Comment on Renewable Energy Sector

There have been some important developments following on from the Copenhagen climate talks held in December 2009, including the Round 3 Offshore Wind Development Zonal awards to developers, and also the Department of Energy and Climate Change’s recent announcements regarding the Feed-In Tariff (FiT).

Unfortunately the Copenhagen talks were largely viewed as a weak outline of a global agreement, falling way short of what Britain and many other countries are seeking to achieve and necessitating major negotiations that will have to be undertaken in the future. Following on from Copenhagen, on 8 January 2010, The Crown Estate announced the successful bidders for each of the nine Round 3 Offshore Wind Zones within UK waters. The expansion of electricity generation from offshore wind represents a major long-term investment opportunity which has the potential to generate thousands of jobs in the UK, as well as securing a marine renewable electricity source. The Round 3 Offshore Wind Energy Generation aims to deliver a quarter of the UK’s total electricity requirements by 2020.

All the parties are understood to have signed the exclusive zonal Development Agreements with The Crown Estate, who has responsibility for renewable energy in UK waters, to take the proposals through the planning and consenting phase. On 1 February 2010, the Department of Energy and Climate Change (DECC) announced the details for the Feed-In Tariff (FiT) for small-scale (sub 5MW), low-carbon electricity which will take effect from 1 April 2010. Households, communities, land and property owners who install generating technologies such as small wind turbines and solar panels along with other eligible technologies, will from April be entitled to claim payments under the Feed-in Tariff for the low-carbon electricity they produce, even if they use it themselves.

The Energy and Climate Change Secretary, Ed Miliband, announced the Feed-in Tariff levels and also published a blueprint for a similar scheme to be introduced in April 2011 to incentivise low-carbon heating technologies. The Renewable Heat Incentive (RHI) will be a world first. These schemes are designed to bring about a significant increase in the amount of locally produced green energy.

The level of payment depends on the technology and is linked to inflation. Operators will get a further payment for any electricity they supply into the grid and these payments will be in addition to benefiting from reduced electricity bills, as they reduce the requirement to purchase electricity. We view the FiT as a major development in the renewable energy sector for smaller scale installations across the UK, in many cases promoting not only an acceptable financial return for the investors but also significant additional  employment.

In the future land and property owners and investors appear to be well placed to assist with energy generation making use of property assets and payment mechanisms for generating technologies either under the Renewables Obligation (RO) or the Feed-in Tariff (FiT).

Finally, with the Budget announcements having been made by Mr Darling including the £2 billion to set up the new Green Investment Bank and a handful of specific measures to encourage green energy, including only £60 million for the offshore wind sector, there is no doubt that the Government will have to make greater commitments on commercial scale generation going forward, if we are to have any chance of meeting the targets set in the future.

Andrew WatkinMRICS

Partner

Andrew is a Partner, based in Peterborough and operates throughout the country. He heads the Carter Jonas Energy and Marine Team which deals with a wide range of renewable energy schemes, includin...

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Andrew is a Partner, based in Peterborough and operates throughout the country. He heads the Carter Jonas Energy and Marine Team which deals with a wide range of renewable energy schemes, including wind energy, solar pv, hydro power, anaerobic digestion plants, biomass plants and coal bed methane projects.

The services provided in the energy sector include site referencing and transmission matters, site search and evaluation, feasibility studies, financial modelling, planning applications and site consents, landowner support and site promotion, valuations, finance, site acquisitions and disposals, wayleave negotiations and feedstock procurement.

The Marine team manage a significant coastal portfolio around England through leases, licences, easements and consents. Activities within the area are varied and cover a wide range of issues such as port developments, marinas, moorings, jetties, cable and pipeline river crossings, outfalls and regulating and conservation leases and stakeholder liaison.

Away from work, Andrew is keen on fieldsports. 

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