Carter Jonas
Carter Jonas

Peak Power Generation – a new opportunity for landowners

With the end of the Paris COP21 conference, a new era may be beginning for energy investment and strategy in the UK. After a series of major blows to the renewable energy sector (including the imminent results of proposed large cuts to the Feed in Tariff), it seems that while the renewable energy industry may suffer at least initially, there will be a progressive drive to support large low carbon and innovation projects across the UK.

One area that is likely to continue with strong support will be the Balancing Services procured by the National Grid.

Existing coal power stations are heading towards the end of their life (with the Government planning to phase them out completely by 2025). The plan is for other technologies to take this burden but large power stations take a long time to develop and renewable energy generation is not very flexible.

Even the fruition of the timescale for nuclear at Hinkley Point C will not be fully realised until circa 2025, and several large offshore wind projects have recently been shelved due to investment risks and uncertainty.

This has created a market for generation which can be controlled “on demand”. Reports from the National Grid state that their 2015/16 winter outlook report predicts the narrowest margin for electricity capacity in a decade. This is a sign of the increasing energy gap growing between our energy demand and energy supply.

Peak Power Generation (PPG) is the term used to describe diesel or gas generators that are able to be 

switched on and export power to the grid at specific times of high demand, typically for short periods of a few hours at the end of the day (STOR is a contract available with the National Grid and also a common term for this and a type of development).

In the absence of new renewable opportunities in the short term, PPG may provide landowners who have access to grid connections, possibly following a failed wind or solar scheme, with attractive propositions and returns comparable with the wind market. As these returns available are likely to fall as the deployment of such sites increases, we would urge any landowner to take advice and check whether they may be sitting on a potential development site.

The most critical requirement for PPG is a grid connection. If a site is close to a substation and / or has previously considered large renewable energy then there may be capacity for PPG. Developments tend to require above 0.3 acres of flat land, ideally on hard standing and away from residential properties.

Whilst there are some attractive rental offers been tabled by PPG developers for sites, Carter Jonas’ Energy Team are also actively advising landowners on how to develop sites themselves in order to unlock the development premiums available from consenting a site and securing both grid and a generating contract.

If you feel you may have a development opportunity we would be delighted to screen this and provide an initial opinion on its development prospects.

Get in contact with you local Carter Jonas office by clicking here.

Charles HardcastleMRICS, FAAV

Partner - Head of Energy and Marine

Charles is a Partner, based in Yorkshire but who operates on a National basis across the country. He heads the Carter Jonas Energy and Marine Team which deals with a wide range of energy projects incl...

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