The Green Recovery
In November the Prime Minister announced the Government’s ten point plan for a green recovery. The plan, which has been eagerly anticipated by all those working in the renewables sector, sets out the ten areas the Government will be actively supporting in the green/clean energy sector over the next few years.
The key focus areas from the ten point plan for those involved in green energy generation, use and storage are as follows:
- The Government has put a particular emphasis on supporting offshore wind and nuclear over and above other green/clean technologies. Although this has disappointed some in the renewable energy sector, particularly those invested in solar, the renewable energy sector will still see an overall, albeit indirect, benefit to this support
- Solar and onshore wind are described as “other technologies” throughout the plan. Despite this, some of the barriers to these technologies that were put in place a few years ago are now being lifted. Most notably, this includes that solar and onshore wind will (from next year) be once again able to compete for Contracts for Difference (CFDs). CFDs are 15 year contracts available to guarantee the price generators can achieve for the sale of the electricity they generate from their projects over this 15 years. Contracts such as these provide banks with the confidence to finance new developments.
The next CFD auction takes place next year and energy developers will be actively looking to put documents in place so that they have projects in the pipeline to put into the auction.
- More financial support will be given to the development of heat technology, including to hydrogen projects (the electrolysis of water ideally using electricity from renewable sources) as fuel and heat, and also to encourage more take up of heat pumps to replace old gas boilers. The renewable heat sector is far behind the renewable electricity sector and significant investment will be required for renewable heat technologies to become cost effective and widely implemented. The gas grid also requires improvement to allow for it to take and carry hydrogen and so, as well as improvements to the grid, we may well see support to encourage off grid and community heat networks
- There is to be investment in the electricity grid and the building of more infrastructure. This is to cope with the increasing number of operators wanting to connect projects of all sizes to the grid to distribute their electricity for onward sale/supply. This is massively welcome given the cost of improving the grid has so far largely been put on the individual developers of proposed projects. They are routinely quoted millions to be granted a grid connection offer. Understandably this cost often prevents projects from going ahead
- There is to be an acceleration in the shift to zero emission vehicles with the sale of new petrol and diesel cars to be banned from 2030. It will be interesting to see what investment is to follow to allow for this as there will need to be significant improvements to the road network to allow for many more charge points at fuel stations across the country. This is not just on motorways, but also in towns and cities, at work places, public car parks and in residential parking areas
- As well as zero emission cars, the government has also turned its attention to public transport by promising funding for zero-emission buses and improving cycle lanes to encourage more sustainable transport. There is a plan to electrify more of the rail network and to also look at how to develop zero emission aircraft and ships
- There is to be investment in developing energy storage technology, which is widely welcomed by the renewable energy sector. The ability to add energy storage to wind and solar sites is nearly always now part of new project documents, planning permissions and grid connection agreements. This allows the electricity to be stored at times the grid cannot accept it and also to continue the supply at times the projects are not generating, for example through the night for solar. The ability to add storage to intermittent energy generation sites often allows developers to accept a curtailment on the amount of electricity they can export at certain times. They can then store what they are not permitted to export which can reduce the cost of grid connection from millions to thousands and ultimately allow projects to go ahead.
It is testament to the commitment and resilience of those working in the green energy sector that solar and wind has become largely self-reliant without subsidy in recent years. That said, the increased funding and investment in improving the grid, increased infrastructure, innovation and the development of new storage and heat technologies announced in the ten point plan has been well received. It is also good news that some of the barriers put up in recent years to solar and onshore wind are now showing signs of being removed so that developers and operators of these technologies can once again compete alongside other green and clean technologies.
Much more detail is awaited on how the ten point plan will be implemented but overall the plan is welcomed by the renewable energy sector and we are likely to see many more projects across the different technologies going forwards.
If you are a developer looking for specialist legal advice regarding any new or existing projects then contact Helen Rumford directly via helen.rumford@GAsolicitors.com or call 01225 618114.