Energy Matters Summer 2015

Energy

matters

ISSUE 9 Summer 2015

Bye-bye ROC – hello CFD Ardkinglas: Renewable energy in action The winding road to windfarm success New technology aids land condition records Biomass subsidy rule changes explained

Make haste with hydro On-time delivery is vital in the rush for FIT

Subsea power link boosts renewables www.galbraithgroup.com

WELCOME

CONTENTS

The elephant in the shower...

4 Cover story: The

H

eat is the single biggest reason we use energy in our society. We use more energy for heating than for transport or the generation of electricity. Accordingly it was interesting to note the Government’s recent statistics on the NonDomestic Renewable Heat Incentive (RHI) scheme in the three years since it opened.

Renewable heating is being installed across the UK, and with 19% of accredited capacity, Scotland has seen proportionally the biggest take-up.

Overwhelmingly the most popular technology is solid biomass, accounting for 98.7% of accredited installed capacity. The tiny remainder is taken up by a mix of ground-source heat pump, solar thermal, watersource heat pump, biogas and biomethane. This bias is unsurprising in that solidf biomass potentially offers the easiest retrofit option, but the disparity may lead the Government to improve support for other technologies.

Renewable heat deployment has been most popular in crop and animal production, followed by accommodation and wood manufacturing. Activities making use of the technologies also include churches, community centres, hotels, offices and even an elephant shower. Installation size ranges from small, 1kW solar thermal units for office hot water, to a large, 27MW biomass steam-turbine combined heat and power facility.

Subsidies cannot go on forever but incentivising and supporting the need for renewable heat is paramount if targets are to be met and carbon emissions reduced – as the scale of energy used for heating is perhaps the ‘elephant in the shower’!

Calum Innes, Partner

CKD Galbraith is Scotland’s leading

independent property consultancy. Drawing on a century of experience in land and property management, the firm is progressive and dynamic, employing more than 200 people in offices throughout Scotland.

The firm provides a full range of property consulting services across the commercial, residential, rural and energy sectors.

clock is ticking for small-scale hydro.

A not-for-profit model for energy.

6 The Loch Fyne

estate that runs on renewables.

8 Access issues:

Clearing the route for wind-farm installation... and making temporary tracks permanent.

10 Subsea power link

will give renewables a boost.

11 Better ways

of recording land condition.

12 Subsidy changes: CAP reforms – and new rules for biomass.

14 Preparing for the

future: Scottish Renewables Conference... and the post-election landscape.

CKD Galbraith provides a personal service, listening to clients and delivering advice to suit their particular opportunities and circumstances.

Our associate, CKD Kennedy Macpherson, is based in London.

Follow us on Twitter: @CKDGEnergy Like us on Facebook: www.facebook.com/ckdgalbraith Join us on Linkedin: www.linkedin.com/company/ckd-galbraith

Energy Matters is produced by ­ llerton Communications, London, A UK, and designed by George Gray Media & Design, St Andeux, France. © CKD Galbraith LLP.

Page 2 | Energy Matters Summer 2015 | www.ckdgalbraith.co.uk | Twitter: @CKDGEnergy

I

n the last Energy Matters we explained the change in the renewable energy subsidy regime from Renewable Obligation Certificates (ROCs) to an auctionbased Contracts for Difference (CFD) scheme.

The system is founded on an overall funding cap set by Department of Energy and Climate Change and under the auction process applications are accepted sequentially from the lowest to highest ‘strike’ price – the price fixed by the seller after receiving bids in a tender offer – up to the point the budget is exceeded.

The final clearing price offered to applicants is set by the strike price of the last approved project.

The first allocation round opened for applications on 16 October with two budget ‘pots’: pot 1 for established technologies, (onshore wind and

“

In total, 27 projects across the UK, with a total generating capacity of 2,139MW, were successful with their tenders.

solar), and pot 2 for less established technologies such as offshore wind, advanced conversion technologies (ACT), biomass and combined heat and power (CHP) generators.

Table 1 summarises the budget amounts available in each financial year.

Price is right in new generation game Renewable energy has moved from ROCs to CFDs, but, asks David Clarke, how will this affect investment?

The Government announced the results of the first auction round on February 26.

In total, 27 projects across the UK, with a total generating capacity of 2,139MW, were successful with their tenders.

These comprised two offshore windfarms with a total capacity of 1,162MW, 15 onshore windfarms with a generating capacity of 748.5MW, two CHP plants with a capacity of 94.8MW, five solar PV farms totalling 72MW and three ACT plants with a generating capacity of 62MW.

projects that weren’t successful, but the Government did not make public any information on the unsuccessful bidders to allow detailed analysis.

A regional breakdown shows that projects totalling 993MW are in Scotland, 954MW are in England and 192MW are in Wales.

wind reduce over time, potentially showing increased competition for CFDs in the future, reflecting the longer lead-in time for delivery of these projects.

Conversely, the strike prices for solar and onshore wind rise over time, leading to the conclusion that fewer projects may be coming on line in the future.

The next auction round is due to begin in the autumn. The various political parties have different stances on renewable energy generation and its funding, so the details of the next budget and allocation round are eagerly awaited within the industry.

Table 3 shows the overall budget spend that National Grid has calculated on the assumption that all these contracts are accepted.

The strike prices by technology are shown in Table 2.

The total value of all applications received was £1,176m based on 2012 prices.

Strike prices for both ACT and offshore

We are aware of some windfarm

David Clarke is an Associate in CKD Galbraith’s Stirling office. david.clarke@ckdgalbraith.co.uk 01786 434 630

Table 1: How CfD budgets change over time Year

2015/16

Pot 1

2016/17

2017/18

2018/19

2019/20

2020/21

£50m

£65m

£65m

£65m

£65m

£65m

Pot 2 ­ —

£155m

£260m

£260m

£260m

£260m

£50m

£220m

£325m

£325m

£325m

£325m

Total

Table 2: Strike price by technology Technology (delivery year)

MW capacity

Strike price

ACT (2017/2018)

36

£119.89

ACT (2018/2019)

26

£114.39

Energy from waste CHP (2018/2019)

l Strike prices for offshore wind reduce over time, potentially showing increased competition for CFDs in the future.

94.8

£80.00

Offshore wind (2017/2018)

714

£119.89

Offshore wind (2018/2019)

448

£114.39

Onshore wind (2016/2017)

45

£79.23

Onshore wind (2017/2018)

77.5

£79.99

Onshore wind (2018/2019)

626

£82.50

Solar PV (2015/2016)

33

£50.00

Solar PV (2016/2017)

39

£79.23

Table 3: Overall budget spend assuming all contracts are accepted Year

2015/16

2016/17

2017/18

2018/19

2019/20

2020/21

Pot 1

-

£0.5m

£6m

£34.1m

£64.9m

£56.4m

Pot 2

-

-

£1.6m

£53.1m

£218.4m

£258.9m

Total

-

£0.5m

£7.6m

£87.2m

£283.3m

£315.3m

www.ckdgalbraith.co.uk | Twitter: @CKDGEnergy | Energy Matters Summer 2015 | Page 3

Social landlord invests in wind to benefit tenants Alister Steele explains why a housing association is extending the not-for-profit model into community energy solutions.

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astle Rock Edinvar Housing Association has invested in a special purpose vehicle to develop Ferneylea Windfarm in East Lothian. The project, which involves two turbines with a capacity to generate 1.5MW of electricity, was connected to the grid last December. In the process of undertaking our due diligence in respect of this investment we relied upon valuation advice and analysis provided by CKD Galbraith.

But why should a social landlord get involved in the renewables sector?

This investment forms part of the organisation’s energy strategy, which at its heart aims to address the facts that housing is responsible for a quarter of the UK’s carbon emissions and, at the same time, more than 39 per cent of households in Scotland now experience fuel poverty according to the most recent Scottish Government figures.

Over the past five years Castle Rock Edinvar has invested £20 million to improve the energy efficiency of its housing stock and provide modern and efficient heating systems.

We have also invested in a Home Energy Advice Team (HEAT) to work with tenants to help them to understand their energy use and reduce their costs.

“

In 2012 we decided to broaden our focus from reducing consumption to investing in on-site renewable generation.

In 2012 we decided to broaden our focus from reducing consumption to investing in on-site renewable generation through PV (solar) installations and combined heat and power to reduce energy costs.

As we increased our knowledge of energy issues and how they affect our customers, we realised that there were opportunities to intervene more directly in the energy sector to promote community energy solutions to address inequalities and market failures. The investment in Ferneylea will give a healthy return on our capital investment and in turn provide funding certainty to develop our HEAT services, through which our expert advisors help customers to get the best tariffs, reduce debt payments and maximise discounts.

We have also just secured £3.2 million funding for the Local Energy Challenge Fund to develop innovative heat storage solutions which will be linked to PV investment to further help reduce energy bills and fuel poverty.

Lastly, along with 40 other social housing providers, we are at an advanced stage in creating a new not-for-profit energy Alister Steele is Managing provider. For more than 50 Director of Castle years, housing associations have Rock Edinvar Housing successfully operated as not-forAssociation, which is part of profit organisations addressing Places for People. housing market failures. We now want to take that model alister.steele@castlerockedinvar.co.uk 0131 657 0610 into the energy sector.

Page 4 | Energy Matters Summer 2015 | www.ckdgalbraith.co.uk | Twitter: @CKDGEnergy

T

here is no doubt the rush to pre-accredit sub-2MW schemes in 2013 and 2014 has sparked unprecedented activity in the small-scale hydro sector.

A quick look at data provided by the UK Department of Energy and Climate Change (DECC) shows we are now moving from a historical average build of about 11MW a year to possibly more than 100MW aiming to be commissioned over the next two years.

A total of 426 schemes achieved preaccreditation in 2013 and 2014. If you are involved in one of these projects and it is not commissioned by year-end 2015 or 2016 then, depending on the year of pre-accreditation, your tariff will fall by anything from 25 to 45 per cent.

It is an industry concern that not all of these projects will meet their deadline, so how do you ensure that yours does?

Whether it is your own development or a third party scheme, good design will be key.

Engaging with a recognised firm with a track record in hydro civil engineering may cost a little more, and scheme design may take two to three months, but it will save time and cost in the long run. A good design gives a clear blueprint to your contractor, avoids foreseeable pitfalls and reduces contractual wriggle room as your project unfolds.

Small-scale hydro: time is of the essence Radical future reductions in the small-scale hydro Feed-in Tariff mean owners of pre-accredited projects must focus on on-time delivery of their schemes, says Alex Reading.

Do not underestimate how long it will take to discharge any conditions on your planning consent and CAR (Controlled Activities Regulation) licence. These are critical to achieving financial close and six months’ delay – which is not untypical – will take a significant chunk out of an already highly-constrained construction window.

these firms are dealing with multiple projects and you will need to try to get what confidence you can that your offer date will be met.

Planning departments are under strain and the Scottish Environment Protection Agency is becoming more prescriptive in its CAR licence terms, so do make sure you are well advised.

Legal agreements always take time, and you will certainly need to engage with your lawyer to finalise any land agreements if you are working with a third party developer or leaser.

Similarly, you will have been given a grid offer date by SSE Power Distribution or Scottish Power Energy Networks. Both

On a related note, the industry has already made representations to DECC to introduce force majeure provisions for grid and weather delays, and we await a response.

“

Achieving financial close is the final hurdle before construction. Secured finance is generally more straightforward, but if adopting a non-recourse route you can smooth the way by addressing all of the points above in as timely a manner as possible. Every day spent prior to achieving financial close is a day lost to getting your hydro project built and operating.

The next two years will be extremely challenging, and exciting, for the hydro sector in Scotland. With a clear plan and the right team on board you can maximise your chances of success.

Alex Reading is development director at Green Highland Renewables. alexreading@greenhighland.co.uk 01738 493 110

Every day spent prior to achieving financial close is a day lost to getting your hydro project built and operating.

www.ckdgalbraith.co.uk | Twitter: @CKDGEnergy | Energy Matters Summer 2015 | Page 5

The spectacular Ardkinglas Estate draws large numbers of visitors to its 11,860 acres in Argyll. The historic Lorimer-designed house on Loch Fyne and much of the estate are powered by renewable energy, writes owner David Sumsion.

An energy evolution on the banks of Loch Fyne

A

rdkinglas Estate, one hour from Glasgow Airport, boasts beautiful, wild Highland landscape extending from the shores of Loch Fyne up Glen Fyne towards some impressive Munros.

Renewable energy here has progressed from early charcoal production, sourced from coppiced oak woods, through 18th century oat and grain milling in a watermill on Kinglas Water to a waterpowered estate sawmill. The mill is now a picturesque ruin beyond the new Gruffalo Trail at the east end of Ardkinglas Woodland Garden.

When Sir Andrew Noble commissioned Robert Lorimer to design his holiday mansion in 1905 the plans included the construction of a dam on Kinglas Water and a turbine house, fitted with marble control panels, to provide electricity for the new house. This high-volume/ low-head scheme with its battery storage would not be viable to build today.

The house, now used for weddings and events, has central heating which still

Page 6 | Energy Matters Summer 2015 | www.ckdgalbraith.co.uk | Twitter: @CKDGEnergy

l Estate of the art: Renewable energy projects on the Ardkinglas Estate include wood-pellet heating in the main house, left, the Tree Shop, below, and two recentlybuilt cottages, right.

wanted to self-build a small 30kW hydro scheme using an intake on estate land.

uses the original radiators and single pipe system, though the boiler has been replaced many times as technology progressed. Originally it was fired by coal, then oil, followed by a large log-burner from Sweden in the 1980s. A groundsource heat pump installed in 2006, with a groundwater feed from a garden borehole, is still in place as a back-up, though the main heat source is a 90kW wood-pellet boiler, with an eight-tonne silo in the former gun room.

A seven-turbine windfarm constructed in 2009 runs under lease to a major operator.

The Lairig and Clachan power stations, large Hydro Board schemes using land compulsorily purchased from Ardkinglas in the 1950s, continue to play an important role in Argyll’s contribution to the National Grid.

Scope for new hydro schemes is restricted, but Ardkinglas recently leased land to a consortium including Here We Are, a local community organisation, for a 1MW turbine, to be fed by a header pond and network of open leats high in the hills of Glen Fyne.

A separate branch of Here We Are leases another site from the estate for a woodchip production unit, a major customer being Lakeland Smolts, which operates a salmon hatchery at the mouth of the Kinglas.

In 2012 the estate built two houses under the Rural Homes for Rent scheme, each equipped with a small wood pellet stove in the living room, linked to underfloor heating and a hot water cylinder. A bold move in affordable rented housing, this has proved a workable and very economical solution.

This year a 45kW wood pellet boiler has been installed at the Tree Shop to heat its offices, shop and café areas. The boiler came pre-fitted together with buffer tank,

“

Future plans may include small-scale district heating biomass schemes and maybe some small hydro and wind installations.

controls and silo in a single container unit, easily installed externally behind the outdoor plant sales area.

Ardkinglas attracts 7,000 visitors to the house and Woodland Garden, and many more customers to its Tree Shop, and we’d like to think renewable energy is a key part of the attraction.

Future plans may include small-scale district heating biomass schemes and maybe some small hydro and wind installations. The largest potential source of renewable energy lies in Loch Fyne in the form of the twice-daily tides, but that will be for others to harness.

David Sumsion, great-great-grandson of Sir Andrew Noble who bought the estate in 1905, is owner of Ardkinglas Estate, where he lives, and director of the Tree Shop. An architect with his own practice, Arbour, he is a long-standing member of the Scottish Ecological Design Association.

For more information about Ardkinglas see www.ardkinglas.com

Ardkinglas has also entered into an agreement with a local householder who

www.ckdgalbraith.co.uk | Twitter: @CKDGEnergy | Energy Matters Summer 2015 | Page 7

Making the case to stay on track Major works often end with landowners seeking to retain tracks built to facilitate a project. Robert Patrick negotiates the path to success.

A

s output from renewable energy has increased, so too have the demands on the grid network across Scotland. As a result, in recent years upgrades have been taking place to the network, including major infrastructure projects such as the new Beauly-Denny overhead line.

As part of any project to construct or upgrade a power line, there is usually a requirement to build new or upgraded tracks for vehicle and pedestrian traffic, as well as provide compounds for material storage and facilities such as catering huts.

Generally, where a new track or construction compound is required, these are included in the planning consent for the overall project, with the planning authority making it a condition that they be removed and the site reinstated once construction is complete.

Landowners who see tracks and compounds constructed on their land will often consider the potential benefits they could enjoy if they were retained once the construction of the power line has been completed.

This has certainly been the case with the Beauly-Denny overhead line, where landowners the length of the route have sought consent to retain tracks and compounds for their own benefit.

In many cases, the planning authorities are happy to allow sections of track to be retained permanently, whether for forestry, agricultural or sporting purposes. Assuming a planning application for permanent retention is secured, the energy company is equally content to leave the track in place, rather than carry out reinstatement as otherwise would be required.

The situation can be more complicated

though when the track or compound is located within a protected area such as a National Scenic Area or National Park. In the Cairngorms in particular, a number of applications to retain tracks constructed as part of the Beauly-Denny line have been unsuccessful.

CKD Galbraith has been involved in a number of applications for tracks such as this. Considerable detail is required to support an application if it is to be successful in areas like National Parks.

In our work on the Beauly-Denny line, a full landscape and visual impact assessment was submitted, along with proposals to reduce the track width and restore the verges. In addition, comprehensive reasons as to why the track was required were also submitted to the planning authority, ensuring there was clear justification for retaining the track.

Following detailed examination of the application by the planning committee,

“

In many cases, the planning authorities are happy to allow sections of track to be retained.

the retention of the track was approved.

Our experience in securing this consent demonstrates clearly the level of additional detail and justification required in a sensitive area such as a National Park, when compared with applications outside such sensitive areas.

In future, it may be beneficial for energy companies to include tracks which will be retained permanently within the original powerline consent.

However, as it stands, the responsibility remains with landowners to pursue their own planning consent whenever they feel the retention of a track may be worthwhile.

Robert Patrick is a chartered planner at CKD Galbraith’s Perth office. robert.patrick@ckdgalbraith.co.uk 01738 456 078

Page 8 | Energy Matters Summer 2015 | www.ckdgalbraith.co.uk | Twitter: @CKDGEnergy

Finding the road to wind farm success Harry Lukas looks at some of the access issues that must be resolved when planning an onshore wind development.

W

hen designing an onshore wind farm project, one of the most important factors is access to the site. Access issues many miles from the development site can affect a project. The size of turbine components – particularly blades which can be more than 50 metres long – means a route capable of accommodating such loads must be found.

Engineers considering developments undertake specialist “swept path” analysis of the route on public roads using computers and on-site measurement to assess whether the loads will encroach on other landowners’ property. This may mean that on some corners turbine parts may “oversail” the adjoining property for which consent for the life of the windfarm will be required.

For tighter “pinch points” some widening or strengthening of roadside areas may be required, or trees trimmed, which may necessitate actual purchase or lease of the land involved.

Other matters that may affect progress of turbine parts may be high bridge parapets and the removal and reinstatement of street furniture such as road signs and street lamps, which can be altered and rebuilt after construction of the development.

From a property owner’s perspective, agreeing to oversail in a rural area is not usually contentious as developers are prepared to pay for the rights.

Where land is taken, reasonable compensation is available, although in rare cases where agreement is not achieved another route would need to be found for the project to progress.

Likewise, where there are a large number of such pinch points, the cumulative sum of required compensation may render the route impossible.

Constructing an average wind farm may take more than six months, so the turbine and abnormal load delivery route is required only for a relatively small proportion of this period, with the owners of the pinch point probably several miles from the development site.

Where access closer to the site is required from

l The length of wind turbine blades makes it essential to ensure access roads are suitable.

the public road, over private tracks or new routes across open ground, then the landowner can expect to receive a share in the value of the development and this is negotiated with the developer.

Issues concerning access agreements are sometimes left until late in the day by developers with consequential delays to planning – for transport routes and estimated traffic generation form a major part of the necessary environmental impact assessment.

Developers usually offer landowners an option agreement to take a lease of an affected site, with an initial fee payable. Exercise of the option will only be required if and when the consent is achieved for the project and when funding is fully in place.

Another consideration for site owners and developers is the route required for power cables from the wind farm in order to access the grid at a suitable substation. Some projects require cables crossing considerable distances and consent for wayleaves for these will be required, possibly from a number of landowners.

CKD Galbraith acts for landowners and developers advising on access, pinch points and wayleave agreements on a large number of renewable projects, from single turbines to major windfarms.

Harry Lukas is a chartered surveyor in the Galashiels office of CKD Galbraith. harry.lukas@ckdgalbraith.co.uk 01896 662 829

www.ckdgalbraith.co.uk | Twitter: @CKDGEnergy | Energy Matters Summer 2015 | Page 9

Under-sea link to boost growth of renewables Work on the subsea transmission link in south-west Scotland is well under way. Bill Robertson reports.

M

ajor progress has been made in building a subsea electricity link between the Kintyre peninsula and Hunterston in North Ayrshire since SSE received approval for the project from the regulator Ofgem.

The project to reinforce the transmission system in Kintyre is driven primarily by the need to relieve the growing pressure on the local network and to support the growth of renewable generation in the region.

The vulnerability of the local network was shown when thousands of homes in the area were cut off in March 2013 when the transmission network was damaged by a severe snow storm.

The £197.4m project will improve the security of supply to Kintyre and help local communities while making a significant contribution to fulfilling Scottish renewable energy targets.

The work involves installing a 41km subsea cable from a new substation on the east side of the Kintyre peninsula, running underwater north of Arran

and connecting in to Hunterston. A new 13.5km section of tower line between Crossaig and Carradale in Kintyre replaces an existing line.

As transmission licence holder in the north of Scotland, SSE has an obligation to offer connection to the system for new generation and for new sources of electricity demand. This involves addressing environmental and ecological issues and undertaking public consultation.

CKD Galbraith is delighted to be closely involved by supporting its client SSE, which owns, maintains and invests in the high-voltage electricity transmission network.

The CKD Galbraith utilities team has assisted in securing consents required to facilitate access by the overhead line contractors Amec Foster Wheeler to facilitate the building of 50 steel towers between Carradale and a new substation covering 12 hectares of former forest land at Crossaig.

This has involved negotiating with landowners for wayleaves, the acquisition

l Hunterston, where the eastern end of the subsea cables will come ashore.

Page 10 | Energy Matters Summer 2015 | www.ckdgalbraith.co.uk | Twitter: @CKDGEnergy

of the substation itself, obtaining planning consent from the local authority, securing rights of access for submarine cable landing and help facilitate the transportation of abnormal loads over the Cross Kintyre Haul Road (XKHR).

The utilities team is charged with maintaining good working relationships with each stakeholder, from landowner to planning authority. Negotiations took place during construction and continue, with landowners seeking compensation for any crop losses, disturbance and depreciation. The project is now in the reinstatement stage and CKD Galbraith is involved with organising contractors for remedial works such as building new walls, roads and fences.

A service road leading from the XKHR to the new Crossaig substation has allowed the installation of four items of electrical plant totalling 600 tonnes. By the end of May 2015, delivery of the 41km submarine cable will take place in two passes by Skagerrak, a purpose-built cable laying vessel.

Bill Robertson heads up the utilities department at the Perth office of CKD Galbraith. bill.robertson@ckdgalbraith.co.uk 01738 456074

The Kintyre subsea project The under-sea cable link will reinforce the 132kV transmission network on Kintyre by providing a new connection of similar voltage between Carradale substation and the new Crossaig substation, which began construction in August. The work is split into three main parts: eplacing overhead line from the •R Carradale substation 14.4km north to the new Crossaig substation; •A n underground cable connection and associated access track will lead from Crossaig to Port a’Mhidair across the Kilbrannan Sound and from Firth of Clyde (north of Arran) to Ardneil Bay in North Ayrshire; •H ere, a connection by underground cable to Hunterston substation will complete the connection and the upgrade requirements.

During the development phase of the project, SSE assessed a number of technical solutions and route options.

They included micro-siting, preconstruction scoping, environmental and marine analysis. Substantial public consultation was also taken during that period.

While the project is largely located in Scottish Hydro Electric Transmission’s licensed area, a 3.5km of land cable and associated substation works are within Scottish Power Transmission’s licensed area at Hunterston.

The subsea cable from Crossaig to Hunterston will consist of two 220kV high voltage alternating current (HVAC) subsea cables, each approximately 41km in length; and 22mm to 250mm in diameter, between Port a’ Mhiadair and Ardneil Bay. A full geo-physical and geo-technical survey was completed in parallel with marine environmental surveys in the summer of 2009.

The survey results allowed for the final selection of the proposed route which sought to maximise the need to bury subsea cables.

Land condition: Getting the record straight Technical advances have made the process of creating records of condition potentially easier – and more accurate – says Michael Fletcher.

R

ecords of condition are an essential part of any development on land, as they will help safeguard both a developer’s and a landowner’s interests.

Whether the development is for a trial pit or a major renewables or utility development it is important for both a developer and a landowner to record the characteristics of the land before work starts on a site.

Developments in both camera technology and geographic information systems (‘GIS’) have enabled CKD Galbraith as a firm to revolutionise its record of condition reporting processes.

Advances in camera technology mean users can now attach site-specific information to a shot while capturing the image. Site data can include location, compass bearing, date and time and site notes, which together or individually facilitate greater analysis and more accurate report production.

This progress has enabled CKD Galbraith as a firm to increase both the efficiency and accuracy in the way record of condition reports are produced through the firm for its clients.

Aside from advances in camera technology, CKD Galbraith has developed its GIS suite of technology to increase further the accuracy of its reports.

A key driver in developing these was the availability of 1:10,000-scale, licensed mapping. Prior to this, the product of record of conditions tended

to rely on freely available mapping data though less detailed ‘base mapping’, making the accurate visualisation of photographic locations challenging.

The integration of 1:10,000 scale mapping into records of conditions allows for more accurate visual interpretation of the location of each photo for the end users of the report.

As a firm CKD Galbraith is involved in major infrastructure developments throughout Scotland, over large areas of land and varying ownerships, and our ability to produce records of conditions on behalf of both landowners

“

Advances in camera technology mean users can now attach site-specific information to a shot while capturing the image.

and developers gives both parties more confidence in the project and any restoration obligations.

The importance of creating robust and accurate record of conditions should not be underestimated. We recommend landowners and developers engage professional help from qualified surveyors in drawing up these important documents.

Accurate collation of data safeguards the interests of all parties so that the land can be returned to a condition agreed between both parties at the outset of the development.

Michael Fletcher is an energy specialist in the Stirling office of CKD Galbraith. michael.fletcher@ckdgalbraith.co.uk 01786 434 600

www.ckdgalbraith.co.uk | Twitter: @CKDGEnergy | Energy Matters Summer 2015 | Page 11

Time to make new CAP subsidies fit Major Common Agricultural Policy reforms mean landowners should look to secure their interest in the face of activity by utility companies, says Nick Morgan.

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s the submission date for Basic Payment Scheme (BPS) claims looms, landowners are looking to ensure they protect their interests under the EU’s biggest rural subsidy for farmers by having as much eligible land available as possible.

Meanwhile, as demand on their networks ever increases, utility companies continue to leave their mark on land throughout the country by installing new infrastructure and refurbishing existing installations above and below ground.

At CKD Galbraith, we carry out work on behalf of landowners and utility companies alike and understand how important it is to maintain relationships between the two interests by acting transparently.

To take a theoretical example, what happens when a utility company has carried out repairs to its network on May 15 so that your potato crop cannot be planted in time or the sown barley crop is damaged? In this situation utility companies generally look actively to work with landowners to achieve a resolution, but the onus is really on landowners to seek compensation where they believe it’s due.

Potentially direct losses of agricultural production must be considered along

with the effect on the BPS, which was established as a key part of the Common Agricultural Policy reform. As a general rule, utility companies are obliged under relevant legislation to consider compensation claims from those affected by their work.

However, landowners should look to minimise their losses and continue to communicate with the utility company on any issues arising that do not allow them to do so.

The utility company should consider with the landowner any resultant compensation claims, supplemented with documented evidence, that its actions led to a reduction in subsidy payments by the Rural Payments Agency.

Colin Stewart, CKD Galbraith’s Rural Partner in Perth, explains: “Those actively farming are looking to maximise their subsidy claims within the base year for claiming the new Basic Payment Scheme.

“This base year effectively sets the number of entitlements for several years to come. This is done by ensuring that every eligible hectare is included within the 2015 Basic Payment Scheme claim.”

If a BPS claimant is affected by either planned or unplanned work of a utility company, then, according to the Scottish Government’s Rural Payments and Inspections Directorate, this may affect the eligibility of land included within a BPS claim.

Accordingly, it is vital that landowners likely to be affected consult all necessary parties to ensure that their interests are best protected, seeking professional advice where required.

Nick Morgan is an Associate based in the Perth office of CKD Galbraith. nick.morgan@ckdgalbraith.co.uk 01738 456 063

I

N 2014 the Government introduced the Heat Network (Metering and Billing) Regulations to ensure suppliers provided a basic level of service and also that claimed carbon savings were real.

The regulations oblige individuals or businesses which supply and charge for heating, hot water or cooling to more than one property – residential or non-residential – to provide details of these services to the National Measurement Office.

The initial deadline was in April, but this was extended to December 31, 2015, because of the large number of enquiries received.

For biomass heating, this means complying with the Timber Standard for Heat and Electricity (TS), which was introduced last December by the Department of Energy and Climate Change to ensure biomass sustainability.

After October 5 this year, all existing and new claimants under the Renewable Heat Incentive (RHI), Renewables Obligation (RO) and Contracts for Difference (CFD) subsidy regimes will have to comply with the sustainability criteria, either by reporting directly to Ofgem and/or sourcing supply from a Biomass Suppliers List (BSL) registered supplier.

The criteria are: • A greenhouse gas lifecycle emissions limit target of 34.8g CO2 equivalent per Mega Joule of heat, or 60% Green House Gas savings against the EU fossil fuel average; • The land criteria.

To meet the land criteria, if you are claiming domestic RHI, you simply have to source your fuel from a supplier registered on the BSL and declare this to Ofgem.

For non-domestic installations you will either be required to source your supply from the BSL and provide a quarterly declaration to Ofgem that the fuel used was registered on the BSL or self-report to Ofgem to demonstrate compliance with the Green House Gas target and land criteria.

Depending on the size of scheme and subsidy claimed your will need to report as follows: • Monthly – RO 1MW and above, CFD; • Quarterly – RHI; • Annually – RO 50kW to 1MW; • Annually (audit report) – RO, CFD and RHI 1MW and above.

Page 12 | Energy Matters Summer 2015 | www.ckdgalbraith.co.uk | Twitter: @CKDGEnergy

Seeing the wood for the regulatory trees The days of unregulated and potentially unsustainable biomass supplies are over. Anneka Fraser explains how new rules will affect subsidy claims.

Ultimately, all biomass must originate from legal and sustainable sources, i.e. be legally harvested in accordance with the EU Timber Regulation and originate from a forest that is managed in a way that meets the 10 sustainability requirements outlined in the Timber Standard.

DECC recognises this may be difficult in practice and has therefore introduced a 70:30 threshold whereby the total supply must be legally sourced but only 70% needs to be legally and sustainably sourced.

Depending on the source of your supply you can provide evidence to support your declaration in one of two categories: Category A: Provide evidence that you have purchased FSC or PEFC certified material (which complies with the Timber

Standard’s sustainability and legality requirements) such as a copy of the Forest Management certificate or Chain of Custody certificate.

Category B: Provide a suitable amount of bespoke evidence to demonstrate a low risk of non-compliance with the land criteria. For example, timber traceable to a forest with a valid felling license and a fully implemented Forest Management Plan in line with the UK Forestry Standard (UKFS) requirements and

“

After October 5, all existing and new claimants under the Renewable Heat Incentive, Renewables Obligation and Contracts for Difference regimes will have to comply with sustainability criteria . guidelines. If this cannot be provided, the applicant will need to adopt a risk-based regional approach.

The Biomass Suppliers List provides RHI participants with a simple way to ensure their supply complies with the sustainability criteria. All suppliers (except selfsuppliers) will be required to register on

the BSL and must be able to prove their supply meets the land criteria.

There are four types of supplier: Producer: Produces fuel from raw materials and is not authorised to sell on.

Trader: Buys fuel and sells it to consumers or other traders.

Producer-trader: Produces fuel from raw materials and sells it to consumers or other traders (RHI participants who source raw materials from another supplier and process these into fuel i.e.

Chip for their own use should register in this category if they wish to use the BSL to meet the sustainability criteria).

Self-supplier: RHI participants with an installation less than 1MWth, sourcing fuel to which they have a legal right from the same estate and within a 50-mile radius of the boiler. Self-suppliers must provide evidence of an FC approved Woodland Management Plan or felling licence, for example.

It is important to note that if you are a registered BSL supplier your deadline for compliance with the land criteria is July 6, 2015, not October 5, 2015, and you must continue to provide quarterly compliance reports to the BSL administrator, giving supporting evidence in either Category A or Category B as outlined above.

On the face of it, registering on the BSL and meeting the woodfuel sustainability criteria seems to involve a daunting amount of paperwork in order to continue receiving RHI payments, but, as the saying goes, there is no such thing as a free lunch. Considering the uptake of RHI, RO and CFD recently the days of unregulated, and potentially unsustainable, supply were always numbered.

We strongly advise acting to protect your incentives well in advance of your deadlines.

Further information and registration forms for both single and multiple networks can be found at www.gov.uk/heat-networks.

Anneka Fraser is an Associate in the Edinburgh office of CKD Galbraith. anneka.fraser@ckdgalbraith.co.uk 0131 240 2280

www.ckdgalbraith.co.uk | Twitter: @CKDGEnergy | Energy Matters Summer 2015 | Page 13

What does the future hold for renewables?

The prospects of the industry came under the spotlight at a recent major event. Toby Kirkwood reflects on the Scottish Renewables Conference.

T

his year’s Scottish Renewables Annual Conference attracted some 800 participants and underlined the fact that since last year the industry has passed many notable milestones.

Renewables have become Scotland’s principal source of power, delivering the capacity that was required to meet the Scottish Government’s 2015 electricity target. Renewable sources also provide 3% of Scotland’s heat energy.

There are challenges ahead for the industry, and many of them were discussed in depth in 20-plus conference sessions by more than 100 speakers, who shared their views on cost, the integration of renewables into the wider energy system, and public and political support for the sector.

Competition for revenue support, cuts to the Feed-in Tariff and the Renewable Heat Incentive degression mean developers

are feeling the squeeze. Many are under pressure to reduce spending, and from now on only the most competitive companies and schemes will be successful in the open market.

The current policy of FIT degression – meaning gradual reduction – is a response to a high number of applications for advance accreditation by the electricity regulator Ofgem in the past couple of years. As a result we have seen FIT reductions in the range of 5 – 10% every six months across several technologies and many developers are rushing to get advanced accreditation in order to avoid degression.

This has distorted the market, and as a result many projects may now never come to fruition. The introduction of the Contracts for Difference subsidy regime to replace the Renewables Obligation may have driven down costs, but the renewables industry has a long way to go in a short time to meet the benchmarks that have been set.

l The Scottish Renewables Conference was well attended.

Page 14 | Energy Matters Summer 2015 | www.ckdgalbraith.co.uk | Twitter: @CKDGEnergy

This view was supported by Dr Christian Redl (right) of German think-tank Agora Energiewende, who spoke at length about the similarities between the transition to low-carbon energy taking place in Europe’s most powerful economy and in Scotland. Comparing the results of the first round of Contracts for Difference – which saw the price of electricity from all renewables technologies fall as developers bid for support from the UK Government in a blind auction – Dr Redl described how government financial support for solar in Germany had fallen 80% in 10 years, putting the technology “well within the range of fossil fuels”.

This is a rather worrying statistic which suggests that many could be looking to turn back to fossil fuels as new technology starts to become unviable because of a drop in price.

Another issue addressed was the integration of renewables into the wider energy system. We can only unlock the full potential of this sector if we can

achieve greater inter-connection and concentrate on the development of storage and other advances in technology. Success will therefore depend on finding and developing new technologies. This applies especially to the marine sector, where there is increased pressure to live up to Scotland’s world-leading position.

Finally there needs to be continued public and political support for renewables, with emphasis on their economic, employment and environmental benefits. One way of doing this is by exploring the possibility of joint ownerships within communities, and Joss Blamire (below) onshore renewables policy manager at Scottish Renewables, told how the organisation’s members were committed to delivering shared ownership opportunities for communities across Scotland.

He said: “Giving communities a stake in renewable energy projects could boost local economies, bringing local suppliers together with projects in their area and helping to address fuel poverty.

“Some developers are already seeing that those projects with an element of shared ownership enjoy far stronger support from local people, and there is now a move towards addressing the potential for community buy-in at a much earlier stage in the development of schemes.”

A well-attended conference session entitled ‘Come what may: the General Election and beyond’ saw all Scotland’s main political parties debating energy

“

Some developers are already seeing that those projects with an element of shared ownership enjoy far stronger support from local people.

issues. The panel was made up of Scottish Conservatives’ Murdo Fraser; Scottish Green Party leader Patrick Harvie; Scottish Labour’s Lewis Macdonald; the SNP’s Mike Weir and the Scottish Liberal Democrats’ Tavish Scott – all of whom faced challenging questions from audience members after setting out their own vision of a future Scottish energy mix.

If Scotland can secure the right outcome from each of these challenges it should make the final hurdle of financing the next stages of the industry much easier.

But every degree of uncertainty over future targets and frameworks adds to the cost of investment in this capitalintensive sector, and this is what will ultimately dictate the future of renewables in Scotland.

Toby Kirkwood is a trainee surveyor in the Stirling office of CKD Galbraith. toby.kirkwood@ckdgalbraith.co.uk 01786 434 635

l Amber Rudd replaces Ed Davey as Energy Secretary in David Cameron’s new all-Conservative Cabinet.

Energy policy: More of the same to follow election Anneka Fraser looks at how the General Election result may affect the renewables market.

H

ow will a new majority Conservative government affect the renewable energy market in Scotland?

Conservative ministers had little new to say about energy or the environment in their campaign. However, most significantly, it was confirmed there would be no new public subsidy for onshore wind.

Considering the recent severe cuts to Feed in Tariff wind turbine subsidies and the lack of funds for onshore wind in the Contract for Difference incentive, it was already clear that the future growth of onshore wind farms was finite. This may appear bad news for British electricity consumers and carbon reduction targets, but it tends to make offshore wind a good investment by comparison.

The Conservatives also promised to support new renewable technologies, and continue to support the “safe development” of shale gas.

In addition they have committed to continue cutting emissions as costeffectively as possible and to push for a strong global climate deal with the aim of limiting global warming to 2°C. To say there are differences between the Tories and the Scottish Nationalists –winners of all but three seats in Scotland – is a big understatement, but both share a focus on minimising climate change and promoting renewable energy in Scotland.

www.ckdgalbraith.co.uk | Twitter: @CKDGEnergy | Energy Matters Summer 2015 | Page 15

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