Agents Eye Column – April
Are you Connected? Does it lead to value?
We’ve been doing farmer led renewable projects for the last 3 – 4 years now and grid connection has always been one of the initial discussions with clients as a constraint or opportunity. It’s becoming such an issue, that I think having a good connection has a significant value to your business and land and something that you should try and take advantage of if you can. Generally speaking if you have a 3 phase supply, the opportunities are much greater for you and luckily for a large majority of Yorkshire (unlike Northumberland), there is 3 phase supply either connected to the farm or running across the land.
However, we have recently come across several situations where the capacity of the grid is now full and the costs of connection are too high to make the scheme viable. Unfortunately, budget estimates are not accurate enough and don’t provide you with any guarantees that a connection will be available when you apply for one. The only answer is a full application for connection but once received this is time limited and will be lost if not accepted and payment made to Northern Powergrid. It’s not ideal and unfortunately it is not NPG’s fault, but a change in procedures set out by OFGEM has lead to this unsatisfactory position.
Most of the time we wouldn’t seek to apply for formal connection until you have the planning consent granted and know that the project can go ahead (i.e. funding is sorted, major conditions lifted such as radar mitigation etc) but there is a danger that unless the grid connection is available then the project may be unviable. There are already areas in Yorkshire where the connection is now full and cannot take any form of additional generator capacity, therefore, unless you already have a connection or a transformer on site capable of export at your given output, you won’t have any ability to get connected = End of Project!
This is becoming a major constraint for renewables projects and needs to be addressed very early on. It may mean accepting a grid connection even without a planning consent and may entail paying a considerable amount of money. Prior planning and investigation is key to prevent wasting time and effort.
There has been a sudden increase in solar farm activity in the last month and several developers entering Yorkshire and Lincolnshire are seeking to lease land for large scale solar developments. Whilst it’s new to Yorkshire, its common place further south, the key again though is the grid connection and the capacity and proximity to the nearest primary substation.
It’s something that has never really crossed valuers desks, but I’m sure that a farm with a good connection has a hidden value to it and there is an ability to diversify and look at alternative methods of generating an income from solar, biomass, wind, etc. But be warned, it’s running out fast!! Do call me if you want to talk through.