How do we continue to meet the country’s need for renewable energy and can our system infrastructure adequately support the demand for renewable energy?
Energy produced by solar and wind farms during off peak times is ‘wasted’ due to the energy supply produced having to be balanced with the immediate demand. This goes against the UK government’s initiative to reduce carbon emissions in the UK by utilising renewable energy.
Battery storage sites are a solution to rising demand for renewable energy, reducing energy waste and utilising renewable energy to reduce carbon emissions. Excess energy can be stored and used when there is an increase in demand. This is welcomed news for those developers, landowners and investors who own land that can house battery storage sites.
However, the regulation governing electricity storage is ambiguous, making it difficult to invest in battery storage sites. Licencing restrictions, EU codes and agreements including climate change are a number of areas which require a thorough review.
The Office of Gas and Electricity Markets (Ofgem) have proposed regulatory reform to clarify, and increase, the growth of energy storage in the renewables sector – specifically electricity storage.
In September 2017, Ofgem announced large scale solar farms with their own battery installation site could claim financial support in the form of Renewable Obligations Certificates (ROC’s) on all renewable electricity generated. This is a lucrative move for those investors wishing to capitalise and invest in commercial solar farms with a battery storage sites.
Ofgem also published two consultations on 2 October 2017. Firstly, Ofgem proposed a new condition be introduced in the electricity distribution licence, so that network operators cannot operate as storage distributors. This would reduce the risk of network operators monopolising on owning and operating both networks and storage sites. This will encourage investors, landowners and developers to invest in land viable for storage operations.
Secondly, Ofgem proposed to make amendments to the electricity distribution licence, to distinguish between energy generation and energy storage. It will provide clarity on the treatment of electricity storage within the regulatory framework and the role of an energy storage operator.
These recent proposals show that the regulatory reforms are moving in the right direction. These changes are essential for developers, landowners and investors who seek to invest in battery storage sites by enabling access to the system infrastructure and continuing to support the renewables sector. Careful consideration and professional advice is required to understand these changes and how they will affect any developer, landowner or investor looking to invest in a storage site.
For further help or advice in relation to this article, please contact Satinder Mander, a senior solicitor in Lupton Fawcett’s Agriculture and Landed Estates team.
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.