date for the round three auction has been set and the Department for Business, Energy and Industrial Strategy has given assurances that future rounds of off-shore cFD will be held every two years.
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To date 25% of the consented GW capacity lies in Scotland, but the challenges for Scotland, despite having wind in abundance, are locating equipment in deeper seas (more than 60 meters in depth) and coping with higher grid costs than the rest of the UK (£10-20 per MWh). With many projects in the pipeline, Marine Scotland, the Edinburgh Government’s marine authority, intends to offer operator licences in a process coinciding with the crown Estate Scotland seabed auctions, to be held later
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A new Offshore Wind Growth Partnership will invest £250 million to support a predicted fivefold increase in global exports to £2.6 billion. this year. This will enable developers of several projects to bid in future cFD rounds. Underpinning these ambitious plans is the UK’s strong competitive position, shown by a historic drop in strike place to £57.50 per MWH, and the economics involved in the recent Hornsea Project 2 and Moray East schemes. Galbraith has been closely involved in the growing offshore industry, helping EDPR and Moray East realise their projects though assistance in delivering the onshore assets consents and land rights involved.
gareth.taylor@galbraithgroup.com 0131 240 6962
The market for operational single wind turbines is strengthening but, as Mike Reid reports, both vendors and investors should make sure records are accurate and current.
ensure that all due diligence takes place before placing any asset on the market. Many agreements were concluded prior to the turbine being constructed and often what was envisaged in the original plans has been changed on the ground.
Making the most of a rising market tHe end of the Feed-in tariff (Fit) and renewable obligation (ro) subsidy schemes has seen a slowdown in deployment of new single wind turbines up to 1.5MW. Reduced returns from these projects means developers are looking elsewhere. However, there are many single turbines already installed under these subsidy schemes, and there is now a developing market in the sale of individual turbines or whole portfolios of sites. Galbraith was involved in the successful sale of the operational Ferneylea wind turbines in 2017. GVO sold their wind turbine portfolio to Tenaga Nasional Berhad (TNB) in 2018. Early this year Galbraith marketed 0.30 hectares of land subject to a lease where a tenant has installed an Enercon E53 wind turbine de-rated to
The Ferneylea windfarm in East Lothian.
500kW. An annual rent based on 10% of the turnover is paid to the landlord. This generated high levels of interest from a variety of different investors and is currently under offer for well in excess of the guide price of offers over £275,000. There is a growing market for renewable assets and as these turbines become more established values are increasing against the backdrop of uncertainty in other investment sectors. An important lesson for vendors is to
In the rush towards commissioning, some property aspects may have been overlooked. Sometimes the turbine hasn’t been constructed in the correct location or the access route doesn’t follow the route on the lease plan. These issues need to be reconciled prior to any marketing campaign. Decommissioning bonds or security sums should be correctly reviewed and up to date to reflect the actual costs of the de-commissioning work. We have been involved in all aspects of duediligence work for turbines prior to sale and as part of ongoing management of these assets. Having up-to-date correct records helps prevent delays in any sale or if the turbine is required as security for any borrowings. The wind turbine may be required as security for the purchase of additional land and a purchase could be lost if there are funding delays caused by any irregularities.
Stalled turbine repowering set for revival SiNCe initial deployment, wind farms in Scotland have benefited from different subsidy schemes, most notably the renewables obligation (ro) scheme, which closed in 2017. We are seeing renewed interest in onshore wind farm development in Scotland as, due mainly to technical advances and reductions in turbine costs, wind farms can now compete in a subsidy-free market. Proposed schemes potentially can incorporate turbines of more than 5MW with tip heights in excess of 200 metres. These turbines will produce far more power than many operational turbines currently under the RO scheme. We are involved in many new developments all across Scotland. Older turbines are smaller and less efficient than their modern equivalents. Repowering existing wind farms, taking advantage of new technologies and more productive
turbines, was previously seen as the way forward – but this hasn’t happened on the ground. The closure of the RO scheme on March 31, 2017 has largely made repowering uneconomic as any new turbines don’t qualify from subsidy, reducing the turnover per megawatt hour by around 50% compared to the RO scheme. Due to the closure of the RO scheme, less efficient turbines are being kept operational due to the benefits of that subsidy income. This is now limiting Scotland’s potential energy generation from onshore wind. As new turbines become more efficient and cost-effective they will become the preferred option compared to current RO-eligible turbines, whose performance and efficiency will decline over time. Some older wind farms are reaching the end of their eligibility to receive
subsidy as well as the end of their planning consent and lease term. This will encourage repowering and we are likely to see new developments on these original wind farm sites with modern turbines. These repowered wind farms will hopefully boost total renewable energy generation although this won’t be without challenges – such as upgrading grid connection capacity and increased access requirements for longer blades. Planning consent may be easier to obtain where there is already an established use and some infrastructure that can be reused. This renewed interest in wind farm development in Scotland is likely to have an impact on new and existing sites.
mike.reid@galbraithgroup.com 01334 659 984
galbraithgroup.com | energy Matters | Summer 2019 | Page 11
The case of the cowshed and the power line When the siting of electricity equipment threatened the expansion of a dairy herd, Galbraith was on hand to help. Rachel Russell reports. SCottiSH Power is committed by what’s called its Grantor’s Charter to look after a vast network of cables and substations so it can deliver electricity effectively and efficiently. this often results in work impacting on land. The charter sets out guidance regarding access to land, works on land, compensation, existing apparatus and wayleave payments – a useful guide should you have any Scottish Power equipment on your land. The growing demands being placed upon the electricity networks, including upgrades of existing lines and installation of new lines, mean Scottish Power and landowners are often in contact trying to balance the needs of the network and that of the farming enterprise. This is where Galbraith can help. We recently acted on behalf of a farmer who wished to build a new dairy cubicle shed. The site of the proposed shed clashed with the location of an existing Scottish Power overhead line pole on the main distribution line and our client had received a quote in excess of £20,000 for moving this pole. The farmer wouldn’t have been able to afford to proceed with the new shed if he had to pay the costs of diverting this pole, and this would then have limited his proposed expansion of the dairy herd. We were instructed to negotiate with Scottish Power, first carrying out a review of the existing electricity apparatus across the land and the agreements in place between our client and the utility provider. We discovered that no current agreement for the main distribution line was in place, although there were owner’s consent wayleaves for the spurs off this line. In addition, the client had received no form of payment for this apparatus since purchasing the farm in the 1950s. In accordance with the Electricity Act 1989, Scottish Power is required to have a wayleave agreement for its apparatus (or servitude if appropriate). We were able to negotiate for the pole to be moved, allowing the client to build his new cubicle shed. A wayleave agreement for the distribution line was then put in place between Scottish Power and the farmer resulting in wayleave payments being paid. The relocation of the pole was carried out at Scottish Power’s expense and the agreed location ensured that it wouldn’t have any constraints on the proposed building allowing the expansion of the dairy enterprise. As the relocation of the pole enabled our client to progress with his development without the need to incur an unexpected cost, he agreed to waive any claim to backdated wayleave payments for the distribution line. Scottish Power also paid all the farmer’s reasonable professional fees. It is always important to make sure that as a landowner, any utilities apparatus on your land, or on recently purchased land, has been properly recorded and updated. If you are unsure whether you hold the correct documentation for apparatus on land under your ownership, or need help in regularising any agreement, please feel free to contact a member of our energy team. rachel.russell@galbraithgroup.com 01334 659 989
Page 12 | energy Matters | Summer 2019 | galbraithgroup.com
Above: How anaerobic digestion fits into the energy cycle. Below: The four stages of AD.
Graphics courtesy of ADBA, the Anaerobic Digestion and Bioresources Association.
Reaping the benefits of anaerobic digestion It’s been around for 3,000 years, and now anaerobic digestion is gaining ground in several business sectors. But, as Calum Innes reports, it needs a level playing field on taxation.
iN iSSUe 16 of Energy Matters we explored how the taxation system in terms of business rates has an unfortunate tendency to penalise hydroelectricity compared to other renewable-energy technologies such as wind and solar. But hydro is not the only victim of business rates inequality – anaerobic digestion is also at a disadvantage. This is unfortunate because encouraging investment in AD could help put the UK at the forefront of green energy production in the 21st century while boosting several other sectors. The rating disparity arises from the methodology applied by the Assessor in Scotland to the valuation of AD plants for rating purposes. This differs from the approach taken south of the border where the Valuation Office Agency apply a ‘collar and cap’ to ensure there is a degree of parity across renewable technologies. Anaerobic digestion is the simple, natural breakdown of organic matter into carbon dioxide, methane and water, by two groups of microorganisms, bacteria and archaea. As many of these are intolerant to oxygen, this process is known as anaerobic. The process, first harnessed by the Assyrians in 900Bc, has advanced to the stage where 484 plants operate in the UK outside the water sector with hundreds more at the planning stage. AD is an environmentally friendly, cost-effective solution to dealing with much of what we think of as ‘waste’. Instead of burning it, or sending it to landfill, AD plants potentially turn this waste, along with purpose-grown crops, into 30% of the UK’s domestic gas, which means less landfill, stable energy prices, fewer carbon dioxide emissions, and even a financial saving for homes, businesses, farms and councils across the country. AD works through a four-stage process. Hydrolysis breaks down complex organic matter into simple sugars, fatty acids and amino acids. These are broken down further into alcohols and
volatile fatty acids (e.g. ethanol and propionic acid), with by-products of carbon dioxide, ammonia and hydrogen sulphide. Fatty acids and alcohols are converted again, this time into hydrogen, carbon dioxide, and acetic acid. Remaining hydrogen and acetic acid are turned into methane and more carbon dioxide. At the end of the process, biogas can be burned to produce both heat and electricity, methane used as vehicle fuel or injected into the gas grid. Digestate is a stable, nutrient-rich substance and can be used for a range of products and purposes – most usefully as nutrient-rich fertiliser but also as feedstock for ethanol production, or in building materials such as fibreboard. After treatment within the AD process, water may be returned to watercourses. Set up in 2009 as a forum for emerging technologies and products from the bioeconomy, ADBA – the Anaerobic Digestion and Bioresources Association – represents companies and organisations working on novel technologies and processes that complement the AD process and products.
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For each tonne of food waste processed through AD rather than sent to landfill, 500 kg of cO2 equivalent emissions are avoided.
AD companies are increasing efficiency or creating products that command a higher value in the current market while reducing the industry’s dependency on government support and ensuring participants are ahead of the curve when it comes to emerging technologies that could compete for existing feedstocks. Technologies and processes operating under the umbrella term ‘bioresources’ include bioplastics, algae, energy storage, heating, electricity, gases and chemicals. It’s a big range that goes way beyond old notions of organic waste and smelly ditches. For example, for each tonne of food waste processed through AD rather than sent to landfill, 500 kg of cO2 equivalent emissions are avoided. With 16% of UK methane emissions coming from manure management, AD can abate approximately a third of these – some 3% of the UK’s total greenhouse gas emissions. But all this could depend on the Government creating a level playing field for anaerobic digestion and bring greater transparency to the market so we can take full advantage of this old, but very modern, technology. calum.innes@galbraithgroup.com 01738 456 075
galbraithgroup.com | energy Matters | Summer 2019 | Page 13
See you at the shows! If you are going to any of the following events pop in to our marquee and meet up with the Energy team – professionals from every service we provide will be on hand for a chat Galbraith Stirling Bull Sales: Sunday 5 and Monday 6 May. Fife Show: Saturday 18 May. Royal Highland Show: Thursday 20 June to Sunday 23 June. Game Fair at Scone: Friday 5 to Sunday 7 July. Great Yorkshire Show: Tuesday 9 to Thursday 11 July – Highland cattle Society marquee. And look out for our teams networking at some of the following events. They will be easily identifiable as they will be wearing Galbraith branded gilets. Stop them for a chat! Northumberland County Show: Monday 27 May. Belsay Horse Trials, Northumberland: Saturday 1 and Sunday 2 June. Border Union Show: Friday 19 and Saturday 20 July. For a full list of events, visit www.galbraithgroup.com/events
Page 14 | energy Matters | Summer 2019 | galbraithgroup.com
Scenes from summer 2018: The Galbraith marquee at Fife Show, the firm’s tug-of-war team in action at Scone – and Edinburgh rugby players taking on our hula-hoop challenge.
New partners: From left, back row: Roddy Findlay, Athole McKillop and Peter Combe. Front row: Galbraith head of energy Mike Reid, Tom Warde-Aldam, Galbraith chairman Iain Russell and senior associate Matthew Williamson.
Estate management experts merge to develop rural services
GalBraitH and land Factor, a specialised rural estate management company, announced a merger of the two firms earlier this year. The merger, which took effect on 1 April 2019, saw land Factor become a fully integrated part of Galbraith. land Factor provides land management, development and forestry services from its offices in Northumberland and cumbria. Mike Reid, head of energy for Galbraith said: “The land Factor team, now Galbraith, is particularly strong in both the estate management and forestry sector. Joining forces and maximising on our skills will enable us not only to
continue to offer these services but also provides us with prospects to enhance and explore new opportunities and further expand our renewables work across Northern England to deliver even greater breadth and benefits to our clients”. Athole McKillop, one of the founding directors of land Factor, and current chair of confor, notes that there are currently excellent prospects in the strongly performing forestry sector, with new planting reaching levels not seen for decades and strong timber prices encouraging more active forestry management across all types of woodland asset.
galbraithgroup.com | energy Matters | Summer 2019 | Page 15
How a Borders village set up its own high-speed broadband In issue 17 we looked at the need for fast rural broadband. Here, John Williams explains how a village in the Moorfoot Hills south-east of Edinburgh got connected and grew its network.
WHeN Heriot first started to receive community benefits from wind farms in 2012, the community confirmed in a survey that high-speed broadband was the top priority for use of the funds. Heriot community council initially took on the project. After initially struggling to find a sensible way forward, the Informatics Department at Edinburgh University gave considerable help, having pioneered several schemes on the west coast. These services use microwave links which are unaffected by weather conditions and avoid the hugely expensive cost of laying fibre in remote areas. The community service has grown steadily since then, with Heriot community Broadband cIc being formed to take over the service. HcB expanded further by tying up with Stobo-
Dawyck community Network with joint directors. Joint backhaul (wholesale service provision) is provided via a spin-off from Edinburgh University (High Speed Universal Broadband or HUBS) but our ultimate internet service provider (ISP) is comms World, a commercial company that believes community broadband has a viable future. HUBS also supplies wholesale services to another 11 communities, mainly on the west coast. Having started with one small mast, the joint service has grown to around 45 main masts. These are usually on the tops of hills as microwave links require direct line of sight. A
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typical main mast will then have a short-distance antenna to relay the service to individual properties. Small scale relays are used for difficult connections. The main masts nearly always link to one, two or three other main masts to ensure high level redundancy. There are three different links to fibre (and therefore the rest of the UK network) and more will be established. Heriot connections were completed some time ago, and the joint service has further expanded, stretching from longformacus in the east to Biggar in the west, with many people and communities asking for help. Several local estates and businesses are connected,
The future will be based on expanding beyond the volunteer model and growing to a size where the overall business supports professional staff.
Small-scale relays allow connections to difficult to reach areas.
Page 16 | energy Matters | Summer 2019 | galbraithgroup.com
including Fallago Rig wind farm as well as hotels. There has been considerable support from local estates. Further connections are being set up into Midlothian, south towards Stow and lauder and communities close to the Tweed Valley. Two substantial groups to the west of the Pentlands— one near lanark and the other further north towards livingstone — may shortly join the customer base. The future will be based on expanding beyond the volunteer model and growing to a size where the overall business supports professional staff. There are approaches by other companies who are keen to take over the networks. However, the joint services, now being merged into a single operating company called Borders Online, may well continue to expand to commercial size building on its successful record. That will require some further commercial funding but there appear to be opportunities in that direction. John Williams is chairman of Heriot Community Broadband.
Keeping the current flowing The move to renewable energy sources requires careful maintenance of the electricity network. Katherine Imlay reports
tHe Galbraith utilities team works closely with Scottish and Southern electricity Networks (SSeN) to assist in essential improvements to the network.
Having been involved in many refurbishment projects across the north of Scotland, Galbraith understands the requirements of negotiating land rights and offers advice on compensation mitigation using our latest technology. Our investment in mapping software and handheld tablets equipped with GPS means we can measure areas of crop damage within
Each year SSEN spends millions of pounds refurbishing its electricity network in order to maintain a reliable service to its customers. Our role as wayleave officers is to liaise with landowners throughout projects, from securing initial access to dealing with any reinstatement issues that may have arisen during the course of the work. The team aims to ensure that projects are delivered safely, on time and on budget by working with land-related stakeholders and taking into account seasonal matters, sporting activities and environmental requirements. One of the recent projects Galbraith was involved in was to secure consents both statutory and voluntary for rebuilding about 14km of 33kV overhead line along its existing corridor west from the Beauly grid substation to Erchless. The route passes through a diverse area involving arable fields, crofting communities, residential gardens, felled forestry and crosses the River Beauly twice.
Cable dip, and, below, a pole damaged by animals.
Several sections are planned to be placed underground where the line crosses under another overhead line, known as a ‘cable dip’. This is sometimes required for safety clearance when replacing wires and often this takes place when a wood pole distribution line crosses under a steel tower transmission line. This ensures that customers and colleagues remain safe in the vicinity of electrical apparatus during the course of the work. The methods of generating electricity are constantly evolving and the increase in hydro schemes and wind farms puts pressure on the network to connect the power generated effectively. The challenge has been to provide such connections while continuing to serve communities with a safe and secure service. The existing apparatus cannot simply support additional generation without taking a holistic approach to navigate the network through challenging terrain. livestock and wildlife can damage wood poles over time as well as the age of the asset and weather conditions causing an impact on apparatus. This refurbishment will ensure that the network is more resilient to these factors, lowering the risk of power cuts through faults and futureproofing the network for the benefit of customers.
arable fields and give the landowner an accurate account to reasonably claim losses. We appreciate the assistance of landowners to help facilitate apparatus on their land therefore look to ensure that damage is reinstated and that overall the work has been carried out respectfully for all involved.
katherine.imlay@galbraithgroup.com 01738 448141
galbraithgroup.com | energy Matters | Summer 2019 | Page 17
Cracking the code: A year on, there is still no clarity on telecoms A legal ruling that should help mobile phone operators to install more equipment may deter landowners from providing sites. Mike Reid reports.
tHe Digital economy act 2017 introduced a new electronic Communications Code to modernise the UK’s telecoms infrastructure by making it easier for companies to erect and extend mobile masts. More than a year on, you would expect some clarity on how the code will work in practice, yet the situation is as opaque as ever. Since the introduction of the code, telecoms negotiations have largely stalled as parties try to assess the implications of the new legislation. The February 2019 Islington council case in England was one of the first to assess the level of consideration and compensation under the code. A brief outline of the case is that prior to the new code coming into force, a rent of £21,000 a year had been agreed for a rooftop telecommunications site in london, but the agreement wasn’t concluded. Under the new code, the mobile providers EE and H3G proposed a consideration payment of £2,551.77 and the landlord proposed £13,250. The tribunal determined that an appropriate consideration payment would be £1,000 per annum but confirmed their award would be £2,551.77 per annum, matching the tenant’s offer. In making its decision the Upper Tribunal made various assumptions on how the code should be interpreted and most of these favoured the telecoms operators. This might look like a good result for the operators, but it may not turn out that way in practice. landlords may not want the hassle that a telecoms site can bring
CURRENT RENEWABLE ENERGY SUBSIDIES
for a nominal return, and could look to resist any attempts to locate apparatus on their land or buildings unless the operators offer a worthwhile payment and reasonable lease terms. Further code cases are pending, which should give further clarity on consideration and compensation, as well as other issues. Many landlords will be
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Telecoms negotiations have largely stalled as parties try to assess the implications of the new legislation.
waiting for these decisions before they decide how best to progress any approach from a code operator. The Islington case also confirmed that reasonable professional fees for progressing a code agreement should be payable by telecoms operators, so anyone affected by a new code approach should obtain professional advice on the terms and implications of any agreement.
mike.reid@galbraithgroup.com 01334 659 984
Domestic Renewable Heat Incentive (RHI) Applications submitted for the period 1/10/2018 – 30/12/2018 Technology Biomass boilers and stoves
The Galbraith energy team has researched the current subsidy regime to produce this reference guide for the most popular technologies. Subsidy levels are subject to change, so the figures given here are for guidance only. Current details of FIT rates, ROCs and CFDs can be found at www.ofgem.gov.uk/environmentalprogrammes The Feed-in Tariff and the Renewables Obligation scheme have both closed to new projects.
Page 18 | energy Matters | Summer 2019 | galbraithgroup.com
Tariff p/kWh 6.88
Air-source heat pumps
10.71
Ground-source heat pumps Solar thermal
20.89 21.09
Source: Ofgem.
TELECOM LEASE RENEWALS WHEN landowners are approached by the telecom companies for new sites, the main issue is the site payment that will be received. But there are additional challenges when the question of lease renewals arises. In Scotland, commercial leases continue by tacit relocation – a legal principle whereby the agreement continues on a year-to-year basis unless notice has been served to bring it to an end. Operators are approaching landowners confirming these leases have expired and are requesting new leases under the Electronic Communications Code, which include a significant reduction in the rent in order to lower costs for telecoms operators although with no benefit of widening digital access. There is considerable uncertainty as to whether there is a legal right for the operator to demand a new lease when the existing lease is in tacit relocation. The Upper Tribunal case of CTIL v Compton Beauchamp Estates Ltd has provided some clarity as this determined that a code operator could not impose a code agreement on a site provider where another operator was already in occupation. CTIL have been approaching numerous site providers who currently have a lease to Telefonica and Vodafone confirming they have the right to a Code agreement, which this decision has now clarified isn’t correct. The tribunal also indicated that it wouldn’t be straightforward for CTIL to justify the public benefit test for any new code agreement as there may not be any benefit if the service provided wasn’t changing. Although the tribunal didn’t determine the appropriate consideration it did confirm that it wasn’t convinced by CTIL’s approach to the value of the site by adopting a pro rata value based on much larger areas of farmland scaled back to the smaller area. Lease terms would also be a relevant factor. It isn’t surprising many landowners aren’t willing to progress matters until legal clarity has been provided and further precedents will still be required, which we expect should happen this year.
Non-Domestic Renewable Heat Incentive (RHI) Tariff name
Eligible technology
Eligible sizes
Small commercial biomass
Solid biomass including solid biomass contained in waste
Tier 1 Tier 2 Tier 1 Tier 2
3.11 2.18 3.11 2.18
Tier 1 Tier 2
3.11 2.18
Medium commercial biomass large commercial biomass Solid biomass cHP systems Water/ground-source heat pumps
Solid biomass cHP Ground-source & water-source heat pumps
Air-source heat pumps All solar collectors Small biogas combustion Medium biogas combustion*
Air-source heat pumps Solar collectors Biogas combustion
All capacities Tier 1 Tier 2 All capacities <200 kWth <200 kWth ≥200 kWth ≤ 600 kWth ≥ 600 kWth
large biogas combustion* Source: Ofgem. Tariff rates are in displayed in pence per kWth and for installations with an accreditation date on or after 22/5/2018.
Tariff p/kWh
4.51 9.56 2.85 2.75 10.98 4.74 3.72 1.18 * Commissioned on or after 4/12/2013.
galbraithgroup.com | energy Matters | Summer 2019 | Page 19
OUR EXPERTISE n
Anaerobic digestion n Battery storage n Biomass n Buying, selling and due diligence n Hydro power n Investment in renewables n Land Referencing n On-shore wind n Oï¬&#x20AC;-shore wind n Planning n Solar energy n Telecoms n Utilities and infrastructure n Valuations
OUR EXPERTS ABERDEEN tom Stewart
01224 860 714
EDINBURGH Gareth taylor
0131 240 6962
tom.stewart@galbraithgroup.com
gareth.taylor@galbraithgroup.com
AYR & CASTLE DOUGLAS David Corrie 07824 690 199
HEXHAM
david.corrie@galbraithgroup.com
Roddy.findlay@galbraithgroup.com
BLAGDON Matthew Williamson 01670 789 621
INVERNESS & ELGIN Dougal lindsay 01463 245 380
matthew.williamson@galbraithgroup.com
dougal.lindsay@galbraithgroup.com
CUPAR Mike reid
GALASHIELS & KELSO Harry lukas 01896 662 829
01334 659 984
roddy Findlay
01434 405 962
mike.reid@galbraithgroup.com
harry.lukas@galbraithgroup.com
STIRLING & PERTH richard Higgins
PENRITH 07717 581 741
richard.higgins@galbraithgroup.com
athole McKillop
01768 800 830
athole.mckillop@galbraithgroup.com
