Don’t get caught out by renewables deadlines, warns Savills in Scotland
Although Scottish local authority planning statistics show that the time taken to determine renewable applications has improved, delays in securing grid connections and uncertainty over future funding continue to stall development, warns Nick Green, head of Savills Energy in Scotland.
Although Scottish local authority planning statistics show that the time taken to determine renewable applications has improved, delays in securing grid connections and uncertainty over future funding continue to stall development, warns Nick Green, head of Savills Energy in Scotland.
The scheduled 10% degression in Feed-in Tariff rates in October 2014 for all non-solar renewable technologies could catch-out land owners and developers that have not yet secured preliminary accreditation, the pre-build approval which hedges against changing tariff rates.
Green comments: “Clarity in policy and subsidy regimes is essential for land owners, developers and the rural supply chain to secure and support future investment. However, the complexity of the Contracts for Difference (CfD) mechanism and Feed-in Tariff (FIT) means that small and medium-sized projects could be placed at a disadvantage.
“Coupled with the wider political context and ongoing challenge to secure grid connections in a timely and cost-effective manner, a number of renewable projects throughout Scotland have been placed on hold indefinitely or killed off entirely.”
The latest statistics show that Scotland now produces in excess of 50% of its electricity demand from renewable energy sources. However, uncertainty over who will fund the CfD regime post the Scottish Independence Referendum on 18th September has prompted many developers to take a summer hiatus.
Green continues: “While caution is understandable, it is important that the industry does not lose momentum. For land owners who are already on the renewable project journey, it is vital to complete as soon as possible in order to lock in to the higher FiT rates.
“The longer farmers and estate managers wait, the greater the chance of reductions in subsidies and the higher the potential for the project to lose viability. Indeed, significant sums can be outlaid in the preparation and planning phases, and having to re-run the figures part way through the process can prove particularly costly.
“We have already seen the predicted reduction in rental income from developers as a result of the transition from Renewables Obligation Certificates (ROC) to CfD. The degression mechanism will also continue, with further reductions expected in Spring 2015, assuming we meet required deployment levels in the latter half of 2014.”
Despite the time pressures, Green argues that there are still considerable opportunities for land owners looking to diversify their income streams, manage costs and deliver a positive environmental impact through investing in renewables.
“The landscape is constantly shifting,” he concludes. “But the long-term need to manage costs, reduce emissions and meet the energy capacity gap will not go away. Investment in renewables is a powerful consideration for all farmers and land owners across Scotland and it is important to get professional advice to make the right choice to deliver return on the investment.”
