22 minute read
affecting the utilities sector
Utilities turn green
With the deadline on the horizon for the UK to achieve net zero by 2050, we find out how sustainability issues are affecting the utilities sector and how energy sources are changing.
As the UK looks to reduce carbon emissions to net zero by 2050, a lot of attention has been focused on the energy sources that will replace fossil fuels. Hydrogen, a gas which when burnt produces nothing more harmful than water, is currently attracting a great deal of interest. Pilot schemes are already underway in the UK, such as H100, H21, HyNTS, Hydeploy and HyNet, projects which aim to create a low-carbon exemplar cluster that can act as a UK model for clean growth. ”
If some of the technical constraints surrounding the clean production of hydrogen can be overcome it could potentially replace natural gas, providing zero emission cooking and heating for domestic homes and power for factories and other industrial users. Production of hydrogen has so far grabbed most of the headlines, with comparatively little coverage given to the infrastructure required to distribute the gas around the country. Current thinking suggests that some of the existing natural gas distribution network and other infrastructure (which is itself being modernised) will be capable of being repurposed for pure hydrogen.
However, Fisher German partner Mark Gilkes says: “It’s likely that the necessary rights will have to be obtained to facilitate the repurposing of the network and considerable lengths of new transmission pipelines will be required to create a high pressure hydrogen spine network, which will feed the distribution network to consumers.”
Better together
The prospect of new pipelines brings with it potential conflict with landowners. Historically utility providers have negotiated with relevant parties to allow a variety of pipeline types to be laid and connected to other infrastructure, at the same time as requesting planning consent from the relevant local authority. Where negotiations have failed, utility companies have had to resort to CPOs (compulsory purchase orders), which can be a time-consuming and costly process.
Mark says: “The introduction of the Planning Act 2008 legislation brought in Development Consent Orders (DCOs), which are designed to speed up major infrastructure projects, including pipelines. The process pulls planning consents and compulsory purchase powers together and makes the Planning Inspectorate responsible for reviewing applications and, as appropriate, granting consents, so is potentially a very efficient way of completing infrastructure schemes.”
It has taken some time for the industry to fully realise the potential of DCOs, but they are increasingly likely to be used on all types of relevant infrastructure projects. Fisher German has seen a number of DCOs through to fruition, and Mark says the process offers two important benefits: “Firstly, as long as consultations and reviews have been carried out correctly the risk of a DCO not being granted can be mitigated facilitating the granting of all the required consents. Secondly, it is much quicker. You can go from a standing start to working on-site in around three years, whereas under the previous regime, projects could be caught up in planning inquiries for many years – and possibly decades for the largest schemes.”
Mark admits that working on DCOs can be challenging but he enjoys the multidisciplinary nature of such projects. “Working closely with other specialists like engineers and environmental consultants, we are able to pull together as one.”
And, he says, he expects to work on more DCOs in the future: “The majority of DCOs succeed, so with increasing demand for pipelines and other key infrastructure schemes, including new energy sources such as hydrogen, utility companies now see this process as an important way of successfully implementing key projects.”
Utilities companies face up to challenges of net zero
As the UK begins to shift rapidly away from carbon energy sources, utilities companies are gearing up for a period of significant change. Fisher German partner Giles Lister says work has already started on the existing electricity network: “Infrastructure is being upgraded by using modern technology, which provides greater capacity. At present there are parts of the country where it is difficult to connect in new renewables schemes because the existing network wasn’t designed for it. So, providing greater capacity, quantitative efficiency and availability of connection points are a crucial element of the network upgrade that will enable optimum transmission and what is left of the carbon-emitting generation to be switched out.”
Although Britain has now left the European Union, it is still part of the European generating network that irons out the supply/demand imbalances, which are inherent in renewablesproduced electricity. Giles explains: “If, for example, it’s very windy in the UK and not so in central Europe we may export our surplus wind turbine-generated energy and vice versa – the driver being to ensure security of supply across Europe. Overall, though, with the increased focus on net zero, we can expect UK requirements for electric power to grow.”
At present, storing significant amounts of surplus energy isn’t possible as the technology for industrial-scale storage is largely theoretical. But that is changing. Giles says: “We’re looking very closely at battery storage facilities, as once the technology has evolved, we think there will be substantial demand for them in many parts of the UK, to maintain supplies during periods of peak demand, which in turn will have implications for land requirements. In addition to this, increased demand for smaller batteries to power anything from electric vehicles to homes will require new production plants, bringing an interesting property perspective to these so-called ‘gigafactories’.”
Net zero could be net gain for utilities
A firm focus on net zero carbon emissions (p.8) is simultaneously causing short-term issues and longer-term opportunities for utility providers. Fisher German partner Giles Lister says: “Plots of land bought as recently as a couple of years ago didn’t factor in the requirements and potential cost of securing the commitment given to biodiversity net gain. Utility companies are now fully engaged with the requirement to attain their aspirations but there are associated cost implications, which in some cases can be substantial. For these companies, we are looking at mitigation measures, which include generating power [electricity] through renewable means on their own assets to reduce energy bills or securing biodiversity offsetting and other natural capital schemes by linking them with landowners interested in environmental schemes on their land through Fisher German’s ‘The Green Offset’ project.”
Habitat improvement also presents an opportunity for utility companies to meet Environmental Social and Governance targets and improve community relations. Giles explains: “We’re liaising with utility companies to ask that they think creatively about how they approach habitat improvement and net gain commitments. For example, there may be opportunities to partner with local/regional environmental groups (such as one of the Wildlife Trusts) working together to deliver the management of identified land to meet the requirements. This is a win-win, as it allows the utility provider to focus on its core activity, while at the same time enabling it to build positive relationships with local communities."
Mark Gilkes
07501 720410
mark.gilkes@fishergerman.co.uk
Access all areas
A new approach to house buying is gathering pace prompted by the pandemic.
Buyers’ attitudes towards new homes are changing and in a positive way. The show home, once an integral early part of any new residential development, is starting to give way to virtual tours and documentation, which potential buyers can access without having to leave the comfort of their sofa.
Fisher German national new homes manager Ella Cartwright says: “Families, in particular, used to be very keen on seeing a property in real life so that they could understand how the space would work for them. However, over the past 18 months they have become much more willing to buy off-plan at developments where building work has only just started. They are joining first-time buyers who have always been more open to this approach.”
Even more remarkably, senior buyers, who traditionally have shied away from off-plan purchases, have also become more amenable about buying in this way. “I recently sold a complete development of bungalows off-plan,” confirms Ella. “Admittedly it required a significant amount of hand-holding throughout the process, especially arranging for buyers to be able to proceed so that they could reserve their new home, which sometimes meant temporarily renting so that they had the funds immediately available. But overall, they were prepared to do it, if it meant they could secure the property they wanted.”
This new-found willingness to buy homes virtually matches a shift in locational demand, prompted by the global pandemic. “The importance of fresh air and outdoor space has focused many buyers’ minds on moving out to more rural areas than they would previously have considered,” admits Ella (see hot spots box). Virtual sales tools helped keep moving plans on track when travel throughout the UK was limited or discouraged.
Ella adds: “The vast majority of larger housebuilders are now providing whole development fly-throughs. So, as well as virtually being able to walk through your potential new home, you can also walk out of the door and down the road so you can get a feeling for the local area. Even though you’re not there in person, it really helps buyers understand a location better.”
The early bird catches the worm
Covid-19 has also encouraged greater take-up of early-bird schemes for new homes. Ella explains: “This is effectively a pre-reservation. A developer will calculate the approximate cost of a home before a new development launches and potential buyers then can register their interest in return for a modest deposit.
“Once the development launches, they have first option to buy the home and if they choose not to, their deposit is refunded. The concept is really becoming popular – we recently worked on a development where each property had three potential buyers before the formal launch.”
Housebuilders are also adapting to post-pandemic norms by reconsidering the layout of new homes, so that the potential for home-working has been designed into the property. Ground floor studies, already popular, are likely to become a staple feature of new homes going forward and if that space isn’t provided downstairs, it is likely to appear on an upper floor through conversion of a bedroom or enlargement of a landing.
Recent new homes instructions
Burcot Gardens, Worcestershire
Set among the rolling hills of the Worcestershire countryside, Burcot Gardens comprises 12 highspecification two to five-bedroom residences built by Hagley Homes. The village of Burcot is charming and full of character, with quaint cottages, rustic farms, a historic church and an active community. Nearby Bromsgrove offers cultural and shopping facilities. And despite Burcot’s peaceful situation, it benefits from excellent transport links, with easy access to the M42 and M5 motorways.
Holly Gardens, Webheath, Worcestershire
A development by Eden Homes, Holly Gardens features nine exceptional two and three-bedroom detached bungalows, offering a superior standard of living in a popular location. Set back from the main road, each bungalow offers elegantly landscaped gardens and beautiful block paved drives. Each home has been designed and built with materials that exceed current building standards, resulting in less energy being consumed and reducing the impact on the environment. Subsidised extras for enhanced sustainability include solar panels, air source heating, triple glazing and upgrades for electric car chargers.
New home hot spots
While this type of built-in flexibility will take time to appear as schemes progress through planning and construction phases over the next few years, many current new homes can also be tailored much more easily towards new modes of living than older properties. Ella says: “Garages often have unused roof space and can accommodate an upper floor that makes for an excellent office. The advantage of this is that it allows home workers to better separate their home and work lives. For the same reason, garden pods are becoming very popular and these complement new homes well, as they can be fitted out to a similar high standard as the main house.”
Oxfordshire
The demand for rural living and a spate of new development opportunities in villages on the edge of towns such as Banbury and Thame has brought in a huge amount of interest from families and professionals who can also benefit from quick and easy access to London and Birmingham. Ella comments: “For a long time there was a shortage of sites in village locations in Oxfordshire and now that a number are coming through, we’ve seen a wave of potential buyers determined to secure their ideal property. As with many rural new homes, these buildings incorporate local building materials, including Cotswold stone, which is hugely popular in the county.”
Northwest
Towns like Chester and Knutsford are extremely popular with those keen to escape the hustle and bustle of Greater Manchester. Buyers can enjoy the tranquillity, beautiful scenery and traditional town centres of leafy Cheshire, yet still have easy access to more modern amenities, such as the UK’s largest designer outlet centre at Cheshire Oaks. Ella says: “Buyers are very receptive to the high-end new-build properties in these areas and, as a result, housebuilders are actively looking for exclusive parcels of land for future builds, while developing outstanding homes on sites that already have planning consent.”
Ella Pearson
07580 323827
ella.pearson@fishergerman.co.uk
READY, (OFF)SET, GO
Fisher German's innovative new platform, The Green Offset, is now live. The website connects those requiring land for a wide variety of environmental improvement reasons with landowners who are willing to provide acreage that will sustain new habitats or host renewable energy sources.
If The Green Offset sounds like something from a sustainable environment documentary, that’s because it may well feature in one before too long. The basis of Fisher German’s innovative online service is to connect those requiring land for a wide variety of environmental improvement reasons with landowners who are willing to provide acreage that will sustain new habitats or host renewable energy sources.
The original objective for The Green Offset team, says Fisher German senior surveyor Alex Watts, was to provide a one-stop-shop for developers who might require land for habitat improvement as a result of the government’s new Environment Bill, which is expected to become law in Autumn 2021. The Bill requires most development sites to achieve a 10 per cent increase in on-site biodiversity and where this isn’t possible within the existing site, the improvement will need to take place on land elsewhere.
“Although The Green Offset was initially designed around the new biodiversity net gain requirements,” says Alex, “we quickly realised that we could build a platform that will be helpful to not just developers, but also corporates, utility companies, high net worth individuals and others who are conscious of their carbon output and need to find land suitable for biodiversity, carbon- or water-related enhancements.”
The website, which went live in spring 2021, has already attracted a significant amount of interest. Alex explains: “The beauty of this site is that it is open to all interested parties, not just Fisher German clients, so it really has a broad nationwide reach. And using the site doesn’t commit either landowners (providers) or those looking for land (seekers) to any kind of firm agreement; it’s simply a way of very quickly and easily introducing interested parties to each other. If they decide to go ahead with any kind of contract, such as an initial environmental
Developer awareness of offsetting on the up
“I know that house builders and developers are looking at the issue of biodiversity net gain very closely, because clearly, it will affect the value and viability of some sites going forward,” says Fisher German partner Ben Marshalsay. “A website like The Green Offset is of great interest to developers, many of whom are still getting up to speed when it comes to offsetting – they are familiar with the term, but not necessarily how it will work for them in practice. Having one place that can showcase a wide range of offsetting opportunities definitely makes life easier for them.”
survey, they do that privately. The site is completely free for providers, and seekers only pay a one-off fee if their search results in a formal agreement.”
Creating a first-of-its-kind website in the UK wasn’t without its challenges, admits Alex, with the complex mapping data proving initially difficult to produce reliable results. But repeated rounds of troubleshooting eliminated bugs and led to the easy-to-navigate interface visible today. “Seeing the live website with actual parcels of land available is a real thrill,” adds Alex.
Growing awareness of the biodiversity net gain requirements included in the Environment Bill has provided an initial spike in interest for The Green Offset and Fisher German surveyor Tom Beeley suggests that demand is likely to rise over the next few years. He says: “There’s likely to be an ongoing market for biodiversity offsetting to achieve biodiversity net gain requirements as there will be a requirement for development to demonstrate environmental net gain. Beyond this it is likely that in addition
Planning authorities ahead on net gain
Local planning authorities will play a major role in the land offsetting process. Fisher German partner Liberty Stones says: “Some local authorities have already brought in biodiversity net gain requirements ahead of the Environment Bill and many are putting together green infrastructure networks within their boundaries, which are effectively areas that they want to improve. We’ll have to see how that works in practice, as well as how cross boundary issues are managed, and whether net gain offset would be accepted in another authority area to that of the development.”
Simple solution for complex land management issue
The positive reception of The Green Offset since its launch has been particularly welcome for Fisher German partner David Merton, who devised the original concept and was keen that the new platform would allow landowners to remain in control of how their land is offered. He says: “The Green Offset provides a simple platform to enable useful conversations around delivery of ecosystem services for the private market to take place. I hope that it will help drive these new markets forward, help landowners access and explore these markets and over time deliver some clarity to what is a complex, new issue for land management.”
to providing an improvement in habitat atmospheric emissions, water management and provision of public space will need to be considered and addressed in a similar way.”
Crucially, The Green Offset has been designed from the start to adapt to changing requirements. Tom says: “We are already refining the website in response to feedback from providers and seekers, which is likely to result in continuous improvements. And if legislation changes in the future, we are ready to make provision for it.”
One thing to bear in mind is that the land will be taken out of agricultural production for the typical 30-year covenant period and that may affect capital values. However, the sort of areas most suitable for The Green Offset are likely to be those which currently yield very little, if any, income. Alex concludes: “While there is no guarantee that the land could re-enter agricultural production at the end of the covenant period, it is quite possible that the landowner will be able to enter into another covenant. And who knows, by the 2050s environmental land may trade at a premium to arable.”
THEGREENOFFSET.CO.UK
The Green Offset is particularly relevant for water utility companies as, like developers and many farm businesses, they will be subject to biodiversity net gain on any of their new assets, which require planning permission. Fisher German has already worked on projects where water companies have delivered biodiversity net gain through the planning process due to local requirements (see box). And now it is clear that government policy means biodiversity net gain is here for the long term, some water companies are going above and beyond what is required by law (see box).
They are also mindful that, in its latest price review, the water regulator, Ofwat, introduced targets for water companies to make improvement of the environment a core part of their business, to deliver sustainable, resilient water supplies, as well as offering greater public value. Time to act, together as Ofwat’s strategy is titled, envisages an industry with the environment integral and inseparable from its services, with water companies driving restoration of ecological status and adding value to the land they hold and use.
Fisher German partner George Simpson says: “Much of this land is managed by farmers, so we foresee increasing collaboration between water companies and farming businesses, which themselves will be expected to demonstrate environmental improvements.”
One of the largest challenges facing water companies will be how they source land required for biodiversity net gain. In a recent Fisher German survey most water company respondents indicated that they are focusing initially on their substantial land holdings to meet these needs. But George notes: “Those land holdings are a finite resource, so it is clear that they will need to be supplemented by acquiring additional land, rights in land or land management schemes, particularly if, as I believe is likely to eventually be the case, biodiversity net gain requirements also apply to development on third party-owned land.”
Farmers are in an ideal position to supply this land and in fact many are already working together with water companies on river catchment improvement schemes. These work by supporting farming businesses in river catchments to undertake improvement works such as fencing off rivers, removing drinking points in favour of troughs, and funding annual management actions such as planting cover crops to improve soil structure or under sowing maize with grass to reduce run off, all of which will improve water quality. George says: “This achieves the primary objective of improving the environment but also brings the substantial added benefit of reducing the requirement for water treatment, which in turn reduces power and plant requirements and therefore carbon emissions. Farmers benefit from improved compliance and greater efficiency as soils improve and nutrients are retained.”
Similar schemes could be established to deliver biodiversity net gain commitments. Examples of existing schemes include: • South Staffs Water’s ‘SPRING’ offers grants of up to £10,000 to fund farm infrastructure and annual management to protect the environment and improve water quality • Anglian Water’s ‘Slug it Out’ has reduced the number of metaldehyde exceedances in the scheme area by 70 per cent by paying farmers to use alternative slug prevention measures
Severn Trent Water is already using its catchment management scheme, for limited periods, to promote biodiversity enhancement on farms. Its ‘Spring STEPS’ programme has delivered more than 1,500 hectares of new or enhanced habitat and 20,000 trees. Although the improvements aren’t directly linked to the water company’s infrastructure projects, these general schemes nevertheless contribute to an overall target for Severn Trent’s five-year plan. They also help to protect water quality and mitigate agricultural run-off and improve soil health on farm businesses.
George says: “It is clear that the direction of travel is a need for more land to deliver biodiversity net gain, which in turn will lead to more and closer partnership working between water companies and farming businesses. Both parties should see this as an opportunity rather than a necessity and it could be a win-winwin situation, where water companies carry out capital work to meet their commitments, farmers then maintain land under an Environmental Land Management scheme and the environment is substantially improved.”
Planners and water companies already building in biodiversity net gain
Some local authorities have already been seeking biodiversity net gain ahead of it becoming law in the forthcoming Environment Bill. Fisher German planning partner Sarah DeRenzy-Tomson says: “We advised on the installation of a new kiosk and sludge thickening building at a Sewage Treatment Works in Warwickshire. A Biodiversity Enhancement and Management Plan (BEMP) was prepared and submitted as part of the planning application, which included grassland creation with wildflowers to deliver biodiversity enhancement. This amounted to a 15 per cent biodiversity net gain, which not only exceeded the minimum threshold set out in local guidance, but also achieved the water company’s own target.”
Acknowledging the wider concerns about environmental welfare, the water industry is looking at improving on statutory minimum requirements. Sarah says: “In the period 2020-2025 we know that some water companies have a biodiversity enhancement performance measure across all schemes, which require a preliminary ecological assessment, and have set a target of between 10 and 15 per cent biodiversity net gain. Project teams are exploring options and delivery mechanisms to achieve the targets to ensure that habitats are enhanced once schemes are complete.”
Case studies: biodiversity net gain targets
Anglian Water A minimum 10 per cent biodiversity net again applies to all land owned directly by the company. Severn Trent Water In addition to Ofwat targets, a minimum 15 per cent biodiversity net gain is applied to all infrastructure projects requiring a preliminary ecology appraisal (where an impact on biodiversity is anticipated). Natural England methodology for assessing the loss (the same as used by the planning system) is applied to the entire project, including where it is on thirdparty land. However, it is worth noting that as the impact from construction of pipelines (the most likely development on third-party land) is temporary, the assessment reflects that, so the loss is relatively small. The time taken for new hedges, trees and other elements to mature is also taken into account.
Alex Watts
07584 707294
alex.watts@fishergerman.co.uk
Tom Beeley
07970 698729
tom.beeley@fishergerman.co.uk
George Simpson
07810 378185
george.simpson@fishergerman.co.uk
