Renewable energy in the age of the Conservatives

Renewable Energy and the Conservative Government:Planning and Financial Impacts

Claire Petricca-Riding Head of Planning and Environmental

Brabners LLP

Welcome

• Topics to be covered:– Recent policy changes overview– Future policy plans– Impact on investment and funding– Impact on planning

Renewable Energy Stats

• RenewableUK: State of Industry Report Summary 2015– 2014/2015 – 6th in the world ranking– £1.25bn UK investment in wind– 15,500 wind energy jobs

Renewable Energy Stats

• DECC– Electricity generation in the UK from renewable sources increased by

21% between 2013 and 2014, to reach 64.7 TWh– Generation from bioenergy sources was 25% higher in 2014

compared to 2013, mainly due to the conversion of a second unit at Drax power station to dedicated biomass (now subject to change)

– Generation from hydro sources also increased by 25% to 5.9 TWh, a record, due to high rainfall

– Solar photovoltaic generation more than doubled in 2014 to 4.1 TWh (due to an increase in capacity, particularly from the Renewable Obligation scheme)

– Offshore wind generation was 17% higher than in 2013, with capacity up 22 %.

– Onshore wind generation was 10% higher, with capacity up 13%– Overall wind generation was 13% higher and capacity 16% higher

Renewable Energy Stats

• What can we read from these statistics • Success story!• Predictions for 2015/2016

Conservative Policy

• 166 days since election• New ministers• Forging ahead with policy changes • Manifesto pledges

Conservative Policy

166 Days

• 2010 – Greenest government ever• 2015 – cutting the green crap• Scrapping of subsidies

– Onshore wind– Solar– Others

• Renewable Obligation• FiT• Energy Bill• Enhancement of oil and gas

166 Days

• CCL• CfD• Planning policies• Other issues

– Green homes scheme– Green investment bank– Zero carbon homes

Headlines

• “Amber Rudd defends solar subsidy cuts as another firm goes out of business”

• “Renewables sector not under attack, insists Rudd”

• “UK Energy Minister denies hostility to green sector”

• “Hundreds of renewable energy companies could be forced out of business”

• “Tetchy tweets”

High Profile Opponents

• @EdwardJDavey Conservatives ditch Zero Carbon standards for new homes after killing onshore wind: Cameron may as well hug a coal power station

• Al Gore• UN Scienec chief Jacqueline McGlade• Mark Carney• Green NGO’s

Future

• Consequences• Location, location, location• Repowering?• Subsidy free• Grid parity• 2020 – a target with new meaning?

Mark RathboneHead of Corporate – Liverpool

Brabners LLP

Renewable Energy and Funding

The Original Proposition

• Government Backed – created certainty of revenue streams

• Long Period and attractive return – sustainable investment propositions

• Degression designed to incentivise and manage innovation and efficiencies

• Consumer and commercial market – broad appeal• Designed for the long term – specific design per

energy source and size – allowed regulatory flexibility.

Backable Investment Proposition

• Long term infrastructure model– Risk on Quality of the Kit, O&M, Feedstock, Energy

Market/prices,

• Development Risk– Risk on planning, grid connection, EPC, Kit prices,

Degression thresholds

• Innovation Risk– Proof of concept, commercialisation, market acceptance,

etc

The Resulting Renewables Platform

• Strong interlinked funding credentials

• Local and international players

• Commercial and consumer markets

• Rated Top 5 internationally for investment in

renewables

• A very young, fragile, but agile emerging market

The constantly changing mind of the Government

• First review proposed, earlier and more aggressive degression – successfully challenged

• Degression rapidly accelerated, time and amount

• Timescale and amount of degression became uncertain

• Government Announcements – lack of support

• An industry working to rapid, uncertain, imposed cycles and deadlines

Is the Government Anti Renewables?

• Openly opposed to onshore wind – RO closed April 2016

• FIT rates for solar to be reduced by over 85%

• FIT rates to be substantially cut for AD and Hydro

• RHI to be reviewed

• Increasing high profile challenge to the policy (John

Gridland, Al Gore)

• Drax initiating judicial review, Scottish Government invoking devolved powers

The Damage

• Solar and wind businesses going into administration

• Domestic RHI never got off the ground

• Increased development risk – degression timetables against planning and grid connection issues

• Lack of trust in the “Government Backed” scheme

• Uncertainty and distrust pervades.

So what are we seeing?

• Pipelines in wind, solar and biomass are getting funded

• Commissioned infrastructure is getting refinanced

• Crowd funds are offering debt finance

• Pensions and insurance backed equity is investing for the

assured long term returns

• Family offices are investing to be in the market and for long term returns

• EIS Funds are still investing in underlying businesses

• New innovation – wind, hydro, fuel cells, etc

What are we not seeing?

• Bank Debt (save in refinancing large infrastructure projects)

• Angels, save where there is significant “proven” innovation

• A white flag

Recent Transactions

• Wind – Endurance financed existing projects and pipeline with

Dream Alternative Investment Fund

• Solar – Macquarie active in commercial solar pipeline and in wind

• Hydro – Wheatsheaf (family office) invested in existing projects and

pipeline

• Biomass – small scale commercial in the frame for Downing funding

• Biomass - large scale on the docks (banks and infrastructure funds)

• AD – innovations and funding of projects once commissioned

Conclusions

• A weirdly buoyant market for us lawyers at the moment

• Funding available, institutional and long term money like the

sector

• However, many are failing or getting out (into something aligned

but different)

• No pipeline, no funding. A significant barrier for entrants now.

• Pressure beginning to rise on new innovation, but few funds

available for early stage.

• The financial markets seem to know it is the future, but not yet!

RENEWABLE ENERGY PLANNING FOR THE FUTURE – WHAT

FUTURE?

Vincent Fraser QC

From the greenest government ever

To the turbine slayer

Conservative manifesto

• “Onshore wind now makes a meaningful contribution to our energy mix and has been part of the necessary increase in renewable capacity. Onshore windfarms often fail to win public support, however, and are unable by themselves to provide the firm capacity that a stable energy system requires. As a result, we will end any new public subsidy for them and change the law so that local people have the final say on windfarm applications.”

Energy Bill

• Clause 65 – removing onshore wind farms from section 36 Electricity Act 1989

• Clause 66 – ending of roc for new wind farms• Secondary legislation for Planning Act 2008 -

NSIPs

Private members’ bills

• Public Nuisance from Wind Farms (Mandatory Liability Cover) Bill

• Off-shore Wind Farm Subsidies Restriction Bill

Greg Clark Statement – 18th June

• When determining planning applications for wind energy development involving one or more wind turbines, local planning authorities should only grant planning permission if:

• · the development site is in an area identified as suitable for wind energy development in a Local or Neighbourhood Plan; and

• · following consultation, it can be demonstrated that the planning impacts identified by affected local communities have been fully addressed and therefore the proposal has their backing.

How the new test is met

In applying these new considerations, suitable areas for wind energy development will need to have been allocated clearly in a Local or Neighbourhood Plan. Maps showing the wind resource as favourable to wind turbines, or similar, will not be sufficient. Whether a proposal has the backing of the affected local community is a planning judgement for the local planning authority.

Transitional arrangements

Where a valid planning application for a wind energy development has already been submitted to a local planning authority and the development plan does not identify suitable sites, the following transitional provision applies. In such instances, local planning authorities can find the proposal acceptable if, following consultation, they are satisfied it has addressed the planning impacts identified by affected local communities and therefore has their backing.

Requirement of allocation

• Requirement that site be allocated• Not sufficient met all objections• Absence of allocations • The golden thread – approve where plan

absent or silent – para 14 NPPF

NPPF and sustainable development

• Delivery of renewable energy and associated infrastructure central to the economic, social and environmental dimensions of sustainable development – para 93 NPPF

• Responsibility on all communities to contribute to energy generation from renewable sources – para 97 NPPF

• Policies should maximise renewable energy development – para 97 NPPF

NPS

• Remain relevant• Supportive of this form of development• Importance and urgency of providing more

development of this nature • Inevitability of impacts

Moratorium on new applications?

• Situation where development plan does not identify sites limited to transitional arrangements

• Can applications be made in advance of adopted plan?

Community backing (1)

• Planning impacts identified by affected local communities

• Objectors’ complaints?• Addressing or removing impacts?• Residual impacts inevitable (NPS)

Community backing (2)

• Resultant backing of the local community• Who is the local community?• All or a majority?• Planning judgment

The transitional provisions

• Applications made before the statement• No suitable sites identified• Need for local community backing

The right of appeal

• Fundamental statutory provisions• Confirmation that LPA decision cannot be

overturned on appeal – Amber Rudd 22nd June 2015

• Right of appeal retained – Planning 26th June 2015

• In name only?

PPG

• Amendments to reflect the Greg Clarke statement

• No amendment of NPPF

Hemswell Cliff

• APP/N2535/A/14/2217829 • Inspector recommended refusal because of

the landscape and visual impact, harm to the setting of a listed building and a conservation area in any event

• This confirmed that the impacts identified by the local community had not been addressed

French Farm

• APP/J0540/V/14/2220136 • 4 turbine extension to consented site• LPA resolved to approve• Inspector recommended allow

French Farm (2)

• Adverse landscape and visual impact within 1.5km

• Overbearing impact on residential property• Several objectors repeated their objections• Despite views of LPA etc. the concerns of the

local community had not been addressed.

Mid-Wales• Llaithddu (66.7MW Fferm Wynt Llaithddu Cyf)• Refused in accordance with Inspector’s recommendation

• Llanbadarn Fynydd scheme (59.5MW Vattenfall)• Refused in accordance with Inspector’s recommendation

• Llandinam (126MW repowering ScottishPower Limited)• Approved in accordance with Inspector’s recommendation

• 132kV overhead line for Llandinam• Refused contrary to Inspector’s recommendation on visual and landscape impacts

Mid Wales (2)

• Llanbrynmair (100MW RES)• Refused contrary to Inspector’s

recommendation on visual and landscape impacts

• Carnedd Wen scheme (130-250MW RWE)• Refused contrary to Inspector’s

recommednation on visual and landscape impacts

Mid-Wales (3)

• Only consented scheme cannot be implemented

• No scheme consented within SSA • Refusal even though local planning authority

content with proposals as recommended by Inspector

 

Development Plan allocation

• NPPF para 97• To help increase the use and supply of

renewable and low carbon energy, local planning authorities should recognise the responsibility on all communities to contribute to energy generation from renewable or low carbon sources. They should:

NPPF 97• have a positive strategy to promote energy from renewable and

low carbon sources; • design their policies to maximise renewable and low carbon energy

development while ensuring that adverse impacts are addressed satisfactorily, including cumulative landscape and visual impacts;

• consider identifying suitable areas for renewable and low carbon energy sources, and supporting infrastructure, where this would help secure the development of such sources;

• support community-led initiatives for renewable and low carbon energy, including developments outside such areas being taken forward through neighbourhood planning

Head west

• Return of powers to Wales• Different policy approach • Will it remain

Political problems

• Need to address political issues• Nuclear power

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