Market view: Co-location of battery storage on renewable sites

Recent developments in battery storage technology and the drop in availability of renewable incentives have led to a focus on co-locating battery storage alongside solar or wind energy projects. Ross Fairley, from independent UK law firm Burges Salmon, looks at the legal considerations and explains why co-location is not as easy as it might seem.

The acceleration in the development of battery storage technology, coupled with the fall in availability of renewable incentives has created significant interest in co-locating battery storage alongside solar or wind energy developments. While this may be seen as a natural addition to an existing renewables project, co-location, particularly on existing renewables sites, is not the simple proposition it first seems. The technology offers a real opportunity for the UK energy market but renewables generators will need to bear in mind the following legal considerations.

Real estate rights

Whilst battery storage facilities may be relatively small in nature compared to the renewables development itself, rights to place batteries on the land will still be needed. Land rights granted by the landowner to the renewables generator may be limited to a particular form of development, such as solar or wind. New or amended leases may be required, prompting renegotiations with the landowner.

Planning permission

Many generators have started to look at existing planning permissions to see whether battery storage could fit within the scope of the existing renewables development permission. Alterations to an existing planning permission can, however, trigger unwanted consequences such as prejudicing the Renewables Obligation accreditation of the project. The battery might be viewed as an extension to the generating facility which may, in itself, push the combined installation above a certain capacity which could require further or different consenting routes. If the battery storage solution is better treated as a separate installation, a separate planning permission will be required. This, in turn, impacts on timescales for obtaining planning and could affect timescales under Ancillary Services contracts, such as National Grid’s Enhanced Frequency Response (EFR) tenders.

Shared grid

Part of the rationale for co-locating battery storage is to maximise the use of the grid capacity at the site and the connection arrangements that exist. Requirements under the EFR tender, or the storage design, may mean that the grid needs to be enhanced or adapted. Rights to share grid capacity and infrastructure may also be needed. The solar or wind project and its funders may object to the grid connection being prejudiced or threatened in any way. Grid arrangements need to be considered if the battery storage is to be viewed as a separate development and this, in turn, links with the design of metering solutions at the site.

Renewables support

It is likely that the existing renewables project will be accredited under the Feed-in Tariff or Renewables Obligation. The continued ability of the project to receive these benefits is crucial and overriding – if the battery storage facility prejudices that in any way, it will be seen as counterproductive. Much of this will depend on where the battery storage is situated and how the battery metering can be separated from the renewables facility. The battery will need to have the ability to draw brown power from the network.

Power Purchase Agreement

There will be an existing Power Purchase Agreement (PPA) for an existing renewables facility. The PPA off-taker may have entered into that contract having modelled the generation and Renewables Obligation Certificates (ROCs) or other green certificates. The off-taker will question the logic of allowing a battery facility to take electricity generation from the renewables facility, if it prejudices the amount of electricity or the ROCs it receives under the PPA.

Bank consent

Many existing renewables projects are project financed. If a renewables project is performing well and repaying the debt, why would the bank consent to changes to the project to permit battery storage if there was any risk it would hinder or interrupt the generation from the renewables facility?

Project Insurances

A renewables project will have a variety of insurances in place. The battery storage plans will almost certainly, need to be declared to the insurers and their views taken into account.

EFR tender

Assuming all of the above can be overcome, the storage developer may need to continually monitor whether the battery storage project, its consenting, land rights and connections mean it is still able to meet all of the criteria and milestones to win any ancillary services contracts from National Grid.

The logic for co-location is strong and the availability of sites where this can be utilised must be plentiful. However, these are not simple projects and those going into them need to consider the risks carefully. Ultimately, with storage in its infancy and the technology developing fast, batteries pose a real opportunity for the UK energy market, but many of these hurdles have yet to be overcome by the regulators and by developers.