The introduction of the Government’s Feed in Tariff (FIT) scheme last year has successfully motivated many landowners in the region to consider renewable energy developments, and now as planning applications are submitted and consents obtained, attention returns to the costs.
There is currently a well-publicised review of the FIT scheme, triggered by the unprecedented uptake of solar electric (PV) and probably associated with the change in Government.
This review has already seen the FIT for large scale PV slashed but a review of all the FIT rates is due to be announced by the end of this year for implementation on April 1, 2012.
Obviously this has left some investors nervous, but what does this really mean for those currently undertaking or even just thinking about starting a renewables project?
Jayne Carrick, renewables project coordinator of gfw-Renewables, said that a phased and flexible approach reduces the risks to investment, where continuous review of the project’s progress and the landowner’s objectives is vital in striking the right balance between risk and reward.
Irrespective of the current review of the FIT, a site with planning consent is valuable.
Firstly, to increase the chances of reaching this point, Jayne stresses the importance of first taking time to properly research the best technology options and location, mindful of the site specific constraints, be it airfield radar or ecological habitat. She said: “Even though currently the FITs are under review, when a renewables project obtains planning consent, to maximise the value and evaluate the risks it is important to take independent advice on the funding options available. The landowner’s current business structure and its aims will influence whether they want to raise all the capital themselves, share the investment or lease the site to a third party investor. It is therefore vital that the options are explained and explored with an independent party to ascertain when a deal is a good deal.”
The road to planning consent is bumpy and a flexible attitude is vital, where the local authority may want compromise, and although inevitably some planning applications will be refused, Jayne said that if the pre-planning work has demonstrated that the site is technically suitable for renewables, she is confident that an alternative solution can be identified, retaining project value.
“The obvious way to reduce the risks associated with the FIT review is to get a project commissioned before March 31, 2012,” she said. “However, realistically considering the planning regime, many projects will miss this deadline. Despite the undeniable uncertainty caused by the FIT review, as it is likely we will have an indication of the reviewed tariffs this summer (as part of the consultation before the formal announcement at the end of the year) there is no benefit in postponing a renewables project at this time.
“The preparation work associated with pre-planning, planning and funding can be undertaken now for the successful delivery of a renewable energy development, which may be different to the one envisaged at the start of the journey, but good preparation and communication will deliver the best value considering the variety of constraints, from planning to review of the FITs.”