Landowners must secure grid connection rights quickly and independently to safeguard income
Press Release: 8 February 2017, Energy Now Expo
The rental income from hosting a large-scale energy scheme can be extremely beneficial for any landowner or farmer with a suitable site. Getting permission to connect to the electrical grid is the most important factor in determining the success and income from any scheme and is one which landowners must approach with caution, says Hugh Taylor of power and grid rights consultants Roadnight Taylor.
Speaking at the Energy Now Expo in Telford on 8 February 2017, Mr Taylor explained landowners rarely consider the value of their grid connection rights. Grid rights could be worth £500,000 to £2 million in ground rental income over 15-20 years to farmers and landowners who secure grid rights effectively – thus offsetting the possible loss in subsidies from any eventual Brexit outcomes. But, he warned, grid rights are worth much less, or even nothing, for those landowners who handle them carelessly.
Beware developer approaches
“There are many developers approaching farmers to obtain ground for large-scale energy schemes. These developers will seek the landowner’s authority to apply for a grid connection offer. Although applied for on the landowners’ behalf, the grid application – and therefore the grid rights and obligations – are always in the developer’s name.”
“Worse still, grid applications are always technology-specific, and a given developer will be applying for their own particular technology, be that battery storage (often called ‘energy barns’), gas or diesel-powered generators (peaking plant, gensets or STORs) or a renewables scheme.”
Don’t sign a letter of authority
“Landowners should never sign a letter or form authorising a developer to apply for a grid connection on their ground. The developer’s technology may be inappropriate for that part of the network – whereas an alternative technology may be viable – and competing developer offers cannot be sought if the grid rights have been signed over to one developer,” Mr Taylor said.
Another important factor in securing grid rights is speed. “As the power grid becomes saturated, sites with connection potential are harder to find. The network operators issue grid rights by application and on a strictly first-come, first-served basis. Landowners must move quickly – before speaking to any developers – to secure their grid connection before their neighbours snap up any remaining grid capacity,” he said.
Other pitfalls to avoid include the torrent of inexperienced and under-funded developers who are entering this fast-moving market, warned Mr Taylor.
Seek specialist, niche advice
Mr Taylor said landowners need to seek specialist, professional advice to safeguard their grid rights quickly, before they commit to any developer. “The advice should be independent of any developer and must consider all the relevant technologies. The site, the local grid and market conditions may make some technologies a better choice for landowners than others. Once grid rights have been secured and safeguarded, the advisers or consultants can invite bids from the best resourced and most experienced developers – resulting in safe competition and improved ground rents and terms and for the landowner.”
He concluded, “Independent advice for large-scale schemes should be at no cost or obligation to the landowner. Consultants’ fees should be on a success-only basis – with success being a lease entered into by the landowner.”