Galbraith Energy Matters Summer 2018

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ISSUE 16 | SUmmEr 2018


Planting a new source of woodland revenue l Farming’s future without diesel l New telecoms code: landowners beware l Stirling makes the most of the sunshine l Preparing for the electric car revolution


New code may slow telecom growth For an industry so tied to concepts of place and continuity, farming has been greatly influenced over the past 20 years by mobile communications. By and large, mobile operators seeking homes for their masts and associated equipment have built a good working relationship with rural landowners who receive a reasonable rental income for hosting these sites. The balance of the telecoms companies being able to provide an effective network with landowners’ rights to look after their property as they see fit has been maintained and recourse to the legislation to resolve issues has been the exception rather than the rule. All that is potentially due to change with the introduction of the 2017 Electronic Communications Code. Opinions diverge significantly on how the code will work in practice, particularly over how much landlords should be paid for these sites. Government soundings before the law was introduced last December envisaged rents would fall by about 40%. Yet some operators are proposing annual rents of £8 for greenfield sites that previously yielded £6,000, and £50 for rooftop locations that fetched around £12,000.


4 The new telecoms code: why landowners need to be wary.

6 Diesel keeps farmers working. But are there alternatives?

8 When wind turbines go wrong. What the new water regulations mean. Filling the gaps in energy supply.

10 Cover story: A carbon capture harvest from new woodlands. Contracting: the lessons from Carillion.

12 Hydro power: some good news at last. Future-proofing agreements.


As you’ll see on page 4, we anticipate landowners simply won’t want to host sites for these returns – and that could slow down rather than speed up deployment, frustrating efforts to create the modern, digital economy that Scotland needs. Mike Reid Galbraith Head of Energy and Utilities

Stirling makes the most of the sunshine.

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The race to establish clean alternatives to petrol and diesel is well and truly on, driven by international pressure to cut greenhouse emissions combined with long-standing concerns over security of oil and gas supply. Fuels such as bioethanol and biodiesel have yet to convince on green credentials and have caused economic, social and environmental problems such as diverting land from food crops to fuel production. Vehicle manufacturers like Honda, Gm and Hyundai, and some energy companies, are investing heavily in hydrogen. But producing this, the most plentiful element in the universe, is costly and can be fuel-intensive, while storage and transport remain problematic. meanwhile, electric vehicles become ever more popular, first with the advent of hybrids such as the Prius, then spurred by Tesla, the auto innovator that made electric-only cars that not only looked great but also performed well. Demand for EVs is likely to keep rising due to the ban on sales of new conventional diesel and petrol cars from 2040 to improve air quality.

That said, it still takes 30 minutes or more to recharge your Tesla or Nissan Leaf, a good ldeal longer than it takes to fill your petrol tank at the roadside services. Surely this presents well-sited retailers with an opportunity?

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Gearing up

But EVs are not that green – producing the electricity to power them uses a lot of energy; and they take time to charge. However, wind and solar are getting much better at producing electricity, and disruptive firms are making big strides in the storing and channeling of power to maximise efficiency.

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Rapid charging stations and plenty of them will be crucial in the move to all-electric cars. Calum Innes looks at the state of play.

Energy matters is produced by Allerton Communications, London, and designed by George Gray Media & Design, St Andeux, France. © CKD Galbraith LLP.

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Yes and no. Green vehicles and how to serve their occupants have prompted strategic thinking at The House of Bruar, the retail phenomenon on the A9 near Pitlochry that attracts two million visitors a year, the big majority arriving by car.

‘RETAILERS CAN ExpECT TO SEE INCREASEd dWELL TIME’ SAleS of electric vehicles are rising year-on year according to the Society of Motor Manufacturers and Traders. There are some 135,000 plug-in cars on our roads and the Department for Transport predicts 1.2 million by 2020.

and local authorities. New market entrants believe drivers will actively seeking eV charge points, so traditional forecourts too can benefit from increased footfall.

Nearly half of all UK households lack access to off-street parking, excluding more than 13 million car owners from being able charge at home, according to figures from the Office of National Statistics. As the number of people driving electric cars increases even further, this will only become a bigger problem.

“People don’t fill up their cars with petrol or diesel each night – they stop to fill up as and when they need to. eventually it’ll become just as natural to do this with electric cars and we’re already making that a reality,” said Tim Payne, CeO of InstaVolt, which installs and maintains rapid-charging units across Britain, providing landowners with rental income.

Several companies have sprung up to serve an expected boom in demand for roadside recharging, their customers including shopping centres, gym chains, supermarkets

“Retailers can expect to see increased dwell time, as drivers typically spend 20-30 minutes waiting for their vehicle to charge, spending money as they do.”

for the electric car A growing number are EVs, says Patrick Birkbeck, whose father mark and mother Linda established the business, billed as ‘the home of Scottish country clothing’ though selling much more, in 1993. He’s committed to installing an EV charging area and is deciding the best way to go about it. “We are researching the potential and need to understand the market fully in order to serve our customers. Because recharging is new and different, it's important we find the right people to listen to and to partner with. “The biggest problem will be ensuring we have access to the power required.” Asked if recharging creates a captive market due to the extra time involved he said: “That’s not going to happen. If you are going to charge your vehicle while travelling, you want a rapid charge. That's what our customers are going to require.” mr Birkbeck said based on the volume of traffic

House of Bruar caters for, he may need 100 charging points. “We are not being opportunists and taking advantage of this market – I don’t see it that way – it's an opportunity to offer excellent service to the customers who come here. The requirement will be to offer a service that matches the quality of our fish and chips, our cashmere and all our other products. If we invest in selling a service, it's got to be the best it can be.” roadside selling has served House of Bruar and its customers well – a business that started on the site of a small hotel is now four times the size it was 25 years ago. “We are huge believers in retail,” said mr Birkbeck. 01738 456075

Because recharging is new and different, it's important we find the right people to listen to and to partner with. | energy Matters | Summer 2018 | Page 3

Rights and responsibilities under the new telecoms code Landowners beware – some mobile phone operators are requesting rights that go beyond the new rules on the siting of electronic apparatus. Mike Reid reports. The New electronic communications code, introduced on December 28, 2017, is of special relevance to landowners hosting masts and other telecommunications apparatus. The Code governs all new agreements from that date for electronic communication apparatus including cables, wires and radio masts. Parties may not ‘contract out’ of the Code although more rights than set out in the Code can be granted to the operators. Landowners should be very careful [and seek advice] before entering into agreements under the new rules. Since December, operators have been proposing terms that exceed rights granted under the Code, and payments far lower than rents previously offered. So what are the implications of new Code agreements?

consideration and compensation Unlike Compulsory Purchase Order rights granted to other Statutory Undertakers, the Code confirms that landowners should receive consideration based on market value and compensation for the imposition of Code rights on their property. The Government impact assessment for the introduction of the Code envisaged rents would fall by around 40%. However, payments have been proposed by the operators as low as £3/annum for greenfield sites (previously around £6,000/annum) and £50/annum for rooftop sites (previously around £12,000/annum). Operators are ignoring that property is being used for a telecommunications installation and producing rental

assessments based on a “no scheme” world where only compensation for loss is offered. As the market value assumptions call for parties to assume that Code rights are being imposed, we consider this assessment isn’t correct. Compensation is due for any losses caused by the imposition of Code rights and these could be significant, particularly where areas of forestry might be sterilised. Compensation can be awarded at any time during an agreement so landowners should protect their rights to receive compensation throughout the agreement in case circumstances change.

Qualified rights to upgrade and share apparatus There are qualified rights for the operator to share and upgrade apparatus provided this doesn’t cause any additional burden to the landowner or damage their amenity. The apparatus is the cabin, mast, antenna, dishes, etc, but this doesn’t include the land. There are no rights for the operator to sub-let the land without the landowner’s consent. The qualified rights to upgrade the apparatus don’t give the operator the right to add additional apparatus to that first proposed.

Operators have been proposing terms giving full rights for them to sub-let the land and add unlimited equipment which are both in excess of the rights granted by the Code.

assignation There are rights for an operator to assign to another Code operator without the landowner’s consent or ability to impose conditions, such as a payment. The Code makes provision for guarantee agreements to be put in place for the lease obligations and it is likely landowners will look to insist on these. restrictions on assignation to non-Code Operators are also likely to be included by landowners.

Termination and registration There is now an 18-month notice period required for a landowner to terminate a Code agreement and this can only be used in limited circumstances, such as redevelopment. Code rights don’t need to be registered against the title and, so may not be picked up in a property purchase. Developers who purchase properties for redevelopment should be careful to ensure they know whether there are any Code rights in force as this could significantly delay any redevelopment plans.

Compensation is due for any losses caused by the imposition of Code rights and these could be significant, particularly where areas of forestry might be sterilised.

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access Landowners are increasingly reporting issues when operators take access to mast sites. Access protocols should be agreed for telecoms sites and consideration given to penalty clauses being included in the event of breach of these protocols due to the restricted rights any landowner has for removal in the event of breach of the agreement.

an uncertain future? We are at an early stage in understanding the provisions of the new Code but it is already obvious that the operators are looking for more rights than are provided for in the legislation. The new Code rights don’t provide the all-encompassing powers that operators hoped for and expose them to potential unlimited liabilities which will be commercially sensitive for them to agree. We may see negotiated agreements being the way forward rather than agreements strictly in accordance with Code rights. Whether a landowner grants additional rights than those included in the Code will, to some extent, depend on the beneďŹ ts they can negotiate, particularly the consideration payable. We doubt there will be landowners willing to let sites for ÂŁ3/annum but if the operators pursue their interest any agreement is likely to be strictly in accordance with the Code rights. We have concerns for the ongoing working relationship between the parties in these circumstances. New Code agreements will be developed over time and it is important for landowners to receive professional advice prior to signing up to any terms proposed. 01334 659 984 | energy Matters | Summer 2018 | Page 5

Farming in the post-diesel era Diesel for agriculture remains cheap, but in the low-carbon era it won’t last forever. Colin Stewart talks to experts about some sustainable replacements.

The PreSSure we all experience to cut carbon emissions at home, in the workplace and on the road is no less urgent in agriculture.

Campbell, Team Leader, Environment & Design at SAC Consulting, part of the college. He weighs up four currently available options (see panel).

Once, during a country drive, I wondered how big machines digging fields or harvesting crops would work when the oil ran out, and what we’d do for food when they did. Concerns about climate change have instead brought laws aimed at cutting carbon emissions to fulfil international obligations such as the Kyoto Protocol.

Of course farms are already producing and using renewable energy on a large and growing scale and a substantial body of expertise has developed in the sector. We’re at the start of a big switch to sustainable energy to drive farm machinery according to Will Watts, a director of rAW Energy, which consults on and develops renewable energy assets. But, he says, there’s a long way to go.

There are already options available to replace fossil fuels, but incentives to switch are limited by the current tax regime, according to Jim Campbell of SrUC, Scotland’s rural College. Agricultural vehicles use ‘rebated’ red diesel, so they incur much less fuel duty than road vehicles, and savings from using alternative fuels are limited. “most of the technologies are already out there but have yet to be adopted because in most cases they do not add up financially,” said mr

“recently in New Zealand we saw farmers herding sheep on Ubco E-bikes and quad-bikes. The move to electricity for a £250,000 combine harvester will take longer, but the Tesla Semi EV truck launch in November shows electricity works for larger machinery as it does for EVs, where the take-up has surprised many.” For Watts, a turning point came on the day last year when more than half Britain’s energy was generated from renewable sources, coinciding with the longer-term adoption of smart-grid technologies. Britain is blessed with great conditions for on- and offshore wind energy production and continued innovation in storage makes electric steadily more attractive. While range anxiety affecting EV cars is not a problem for farmers, long re-charge waiting times will be, especially in intensive periods such as harvest.

looking to the future: Will Watts and Jim Campbell.

“Biodiesel and biomethane are very effective fossil fuel replacements as they work in existing vehicles with little or no modification, but their suitability will depend on the crop types

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Above: Valtra’s dual fuel tractors run on diesel oil or biogas or a mixture of the two. Below left: John Deere’s electric tractor has an array of batteries instead of a diesel engine. Below right: New Holland’s hydrogen fuel-cell prototype.

produced, legal limitations on fuel crops and whether biomethane is available from anaerobic digestion assets on a property,” said mr Watts, whose company is based at the Farm491 agritech and innovation centre at royal Agricultural University, Cirencester. “Ultimately fuel will be viewed by government and others on how it integrates into sustainable farming, alongside other factors such as food production, carbon budget, soil management and resource preservation.” 01738 448144



This is generally produced from oilseed rape, which is grown across the UK. It can be used as a direct substitute for mineral diesel or mixed as a blend.

Aimed at farmers with their own AD plant, Valtra offers ‘dual-fuel’ tractors that will run on either diesel or biogas or a mixture of the two. They operate on biogas as they do on diesel (possibly at slightly reduced power) so introducing them into a fleet is straightforward. New Holland also has a biogas prototype.

Some engine manufacturers are reluctant to provide engine warranties where higher proportions of biodiesel are used – a procedure that can also make it harder for catalytic converters to achieve emission targets.

electric vehicles Since many farmers also own renewable energy assets there is some interest in this. Disadvantages include re-charge time - in a busy harvest, hooking up for several hours is a major consideration. As battery technology improves and re-charge times reduce, electric will become a real option, though it would require a major commitment to change from diesel. Trailed and mounted equipment could also go electric, with power transferred from tractor by cable rather than to shafts and hydraulic lines. John Deere, among others, has a prototype. For smaller vehicles see Ubco

hydrogen The most abundant element in the universe remains problematic to produce commercially. ‘Steam reforming’ is cheap but produces large amounts of greenhouse gases. Hydrolysis is intensive and costly. However, there’s a worldwide rush to produce this gas cleanly, and any breakthrough will interest farmers with renewable assets or resources and no access to the grid to export electricity. While hydrogen must be compressed to a high pressure for road-going vehicles, farm tractors operating close to base could be refuelled regularly. Hydrogen can also be used in a converted internal combustion engine on a vehicle fitted with a high-pressure tank. New Holland has a tractor powered by a fuel cell running on hydrogen. | energy Matters | Summer 2018 | Page 7

When turbines go wrong Putting up a wind turbine can be great way to generate additional income from land, but first it’s important to consider what could go wrong, as Mike Reid observes.

MaNY landowners have constructed single wind turbines on their land and entered into operation and maintenance (o&M) agreements for this equipment. most turbines work well but some are problematic. Design flaws can cause problems but once the issue has been identified and an appropriate resolution found, it is hopefully no more than an inconvenience of cost to have it resolved. But what happens when a more major challenge arises? We know of one landowner who erected three 50Kw wind turbines, one of which developed a fault which required the generator to be rewound. The O&m company confirmed the turbine manufacturer would be able to rewind the generator but this would be at considerable cost and a potential time scale from dismantling to reerecting of up to six months as it would need to be shipped abroad for the work to be done. The landowner managed to source an alternative UK company direct that could rewind the

generator for approximately 50% of the cost and with a six-week turnaround period. The UK manufacturer was commissioned to rewind the generator and the work completed. Unfortunately, when the rewound generator was installed the problem immediately recurred, and the generator needed to be rewound again for the same cost as previously. There was now a potential contractual issue as the O&m company hadn’t arranged the rewinding but had taken down and then refitted the generator after the works took place. They denied any responsibility for the fault as did the UK company that had done the rewinding. Proving liability in this situation would be very difficult and, with neither company considering they were at fault, this could have turned into a complicated and expensive legal battle. All the while further income was being lost from the broken turbine. Was there a problem with the rewinding, was the generator damaged during installation or was there an underlying problem with the turbine which was causing the generator to fail? rather than stalling matters trying to work out the liability, the decision was made to have the generator rewound again by the same team with additional safeguards in place. This time when the work was completed the turbine worked successfully. The turbine is now back generating income for the farmer but the costs have been higher than anticipated, although not too much in

Testing times ahead for water New water regulations for domestic rented premises mean extra responsibility for owners. Rachel Myles reports.

IMPorTaNT new laws came into force in october to protect the health of housing tenants by ensuring that water meets appropriate quality standards. The Water Intended for Human Consumption (Private Supplies) (Scotland) regulations 2017 partly replacing the existing Private Water Supplies (Scotland) regulations 2006, offer protection from the adverse health effects of any contamination of water intended for human consumption. The main difference is that domestic rented premises need to be included in an annual testing regime. Land agents and property managers at Galbraith are liaising with clients who have let properties served by private water supplies in order to provide the relevant local authority with the information they require to keep a register of the private water supply systems in their area. So for those with domestic rented premises in Scotland served by private water supplies, what do the 2017 regulations mean in practice? • The addresses of the qualifying properties should be provided to the local authority so that the properties can be added to the Private Water Supplies register before January 1, 2019, although there is a transitional period until January 2022 for the local authority to improve on the information held on the register.

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• The supplies will be tested by the local authority annually and a risk assessment carried out. Each initial assessment must be completed before January 1, 2022 and these must be updated at least every five years. It is only the water supply that is monitored and tested under the 2017 regulations, not each individual property. • Action the steps set out in the remediation Notice (regulation 30) or Enforcement Notice (regulation 31) should be issued following the supply test. Should upgrade works be required to the supply, the relevant person, as defined in the 2017 regulations, may be eligible to apply for a private water supply improvement grant through the local authority. • There is a fee per supply per year, set by the local authority. Galbraith land agents and property managers are liaising with local authorities to provide information for the relevant Local Authority register and also assist with arranging access for supply tests. If you have any queries in relation to the 2017 regulations or if we can assist with registering your private water supply, please contact your nearest Galbraith office. 01334 659 989

Gas peaking: Filling the gaps in energy supply By Toby Kirkwood a huGe surge in renewable energy generation in the uK in recent years is set to further dominate the market as the next wave of offshore wind farms come online.

excess of the original quote, taking into account the proposed timescale for the work to be done. In another instance, a single wind turbine was erected and then due to a contractual dispute has never been commissioned or generated any power since, leaving a number of parties out of pocket. Further, the commissioning date under the Feed-in Tariff was missed, resulting in a far less viable project, should the contractual dispute ever be resolved. Contract law is a complicated area but it is important to know who you are contracting with, establishing what each party is expected to do and ensuring there are no gaps in the chain of responsibility. 01334 659 984

meanwhile all remaining coal electricity generating plants are set to be decommissioned by 2022 and half the UK’s nuclear capacity is predicted to be offline by 2025. The electricity generation market will therefore be increasingly dominated by intermittent sources. This means grid operators will face new challenges as they look to provide grid capacity and stability against a backdrop of potentially extreme fluctuation. To soften the blow, Ofgem (the office of Gas and Electricity markets) has introduced a number of markets aimed at helping to ensure delivery of electrical power generation capacity at short notice. One of these is the Capacity market which incentivises flexible, fast responding generation during peak times. This is where peak power plants come into play, burning gas from the nearest point of connection to produce and export electricity back into the grid during times of high demand. This provides an opportunity for landowners to maximise the value of their vacant land assets and generate stable, long-term revenue in either rural or urban locations. It is common practice for developers to fund the development and construction of the generation plant, so they are generally willing to offer a rental payment on a per mW basis of installed capacity to the landowner. Developers can minimise the development footprint by deploying the latest modular gas-powered engines. These are housed in containerised units, which ensures quick construction, minimal site disruption and minimal noise pollution. As the generators are modular, output can be optimised to the land available and the capacity of the local grid. Developers are extremely keen to find sites which can connect to the grid. The land needs to be flat, near to a suitable substation with access to the local road network, and not have any special designation e.g. site of special scientific interest, area of outstanding natural beauty, or within a national park. Galbraith has key contacts within the sector and will be happy to either make an introduction on your behalf or, if approached by a developer, guide you through the development process from start to finish with professional fees being footed by the would-be developer. 01786 434635 | energy Matters | Summer 2018 | Page 9

Who are you contracting with? The Carillion failure highlights the need to know who you’re contracting with, says Mike Reid. The receNT well-publicised demise of carillion has highlighted again that if you come to a commercial agreement with a contractor the terms are only enforceable against that legal entity rather than any other connected party. Landowners are often approached by contractors working on infrastructure projects for ‘statutory undertakers’ such as Transport Scotland, Network rail and Scottish Power Energy Networks. Whereas the scheme will have been initially proposed and agreed by the statutory undertaker, the contractor then follows along to deliver the project. The contractor often looks to come to a separate agreement to secure temporary rights for compounds, storage areas, car parking and access agreements if these haven’t been provided for under the scheme. Agreements can be reached privately with the contractor but landowners should be aware that should the contractor default on the terms there is no recourse to the statutory undertaker. Carillion was a well-known name in the construction industry and many people will have been surprised to see them go into administration. We highlighted in Energy Matters issue 14 a temporary storage compound that was agreed with Network rail for works on the east coast mainline. Carillion was the main contractor on that project and went into administration when there were still payments due for the temporary compound and compensation claims were outstanding. Had the landowners entered into direct agreements with Carillion they would have lost out significantly as a result of the administration of the company. Not only would they have lost income from the agreement but reinstating the land would also be their responsibility including some legacy drainage issues. However, the agreements we reached on their behalf were with Network rail direct so the landowners were unaffected by Carillion’s demise. Agreeing temporary compounds for utility schemes can be a useful additional income for landowners and can also deliver costs savings to the contractor so there is benefit to both parties provided this includes appropriate terms. Galbraith normally recommend agreeing terms with the statutory undertaker to ensure agreements will be honoured. However, there is still a place for agreements to be reached with contractors direct, and many are done so successfully. Landowners should be aware of the pitfalls before entering into such an agreement and make sure the terms agreed are appropriate to ensure that the obligations and rights of the parties are secured while allowing the contractor to progress the scheme. 01334 659 984

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How new woodland can reap a carbon capture harvest Woodland carbon credits provide estate owners with incentives to limit UK emissions. Philippa Cliff reports.

buyers, e.g. a power generator at the limit of its emission allowance, “banking” them to use the woodland carbon units to offset their footprint at the various verification dates, the first being five years from the planting date.

The woodland carbon code (wcc) is a uK Government initiative aimed at quantifying and verifying the amount of carbon that will be captured by new planting.

This option offers forest owners an upfront cash injection, but also ties them into delivering the total PIUs to the buyer over the lifetime of the scheme (which can be up to 100 years) and is therefore effectively a burden on the land.

Although still in its relative infancy, the WCC potentially offers land owners an additional tax-free income stream to sit alongside the more traditional revenues from forestry. For property owners, the initial stage of the WCC is to get your new planting project registered and validated into the scheme. This involves the project passing a number of qualifying criteria, together with the gathering of various data sets, allowing carbon calculations to be made. The system is designed to satisfy the UK’s international environmental obligations and creates a market where woodland owners can trade their ‘credits’ with companies engaged in industries, such as heavy engineering and power generation, that produce atmospheric emissions. At the outset, an estimate of the volume of carbon that will be sequestered by the project is made, and once it is successfully validated into the woodland carbon scheme, this estimated volume of carbon is issued to the project as ‘pending issuance units’ or PIUs. These are an estimate of the total carbon units the woodland will capture in its lifetime. PIUs are tradeable but cannot be used to offset carbon emissions. Throughout the life of the planting scheme, verification audits are made – first five years after planting, then every 10 years thereafter. At each verification stage, surveys of the woodland are conducted and calculations of the carbon capture are made. So, they will calculate the volume of carbon captured between year zero and year five. At year 15, they will calculate the volume of carbon captured between years five and 15. At every verification stage, the audited number of carbon units is converted. This process involves the relevant number of PIUs being converted to woodland carbon units. For example, if at year five a project had 1,000 woodland carbon units calculated postverification, then 1,000 of the PIUs would be converted to carbon units. These verified woodland carbon units can be officially used to offset carbon footprints. There are two ways of trading under the WCC. The first is to sell PIUs upfront with

Others do not sell any PIUs upfront, and just sell their approved woodland carbon units at the various verification dates. This means that although income is a longer term prospect, forest owners are not tied into a contract with the carbon buyer for the life of the woodland but simply sell carbon in verified batches. This ensures that a project generates a fairly regular income over its lifetime, which can cover the costs of

A 100ha native woodland scheme, sequestering 30,000 tonnes of CO2 over its 95-year rotation, could yield between £152,000 and £304,000 in total from carbon revenue.

management, monitoring and verification as they arise. In addition, should a landowner want to sell the holding they are passing on an asset of unsold carbon. To quantify the potential income from a WCC scheme, a 100ha native woodland scheme, sequestering 30,000 tonnes of CO2 over its 95-year rotation, could yield between £152,000 and £304,000 in total from carbon revenue, dependent on the value of carbon (range used is £5-10 per tonne CO2 – Forestry Commission Scotland reports average sale price to be £8 per tonne). With this in mind, the WCC can significantly affect the returns from forestry, and should be seriously considered by all those undertaking new woodland planting. 01463 224343 | energy Matters | Summer 2018 | Page 11

Rates relief move aims to give hydro generation a boost Calum Innes reports on two items of good news for an important sector of the Scottish renewables industry.

owNerS and operators of hydro projects have welcomed further support from Government in their campaign to ensure the viability of renewable energy schemes in the face of business rate rises, with help from Galbraith. In response to the hydro industry’s concerns over significant increases in business rates following the 2017 rating revaluation, the Scottish Government introduced interim measures for the financial year 2017/18 to provide transitional relief for schemes less than 1mW. Subsequently, in response to the Governmentcommissioned Barclay review of the Scottish non-domestic rating system, Finance minister Derek mackay announced a pledge to review the underlying legislation as it relates to hydro and the introduction of a new relief to reduce liabilities. Now, a policy note issued by the Scottish Government has confirmed it is upholding that earlier promise and with effect from April 1 it will introduce a new 60% relief for hydro schemes with a rateable value up to £5 million. Galbraith assisted the British Hydro Association and the Scottish group of hydro operators –

Alba, in their talks with Government to find a long-term solution. After long, detailed discussions, it was clear the valuations imposed by assessors in connection with the 2017 revaluation would threaten the viability of many schemes unless special measures were undertaken, possibly undermining the hydro industry in its current format. The February guidance note says: “renewable energy is one of Scotland’s most important industries, creating jobs and investment opportunities while delivering secure, low-carbon, cost-effective energy. The Scottish Government is committed to reducing carbon emissions, and the development and promotion of renewable energy generation is one of a number of measures aimed at tackling this issue. “Decreasing the non-domestic rates payable on these properties should increase the attractiveness of renewables technologies as a means of energy generation. This should, in turn, promote greater energy generation in the sector and a reduction in carbon emissions.” Further details of Government’s wider support for this industry have yet to be published pending the outcome of a committee recently commissioned to review the Plant and machinery regulations which impact upon the valuation methodology. 01738 456075

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COMpROMISE ON ENvIRONMENT CHARGES oPeraTorS of smaller hydro-electric schemes say progress has been made on reaching an accord with regulators on charges aimed at protecting the environment. Controversially, the Scottish Environment Protection Agency (SEPA) has been seeking to raise funds to cover not only direct costs incurred by the small hydro sector, but also indirect or ‘environmental’ costs to support SEPA operations more widely. Alba Energy, an organisation representing independent hydro-electric scheme operators in Scotland, voiced concerns at these proposals and their potential impact upon the industry and has been in liaison with the regulator during the consultation period. SEPA intimate that the new system, proposed on instructions by the Scottish Government, will enable it to focus on the biggest environmental risks while cutting red tape. As a result of the consultation, schemes with an installed capacity between 100kW and 500kW will now have a single annual fee of £200, with no additional ‘environmental charge’. However, schemes from 500kW to 2mW will be liable for this ‘indirect’ charge, based on an abstraction formula of 50% of the winter permitted abstraction and 25% of the summer permitted abstraction, using the charging calculations issued during the consultation. So the contested ‘environmental charge’ has been kept for schemes of more than 500kW, to be phased in over three years on the basis of 33.3% in year one, then 66.6% and 100% in year three. SEPA considers the consultation with the small hydro sector to be ongoing and there will be a further review of the work required and the resultant charging. This review will include representatives from the hydro industry.

Future-proofing agreements to facilitate development Cuts in renewable-energy incentives have injected a dose of reality into the industry. Renegotiating agreements means give and take, says AnnekaFraser. There is normally quite a long lead in time between terms being agreed for renewable energy developments and the start of construction, let alone commissioning, particularly with large scale wind or hydro schemes. The recent drop in support for renewables has resulted in schemes obtaining consent for development now, which have historic terms agreed when the financial returns for the project were far higher. Under the agreed terms the potential return to the landowner is now a much higher percentage of profit than previously envisaged and the developer considers the project isn’t viable as a result. many developers have been approaching landowners to renegotiate the commercial terms of agreements in order to allow consented projects to progress. Where landowners have been aware of the potential income under the previous terms, the revised proposal from the developer is often seen as a significant disappointment. However, landowners shouldn’t be comparing the proposed scheme with what was previously agreed under a different financial support system – they should look at the current income from the land now, compared to the returns that are likely under the revised renewable

development to assess whether the project is an attractive opportunity. The developer has approached to renegotiate terms as the financial returns for the renewable energy project have reduced. However, if the profitability of the scheme had dramatically increased there wouldn’t be the opportunity for renegotiation as the developer would refer to the signed, legally binding, agreement which confirms the commercial terms. The concern for the landowner is if they sign up to commercial terms when there is no support system in place and a replacement support system is introduced to reincentivise renewable power, then the terms agreed may not be able to be renegotiated to reflect the viability of the project. In such situations, we have found a successful way to move development forward is to agree revised commercial terms reflecting the current viability so it actually proceeds, but build in a mechanism to ensure that if profitability increases then both parties will receive an appropriate share and be able to benefit from this uplift in an equitable way. This, on many occasions, has enabled renewable developments to proceed which otherwise might have stalled with the parties in entrenched positions. Looking at innovative solutions has helped many projects to progress that otherwise might never have been developed. 0131 240 2280 | energy Matters | Summer 2018 | Page 13

Making the most of the sun in A local authority PV solar and storage programme means households are enjoying energy independence while cutting their carbon footprint. Jason Cross reports.

STIrlING couNcIl started its capital investment programme in solar PV and battery storage back in 2011. Its key objectives were reducing fuel poverty, improving energy efficiency and reducing the carbon footprint of its housing and commercial stock. FES Group has been involved with the project since 2011 as the preferred framework contractor providing installation and maintenance services. The programme is now into its fourth phase with more than 1,900 installed systems and a further committed investment of £10 million over the next four years. One of the challenges of the project was dealing with a housing portfolio that included properties with small roofs, including tenement blocks and properties located in conservation areas. This was

Page 14 | energy Matters | Summer 2018 |

overcome by FES by specifying a market leading product from SunPower that provided a high wattage output panel within a reduced footprint, allowing the smallest properties to achieve the maximum solar PV output possible. SunPower solar PV panels were also used in conservation areas, and careful panel and equipment selection allowed systems to appear as part of the building structure, satisfying strict planning requirements. With the ongoing development of renewable energy technologies, FES has been installing Tesla battery storage systems alongside the solar PV systems for Stirling Council. The Tesla battery storage system is a highly beneficial technology that allows tenants to store excess electricity generated from the solar PV rather than exporting it to the grid. This increases the selfconsumption of the properties significantly and

Stirling we have data showing tenants were 99% selfsuďŹƒcient from the grid at certain points throughout the year using only solar PV and battery storage. The contract also includes a remote monitoring, planned maintenance and reactive call-out service provided by FES from their in-house 24/7/365 call centre located in Stirling. This service monitors all installed systems to ensure that they are producing to required outputs and that any faults that occur are responded to within the required Service Level Agreements.

Stirling Council has invested heavily in solar PV and battery storage.

Stirling Councils plan to have 2,600 systems installed by march 2018 and 3,700 systems by march 2019 taking over 60% of their housing stock to have solar PV systems installed. Jason Cross is Managing Director of FES Support Services, a UK-wide electrical installation, building and support services and facilities management company based in Stirling. | energy Matters | Summer 2018 | Page 15

Estate’s first steps to solar power The renewablefriendly Rosebery Estate is nearing terms on a subsidy-free 50MW solar farm. Richard Higgins reports.

we haVe spent some time working with a number of our rural estate clients over the last few years and, given the changes to the subsidy regimes for renewable energy projects, this has been something of a movable feast for viability and the approach taken by some of our clients. However, with the incentives structures now more settled and as development and asset funding markets mature, the longer-term projects are attractive to developers, landowners and landownerdevelopers alike. The rosebery Estates is a significant landholder to the west of Edinburgh and also extends to landholdings in the

Borders and midlothian. The estate has undertaken a range of diversification utilising its land-based assets and agricultural operations. These include some smaller scale solar panels on grain stores to assist with the power requirements of a new grain drier. The estate also has an interest in anaerobic digestion, presently supplying feed stock to a large AD plant in Fife and is considering options for AD gas generation closer to the centre of the estate at Dalmeny. On the solar side, Galbraith has worked with the estate and recently concluded negotiations of principal commercial terms with a renewable energy

This is a very exciting project both for the firm and for our client.

Page 16 | energy Matters | Summer 2018 |

company for the potential development of large-scale solar farm of about 50mW. The project is at very early stages and we anticipate a grid connection request to be submitted imminently, with the initial scoping and planning activities to follow. This is a very exciting project both for the firm and for our client, being one of the larger potential developments in Scotland and undertaken without the benefit of any subsidy support from the UK Government. 0131 240 6966

dEvELOpERS uNdETERREd By ENd Of SuBSIdIES We HAVe recently experienced an upswing in enquiries from large, recognisable solar and renewables developers seeking utility-scale or largescale land opportunities across Scotland, especially in the higher irradiation areas. Threre is also a willingness by landowners to consider committing significant areas of ground to diversified income opportunities. Alongside solar, largerscale wind, particularly for turbines of 2MW and over, is now evidently viable without Government subsidy and developers are actively seeking, securing and promoting opportunities. The hiatus over the past two to three years following the degradation in subsidy availability and support is clearly coming to a close, and the market has, as ever, reached equilibrium for the time being. With the availability of investment from normal sources, including clearing banks, there are alternative investment forums also seeking representation in non-core areas which is helping to support the industry. The returns are not earthshattering, but they are real, commercial returns which are bankable and enable projects to get off the ground. We are hopeful that as the industry matures in the postsubsidy world, that with more transactions happening and the maturation of the consenting process, that real opportunity will emerge in what might currently be marginal areas, but which in a short period of time may become viable. The additional requirements for battery charging points for electric vehicles, tied in with battery storage requirements, is an engaging suite of opportunity.

Mobile apps bring GIS into the field Galbraith has invested significantly in its in-house Geographic Information Systems. Now, reports Strath Slater, mobile is taking the innovation further. The aDVeNT of Geographic Information Systems (GIS) has enabled the production of accurate maps, 3D terrain modelling, and spatial analysis to understand how assets and infrastructure relate to each other. These techniques lead to a deeper understanding of where we work and help our clients make faster, more informed decisions. Effective GIS work requires high quality data. Galbraith has access to commercial datasets produced by national mapping agencies and a plethora of ‘open source’ data. However, to gather site-specific data which is not otherwise available, you have to put ‘boots on the ground’. Traditionally GIS is a desktop system. Until recently the primary means of taking information from GIS into the field was a printed map. Collecting new data involved a cumbersome mixture of maps, notebooks, cameras and handheld GPS units. ‘mobile GIS’ – geospatial applications running on a smartphone or tablet and using the device GPS (or an external receiver) to capture location data – has dramatically changed this. Full GIS projects can now be taken into the field loaded onto a ruggedized tablet with integrated camera and GPS unit. Galbraith has adopted QField (a customisable open source application based on QGIS), Avenza maps Pro (a simple, intuitive application produced by Avenza Systems Inc) and Collector / Survey123 (Esri applications integrated with the ArcGIS Online platform for company-wide data sharing and collaborative working). These were used for landowner/ contractor liaison during the ground investigation phase of a major renewable energy project, mapping servitudes and field access points during the refurbishment of the 275kV East Coast main Line, forestry fieldwork and for mapping new fences at agricultural holdings. We look forward to thoroughly integrating our mobile GIS with our existing desktop GIS for a truly seamless flow of data from field to office. 01786 432988 | energy Matters | Summer 2018 | Page 17

One farm and its turbine It’s four years since a wind turbine was installed on a family farm in Fife. Mike Reid reports on how it has performed over that time.

we previously covered (Energy Matters issues 5 to 7) the development of a 500Kw turbine on a farm in Fife, which was leased to a developer.

noise levels of 35 decibels – noise levels equivalent to a fridge.

The turbine was commissioned almost four years ago, so was performance and the impact on the farm and neighbouring properties as predicted or not?

Performance As can be seen from the chart below, monthly output from the turbine varies considerably as this is dependent on prevailing wind speeds. Over the calendar year the capacity factor has ranged from 29 – 36% with an average of 33%. Wind speeds in Fife are not as high as other areas of the country and the average performance of the turbine is less than the generic capacity factor of 35% initially indicated but, taking into account wind speeds in this area, performance has been in line with the farm’s expectations. On average the annual production from the turbine has been enough to power 366 homes so renewable energy produced on the farm far exceeds the farm’s consumption of energy.

Prior to the turbine being erected it was anticipated that noise would come from the blades turning and, although this noise does occur, there is also a separate noise from the nacelle adjusting to face into the prevailing wind direction. The nacelle adjustment noise is more audible than the blades turning but more intermittent. In most weather conditions the turbine isn’t noticeably audible from the residential properties on the farm. However, in some lower wind speeds the turbine is audible but only externally rather than internally within the residential properties and doesn’t cause any significant impact.

Shadow flicker This was never anticipated to be an issue from any residential properties on the farm and, although in spring and autumn when the sun is at a lower level shadows fall across some residential properties, these do not give a shadow flicker effect and cause no interference.

environmental impact


Although we don’t monitor the turbine on a regular basis, we haven’t observed any birds being hit by the turbine blades nor discovered any dead birds or bats around the turbine.

The environmental impact assessment for the turbine confirmed that the nearest residential property would be exposed to

The turbine does have an added benefit that we weren’t expecting in that on days when arable crops are to be sprayed, it provides a very good indicator of wind direction and speed to confirm whether spraying will be possible. Thanks to careful planning before construction works commenced, particularly in connection with drainage, arable production in the vicinity of the turbine has been unaffected and crops are harvested within a few meters of the turbine tower. Since being erected other turbines have gone up in the vicinity of the farm and the visual impact of the turbine is diminishing. 01334 659 984

Electricity generation (KWhr/month) 225,000



0 January




May 2014

Page 18 | energy Matters | Summer 2018 |

June 2015

July 2016

August 2017






feed-in Tariffs (fiT) Generation & Export payment Rates 1/4/2018–30/6/2018*

The renewable energy industry is undergoing a major shake-up as the Westminster Government reviews incentive entitlements across the board.


≤100 >100≤500 >500≤2000 >2000



The Galbraith energy team has researched the current subsidy regime to produce this reference guide for the most popular technologies.

Installed capacity kW

Subsidy levels are subject to change, so the figures given here are for guidance only. Current details of FIT rates, ROCs and CFDs can be found at



Contracts for difference (Cfds) Clearing prices as of 11/9/2017 (£/MWh, 2012 prices).


Higher middle Lower Higher middle Lower Higher middle Lower

>250≤1000 >1000

Tariff p/kWh 01/10/17 01/01/18 –31/12/17 –31/01/18 8.07 6.49 6.49 4.73

8.06 6.48 6.48 4.73

4.01 3.61 0.31 4.25 3.83 0.31 1.85 1.67 0.31 1.50 0.31 0.15

3.93 3.54 0.25 4.17 3.75 0.25 1.79 1.61 0.25 1.43 0.25 0.13


2021–2022 2022–2023

Stand-alone solar PV**

Offshore wind




Advanced Conversion Technologies*



Dedicated biomass with CHP



≤50 >50≤100 >100≤1500 >1500

8.46 5.01 2.15 0.66

8.39 4.94 2.13 0.65

Anaerobic Digestion

≤250 >250≤500 >500

4.60 4.36 1.61

4.56 4.34 1.57







* (with or without CHP)

Renewable Obligation Certificates (ROCs)

Export Tariff

For period 1/4/2016 to 31/3/2017*.

* Publication date: July 7, 2017. Source: Ofgem.



Anaerobic Digestion




Offshore Wind


Onshore Wind


Solar PV**


** FIT payment for solar photovoltaic installations have been determined by the Gas and Electricity Markets Authority (Ofgem) under Article 13 of the Feed-in Tariffs order 2012, in accordance with Annex 3 to Schedule A to Licence Condition 33.

domestic RHI Applications submitted for the period 1/4/2018 – 30/6/2018

* The buy-out price for the 2018-19 obligation period is £47.22 per Renewables Obligation Certificate (ROC). ** Small-scale Solar PV (<5MW) closed as of 01/04/2016 and to additional capacity added to existing accredited stations that does not take it above 5MW in total installed capacity from that date. The availability of grace periods in line with those provided for Solar PV projects above 5MW back in 2015, enabling projects to be accredited up to 31/03/2017 where preliminary accreditation or significant financial commitments have been made on or before 22/07/2015, and for projects affected by grid delay. Source: Scottish Govenrment.


Tariff p/kWh

Biomass boilers and stoves


Air-source heat pumps


Ground-source heat pumps Solar thermal

19.86 20.06

Source: Ofgem.

Non-domestic RHI* Tariff name

Eligible technology

Eligible sizes

Small commercial biomass

Solid biomass including solid biomass contained in waste

Tier 1 Tier 2 Tier 1 Tier 2 ≥1mWth All capacities Tier 1 Tier 2 All capacities <200 kWth <200 kWth ≥200 kWth ≤ 600 kWth

medium commercial biomass Large commercial biomass Solid biomass CHP systems Water/ground-source heat pumps Air-source heat pumps All solar collectors Small biogas combustion medium biogas combustion**

Solid biomass CHP Ground-source & water-source heat pumps Air-source heat pumps Solar collectors Biogas combustion

Large biogas combustion**

≥ 600 kWth

Tariff p/kWh 3.05 2.14 3.05 2.14 3.05 4.42 9.36 2.79 2.69 10.75 2.97 2.33 0.89

* Source: Ofgem. Tariff rates are displayed in pence per kWth and apply from 20/9/2017. ** Commissioned on or after 4/12/2013. | energy Matters | Summer 2018 | Page 19

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