Connected thinking on rooftop solar – Victoria Towers writes for EG
Victoria Towers, Partner and Co-Head of Industrial and Logistics, has written a piece for EG on the benefits of collective thinking to streamline the legal processes causing delay to rooftop solar.
With time running out for promised legislative change to facilitate rooftop solar, there is much to be achieved in banging a few heads together and streamlining some of the legal processes currently causing delays.
The issue is acute for power-hungry industrial and logistics development, when rooftop solar is often incorporated as part of any planning application and the market is clamouring for fast delivery of new space in the right locations.
It was October, in energy secretary Claire Coutinho’s speech to the Conservative Party conference, promising to reduce red tape for solar panels on industrial rooftops, that she bemoaned solar farms covering our green and pleasant land, and pledged to make it easier for solar panels to be installed on industrial rooftops, warehouses, car parks and factories, cutting through the planning red tape that limits the amount of solar that businesses can currently install.
At the same time, her department’s Solar Taskforce has been looking at barriers to rooftop solar after highlighting the untapped potential of commercial sites, such as warehouses. The task force is due to be wound up around February, and its work will be used for a solar roadmap, to be published later this year.
This time last year, a survey by Forsters found 77% of developers and investors currently used solar panels on industrial and logistics real estate or planned to. The Department for Energy Security and Net Zero should be pushing at an open door.
The government’s own figures show progress in getting photovoltaics on to buildings. An update published in January showed that 50% of capacity came from ground-mounted or stand-alone solar installations at the end of September 2023, but – rather perversely – the majority of the remaining capacity was on domestic buildings, not commercial.
November’s Autumn Statement addressed the issue, promising reform of the grid connection process to cut waiting times, including freeing up more than 100GW of capacity so that renewable energy projects can connect sooner, potentially reducing connection delays from five years to no more than six months.
Co-operation is key
For those of us negotiating these connections for industrial developments, day in and day out, investment is certainly needed. Not only in the grid infrastructure itself but also – much like the challenges around the planning process – in the process of securing a connection. Client projects seem to be held to ransom on substation and wayleave arrangements when they want to connect to the grid.
A question often presents itself when repeatedly agreeing substation leases with providers: why, when dealing again with the same provider, can we not cut through the negotiation and proceed on similar terms? There are a handful of points that are site-specific, but the usual obligations around repair, alterations, use and works in the vicinity of any cabling do not need to be brokered every time. Surely it is better for all those concerned to ensure that the legal documentation is progressed as swiftly and efficiently as possible.
To that end, it does not seem beyond contemplation to have a common ground as a starting point – but standard terms will only work if drafted well. A few years ago, a template wayleave agreement was introduced, but the result was too complicated and everyone quickly broke away from the standard approach. As the pressure increases on all those involved, it seems that we should look at agreeing a succinct, market-appropriate suite of documents that can be called on.
We know that most substation providers have a list of requirements – for example, uncapped indemnities – but many of these are unrealistic and deter investment. Investors don’t like indemnities where they are unnecessary, and quite often facts can allay the concerns that providers have. For instance, an indemnity should not be required on a site that is verified as remediated from an environmental perspective.
Mindset shift
Another frustration comes in the interplay between utility companies. If a gas pipe and an electricity cable are both needed, we would expect some joined-up thinking in using the same route and consulting with each other over installation.
We need more co-operation between independent distribution network operators and distribution network operators. We find ourselves in situations, albeit rare, where we are only permitted to liaise with the IDNO, which in turn has to pick up with the DNO. Alternatively – and again rather confusingly – we liaise with each entity but they do not have any contact with each other. This makes negotiations more protracted and challenging.
There is an interesting legal question here as to whether a potential power user has a right to be connected to the grid. We know the regulatory backdrop, but more and more we are being presented with a “take it or leave it” attitude to negotiations, where the view seems to be that if the end user does not agree to the terms, then the relevant development can be left without power. How has it come to this?
An attitude shift and greater uniformity should not require test cases or legislation. Instead, there should be a focus on working together, taking a sensible approach and not reinventing the wheel every time negotiations are commenced. Strict timelines, set in legislation, would focus minds, but it is hard to imagine a sanction that would not make the situation worse by drawing resources away from investment in grid infrastructure.
Developers are incurring huge costs as a result of delays in getting substations built, signed off and energised. Industrial and logistics development needs to be quick to meet demand – and we need the providers to be more responsive and more reasonable.
The article was originally published on 27 February 2024 and can be read here behind the paywall.